AUSTRALIA's newly-elected prime minister, Mr Tony Abbott, declared shortly after coming to office in September that he wants to be known as an infrastructure prime minister and, rather worryingly for rail transport, proclaims: "I want building the roads of the 21st century to be a hallmark of my government."
So it was somewhat of a surprise when one of the first acts of the new government was to give the go-ahead to the Inland Rail project. This 1700km line will provide a new standard-gauge link between Melbourne and Brisbane which avoids the poor alignments of the current East Coast route and the congested Sydney area.
Approval of Inland Rail was one of the aspirations of the Australasian Railway Association (ARA) prior to the election. "This project will take seven hours off Melbourne - Brisbane transit times and boost regional development along the entire route," says ARA's CEO Mr Bryan Nye. "There is a massive amount of coal to Brisbane which can't use the existing line because it is not up to it.
"The new government has fixed a start date of 2016 and a completion date of 2026," Nye told IRJ. The project involves building links between existing lines to create the new route. The new sections account for 34% of the total, while major upgrading will be needed on existing lines making up a quarter of the route, and only minor improvements will be necessary to the remaining lines.
"The government will now set aside money to buy the land needed," Nye says. "Detailed engineering and environmental impact studies need to be completed during the next three years, which is quite fast for Australia."
A report last month by Infrastructure Partnerships Australia said there has been a 35% decline in national infrastructure investment between 2011-12 and 2012-13, with road investment falling by 25%. Conversely, rail investment has remained steady.
This helps to explain why the new government is committed to building new roads, and has already approved construction of WestConnex, a 33km highway in Sydney. To achieve this objective the federal government will in future take over responsibility for funding 80% of federal road construction while the state governments will be responsible for urban rail.
"The previous government was funding some road and some urban rail schemes, but this came to a head with a conflict over which project to back in Sydney with the federal government pushing for one scheme and the New South Wales government for another," explains Nye. "The new situation should provide more clarity for road and rail."
Queensland's transport minister, Mr Scott Emerson, believes the change will free up funds previously spent on roads for investment in rail. "The good news for us is that we have a federal government that is committed to paying for 80% of our federal roads," Emerson told the Brisbane Times.
"The previous Labor government wanted us to pay for 50%. We have more money to spend on other projects like Cross River Rail." Emerson says the state government will now consider funding the $A 5.2bn ($US 4.8bn) project to build an 18km north-south underground line beneath the city centre to relieve congestion on the existing network, although Queensland's premier Mr Campbell Newman says he wants to find ways to reduce the cost.
Nye also hopes that the new government will be able to unlock the estimated $A 3 trillion which is sitting in pension funds and use it to invest in infrastructure projects. "Australians have to contribute to pension funds," says Nye. It is currently set at 9.5% of income and will increase to 12% over the next few years. "Around $A 1bn is going into pension funds each week, but the fund managers don't know what to do with it," says Nye.
Government restrictions currently prevent pension funds from investing in infrastructure projects, so the new government will look into how this can be changed. "The crazy thing is that Canadian pension funds are already investing in Australia," Nye points out. If the restrictions on Australian pension funds are lifted, the investment would be in the form of public-private partnerships (PPPs), but the Australian model for PPPs will also have to be changed because the current one is seriously flawed.
New PPP model needed
Up to now, the government did not want to take any risk in PPP schemes, being content to leave the risk entirely with the private sector. Apart from making PPPs expensive, as the private sector prices risk according to the proportion it will have to bear, confidence in the Australian model has been severely dented following the bankruptcy of several road tunnel PPP schemes. As Nye observes: "There is a very active debate on the future of PPPs in Australia at present."
Earlier this year the previous government released its long-awaited Stage 2 study into options for a 1748km high-speed line linking Brisbane, Sydney, Canberra and Melbourne at an estimated cost of $A 114bn. The standard-gauge, electrified, double-track line would have a maximum operating speed of 350km/h, and would require around 144km of tunnels, nearly half of which would be in the Sydney area.
The study included detailed designs, estimates of costs and benefits, construction schedules, traffic forecasts, environmental implications, and a proposed optimum route. The study says that once the line is fully operational in 2058, up to 84 million passengers would travel by high-speed train each year.
"High-speed is still on the agenda," says Nye. "The politicians realise they will need to protect the corridor, and we need to start this process while they test the market. I'm quite confident this will happen.
"We will have to get all the east coast states to agree on the project over the next three to four years. This is a 30-year project so you can build it in stages." The previous government realised this and proposed constructing the Sydney - Canberra section first with work starting in 2027 and the line opening in 2035. This would be followed by an extension to Melbourne five years later, followed by the northern section from Sydney to Brisbane.
Another quick action by the new government is its decision to repeal the carbon tax. "There was no clearer commitment that this government took to the election than our commitment to abolish the carbon tax," Abbott said. Legislation to repeal the carbon tax will be the first bill considered by the new parliament. "In three years' time the carbon tax will be gone," Abbott pledged.
The tax is levied on the consumption of energy, such as gas and electricity, but it is also levied on rail including electricity usage by railways. However, the tax is not applied to the worst transport polluter, namely road transport, a situation which Nye describes as bizarre.
"The new government says it wants to replace the carbon tax with direct action - funding things that will reduce carbon emissions," Nye says. "I don't know what they will do regarding road transport which is one of the biggest carbon producers. I like the Canadian system of giving carbon credits if freight is transferred to rail."
Another source of comfort for Nye is that the new transport minister was Australia's transport minister six years ago. As Nye put it: "he understands the issues." This has to bode well for the future of Australian railways, and you can be sure that Nye and his team will be there to encourage the new government to remain on track.