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Road, Rail and Infrastructure Policy and Programs

OUTPUTS
OVERVIEW
PERFORMANCE RESULTS
OUTPUT 5.1 ROADS POLICY AND GRANT ADMINISTRATION - NATIONAL HIGHWAY AND ROADS OF NATIONAL IMPORTANCE
OUTPUT 5.2 RAIL POLICY AND INFRASTRUCTURE GRANT ADMINISTRATION
OUTPUT 5.3 INFRASTRUCTURE BORROWINGS TAX OFFSET SCHEME

Contact: Bill Ellis (02) 6274 7651

OUTPUTS

  1. Roads policy and grant administration - National Highway and Roads of National Imp1ortance
  2. Rail policy and infrastructure grant administration
  3. Infrastructure Borrowings Tax Offset Scheme

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OVERVIEW

Land Division facilitates access to competitive, reliable road and rail infrastructure under nationally consistent regulatory and safety regimes. In 1998-99 it administered a significant road and rail capital works program of almost $1 billion. It also funds research projects supporting land transport objectives.

Throughout 1998-99, its focus has been to find the balance between the roles of the government and the private sector, and to encourage private transport infrastructure investment. Land Division works closely with State governments to encourage private-sector transport operators to be efficient, innovative and responsive.

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PERFORMANCE RESULTS

OUTPUT CLASS 5 ROAD, RAIL AND INFRASTRUCTURE POLICY AND PROGRAMS

Ministerials, Questions on Notice, Briefings and Speeches

Land Division prepared 636 replies to Ministerials and took appropriate action on a further 396 items of correspondence. One hundred and eighty Minutes were sent to the Minister, and 46 briefing and speech requests processed. Replies were prepared to 94 Parliamentary Questions on Notice, 89 in the Senate and five in the House of Representatives.

The Department is drafting a discussion paper in response to recent Parliamentary Committee reports on road and rail, the Productivity Commission Inquiry Report Progress in Rail Reform, and a private sector taskforce report into the rail sector released in May 1999 (the Smorgon Report).

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OUTPUT 5.1 ROADS POLICY AND GRANT ADMINISTRATION - NATIONAL HIGHWAY AND ROADS OF NATIONAL IMPORTANCE

Payments management

Total Commonwealth road funding for 1998-99 was $1688 million, $868 million of which was direct spending. National Highway expenditure was $745.5 million, while Roads of National Importance (RONI) spending for the year totalled $122.5 million. The remainder was made available as general revenue-sharing grants to the States, Territories and local government.

The Department managed 270 road projects in the categories of National Highway (complete federal funding) and RONI (joint funding with States and Territories). Where State road authorities lodged correct expenditure claims, 85 per cent of reimbursement payments were made within Land Division's performance criteria levels.

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The National Highway and Roads of National Importance

The Department achieved most of its major road construction targets for the inter-capital National Highway network and RONI projects in 1998-99, with the exception of a start on the Hume Highway upgrading at Albury.

Major National Highway projects completed and opened to traffic during the year include:

  • the Leneghans Drive connector between the F3 and the New England Highway west of Newcastle;
  • the New England Highway realignment at Belford Bends;
  • the Edmonton bypass and duplication of the Bruce Highway south of Cairns;
  • the Oakey bypass on the Warrego Highway, west of Toowoomba;
  • a duplicate Ron Camm bridge over the Pioneer River at Mackay;
  • the Penguin to Howth section of the $66 million Penguin-Chasm Creek upgrading on Tasmania's north-west coast;
  • the $100 million Victoria Highway upgrade in the Northern Territory (NT);
  • Mickans Bridge-Truro upgrade of the Sturt Highway in South Australia (SA); and
  • a new bridge over the Murray River at Blanchetown, SA.

Progress on several major projects slowed in 1998-99 due to unseasonal wet weather experienced across much of northern Australia and which resulted in additional funding for repair work.

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The Pacific Highway

The $3.3 billion Pacific Highway Upgrading, funded jointly with the New South Wales (NSW) and Queensland Governments, is progressing toward a year 2006 deadline when at least 50 per cent of the route will have been widened to four lanes and much of the remainder realigned or substantially improved. In the first three years of the program in NSW, the State and Commonwealth Governments are jointly funding the upgrade at 18 locations. Projects completed in 1998-99 include the Raymond Terrace bypass, the Ewingsdale to Tyagerah realignment, and the Herons Creek and Eungai duplications.

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Commonwealth roads program funding

In late 1998, the Commonwealth Government allocated an additional $195 million for five new projects, the Great Western Highway between Penrith and Bathurst ($100 million), the Pakenham bypass in Victoria ($30 million), the Gladstone Port access road ($6 million) and Main Road 92 ($34 million), a proposed new highway linking the Illawarra and Shoalhaven regions with south-eastern NSW. The remaining $25 million was allocated to widening the Bruce Highway immediately north of Brisbane. Funding for these projects is available from 1999-2000.

In May 1999, the Government announced it would spend an extra $30 million each year from 1 July 2000 to improve the standard of key national freight routes, including upgrading bridges to serve higher mass limits for the road transport industry.

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Bridge upgrading and higher mass limits

The Commonwealth Government also announced $20 million for bridge upgrading on the National Highway to enable the implementation of increased mass limits for Federal Interstate Registration heavy vehicles fitted with road-friendly suspensions. These vehicles vary with axle configuration, but for the most common long-distance truck, a 6-axle semitrailer, the mass limit would increase from 42.5 tonnes to 45.5 tonnes. Forty-four under-strength bridges are being improved under the program. Ten were strengthened in 1998-99.

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Murray River bridges program

The Commonwealth Government has committed $44 million from the Centenary of Federation Fund to finance the construction of three new bridges across the Murray River border between NSW and Victoria. The new bridges will be built at Corowa ($12 million), Echuca ($15 million) and Robinvale-Euston ($17 million).

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OUTPUT 5.2 RAIL POLICY AND INFRASTRUCTURE GRANT ADMINISTRATION

Rail reform program

The Department has successfully delivered two key elements of the Commonwealth Government's rail reform agenda:

  • establishing the Australian Rail Track Corporation (ARTC) to manage access to the main interstate rail lines throughout Australia; and
  • the sale of the three operating businesses of the Commonwealth-owned Australian National Railways (AN), and progressing outstanding issues associated with the wind-up of residual elements of AN.

The strategic focus in 1998-99 has been to encourage rail to compete more effectively with road in transporting freight, viz.:

  • increased competition in providing freight rail services;
  • improved regulatory uniformity between State-based rail systems; and
  • improved rail track services.

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Access to interstate network - Australian Rail Track Corporation

Establishing the ARTC is the cornerstone of the Government's rail track reform policy. The corporation, all shares owned by the Commonwealth, commenced operations on 1 July 1998. The majority of AN interstate rail track and track-related maintenance equipment was transferred to the ARTC for the 1 July 1998 start-up by ministerial direction. The ARTC also controls Victoria's interstate rail track under an interim lease agreement expected to be formalised by September 1999.

The ARTC acts as a one-stop-shop for train operators to access the interstate rail network, and now controls more than 52 per cent of the interstate track. It is negotiating agreements with the remaining track owners in NSW, Queensland and Western Australia that will allow ARTC to act as sole access provider for the interstate rail network.

The Department exercises shareholder oversight responsibilities in relation to the ARTC.

Achievement of regulatory uniformity, more seamless track access arrangements and more uniform operational arrangements will also facilitate the entry of new rail operators.

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Sale of Australian National

To develop further a competitive market of private operators offering diverse services, the Commonwealth has sold all above track business previously operated by AN. The Department progressed outstanding issues associated with the wind-up of the residual elements of AN.

A major outstanding issue involves transfer of AN's Alice Springs-Tarcoola corridor to the ARTC. Arrangements for the NT and SA Governments to transfer the corridor land to AN are expected to be completed in late 1999, following which the rail track corridor will be transferred from AN to the ARTC by ministerial declaration.

A condition of the AN sale was the standardisation of the Pinnaroo grain line in SA.

Negotiations continue with the SA Government to resolve outstanding issues associated with the previous interstate operations of AN in that State (a prerequisite to repealing in late 1999 the Australian National Railways Commission Act 1983).

The Department also provided $3 million from a budgeted $5 million for a four-year infrastructure program for upgrading track in Tasmania.

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Sale of National Rail

Arrangements for the sale of National Rail (NR) were also advanced in conjunction with the Office of Asset Sales and Information Technology Outsourcing and the NSW and Victorian Governments. The Department is liaising with these States to ensure that Commonwealth rail reform objectives are given due consideration throughout the sale process.

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Private sector investment and rail industry development

At the September 1997 National Rail Summit, Transport Ministers commenced a survey of participants and potential entrants to the rail investment market and agreed to a range of rail reform proposals, including the need to examine barriers to private investment in the rail sector.

The Department took responsibility for conducting an industry survey, the major findings of which were completed in February 1999. Its report provides the first comprehensive account of the experiences of current and prospective private rail operators pursuing new opportunities to provide rail services in areas traditionally reserved for government railways. Overall, private railways demonstrated a willingness to respond to those opportunities, but were concerned about a range of major impediments to investment, including:

  • unfair competition from road transport;
  • unfair competition from government-owned rail operators;
  • poor access to track;
  • poor access to freight terminals; and
  • an inefficient regulatory environment.

The survey results were provided to two major rail inquiries - the Productivity Commission's inquiry into Progress of Rail Reform, and the Rail Projects Taskforce. The Department provided administrative support for the Rail Projects Taskforce, and assisted in drafting its report Revitalising Rail: the Private Sector Solution (the Smorgon Report), released on 31 May 1999.

The Taskforce recommended that the rail industry be treated as an off-road user of diesel fuel, a proposal that has been accepted by the Commonwealth Government. Under new taxation reforms, the initiative will be worth $160 million annually to the rail industry.

The Department provided several submissions to the Productivity Commission Inquiry into Progress of Rail Reform.

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National operational uniformity for rail

Traditionally different States have regulated their own sections of the interstate mainline rail track, making it difficult for rail to function as an integrated national facility. Duplication and inconsistency in operational requirements for interstate operators impose considerable costs and create a barrier to new operators attempting to enter the interstate rail freight market.

An Industry Reference Group (IRG) established in July 1998 was given the task of developing nationally uniform operating requirements and rail standards across State boundaries, designed to improve the efficiency and competitiveness of rail.

The IRG has focused on the development of:

  • national codes of practice;
  • communication and information systems;
  • train operating standards; and
  • uniform pricing and access arrangements.

Drafting the national codes is well advanced and they are expected to be available for industry comment by September 1999, pending implementation in early 2000.

Transport Ministers meeting as the Australian Transport Council (ATC) recently endorsed the development of an Inter-Governmental Agreement (IGA) as an interim measure to facilitate implementing uniform operational requirements and rail standards. The key benefits of this arrangement are:

  • government commitment to a nationally consistent implementation mechanism to ensure timely adoption of uniform operating requirements;
  • the establishment of a non-statutory unit, attached to the Commonwealth Department of Transport and Regional Services, to facilitate and coordinate implementation arrangements; and
  • the establishment of Commonwealth custodianship arrangements to provide for ownership of intellectual property and an entity for legal liability issues.

It is anticipated that Ministers will endorse the IGA in November 1999.

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Rail safety

The Department chairs the Rail Safety Committee of Australia (RSCA), a body established to help develop nationally harmonised administrative and operational requirements for rail safety. Much of the committee's work is expected to be completed in the latter half of 1999. Progress to date includes:

  • streamlining the rail safety regulation and accreditation process for interstate operators;
  • preparing a discussion paper on a national approach to accreditation fees;
  • developing a process for exchanging and analysing nationally consistent information on rail accidents and incidents, including defining national incidents and overseas experiences;
  • assisting Rail Group's Rail Accident and Incident Investigation Task Group develop a national model for an open accident investigation process - the report was endorsed by the ATC and will be implemented in consultation with the Rail Group;
  • establishing a process to ensure compliance with radio communication standards on the defined interstate network;
  • developing an interim draft protocol for radio voice communication and providing it to track owners and rail operators for voluntary adoption; and
  • taking measures to reduce overlap between occupational health and safety legislation and rail safety legislation.

The ATC will determine the future direction of the national rail safety regulatory framework in November 1999 following completion of an independent review of rail safety arrangements. The independent review will assess the efficiency and effectiveness of current and emerging rail safety issues, including mutual recognition arrangements.

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Interstate Rail Investment Fund

The Interstate Rail Investment Fund is a $250 million program over four years to upgrade the interstate network. Specific aims are to improve track quality, decrease travel times, and improve network reliability. The ARTC manages the program, taking a network-wide view of the investment needs of the interstate rail track and advising priorities for investing Commonwealth rail infrastructure funds.

The Department engaged the firm Booz Allen and Hamilton Australia Limited to examine the costs and benefits of mainline infrastructure upgrading projects. Its report, completed in November 1998, produced a priority list of projects and made some broad recommendations.

The Minister approved three projects in 1998-99:

  • $8 million for the re-railing of the Pura Pura-Maroona track in western Victoria. The Victorian Government contributed $15 million to the project to install concrete sleepers;
  • $10.3 million for 'grinding and straightening' the entire Victorian interstate track, to enable trains to operate at the same speed and axle loads limits as on the rest of the ARTC network; and
  • $53.4 million for crossing loop extensions. These loops contribute to attaining track performance standards agreed by Transport Ministers at the 1997 Rail Summit. The standards require track conditions capable of handing 1500-metre trains north-south and 1800-metre trains east-west.


These projects have reduced service times on the east-west corridor with the lifting of some of the severe speed restrictions that formerly hampered track operations. A 90-minute reduction in the Adelaide-Melbourne transit time is envisaged by September 1999.

Negotiations between the ARTC and NSW authorities on the problems of alleviating freight congestion through metropolitan Sydney are underway. Once the issue is finalised, the Minister for Transport and Regional Services is expected to announce the overall schedule of works for the $250 million program.

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Centenary of Federation Fund and other rail projects

The Commonwealth Government's Centenary of Federation Fund is to be used to help finance three rail projects - the proposed private-sector Alice Springs-Darwin rail link ($100 million), the Abt railway in Tasmania ($20.45 million) and the Brisbane Light Rail Network ($65 million). The Department will monitor operating and financial progress of the projects and provide regular reports to government.

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Sydney-Canberra very high-speed train

The Commonwealth, NSW and Australian Capital Territory Governments are undertaking a scoping study with a private consortium, Speedrail, to establish the commercial viability of a very high-speed train service linking Sydney and Canberra. The three governments are making every effort to facilitate the development on the understanding that the $3.5 billion project will proceed if there is no net cost to taxpayers. The study is due for completion by October 1999.

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Accessible transport

The Department is assisting the Attorney-General's Department to implement new draft disability standards for transport adopted by the ATC in April 1999.

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OUTPUT 5.3 INFRASTRUCTURE BORROWINGS TAX OFFSET SCHEME

Administering the scheme

The Infrastructure Borrowings Tax Offset Scheme (IBTOS) encourages the delivery of efficient private infrastructure. A tax rebate is provided to project lenders on interest income obtained from projects approved under the scheme. Benefits are passed to the project borrower. Candidate projects are examined against a range of specified criteria to ensure the rebate is targeted effectively. The scheme also benefits the community by providing opportunities for a greater number of investment projects, and is administered by the Department in conjunction with the Australian Taxation Office.

First-round applications closed in April 1998. Thirty-five applications involving 30 projects were received and progressively processed throughout the year.

Five projects worth almost $1 billion qualified for assistance in 1998-99 subject to appropriate environmental clearances and acceptable financial arrangements: Eastern Gas Pipeline, the Botany Co-generation Plant, the Adelaide Airport terminal, the Citylink freeway extension in Melbourne, and the Brisbane Cruise Port.

Seventeen applications for 15 projects representing investments of more than $5 billion have been received for the second round that closed on 25 March 1999.

The Department is also finalising agreements for three 'pre-approved' projects (Redbank, Oakey and Parkeston power stations) to receive rebates under the scheme.

The IBTOS incentive is expected to generate investment worth almost $1 billion in transport infrastructure.

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Regional Development Program

The Department wound up the previous Government's Regional Development Program. Finalisation of reporting requirements is expected by 31 December 1999, but this timeframe may be extended in parallel with any extension given to exhaust existing funding.

The Program was developed to support regions through Regional Development Organisations pursuing sustainable economic activity. Financial assistance was provided toward the running costs of Regional Development and to specific projects.

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