Big hurdles, but huge benefits

Australian
Thursday 16/10/2008 Page: 6

FEW people will be watching the outcome of the emissions trading debate in Australia with more interest than Mark Rowsthorn. As chief executive of Asciano, the ports and rail giant that has been spun out of Toll Holdings, he is acutely aware that a push for more environmentally friendly freight operations will favour rail and sea services at the expense of road transport. With rail accounting for a mere 5 per cent of the domestic freight load, the scope for growth and profits is obvious. Rowsthorn has welcomed Ross Garnaut's Climate Change Review report and supports the introduction of an emissions trading scheme. He is calling on government to resist calls from big business to back away from a full-fledged ETS.

If they're serious about what they're trying to do, politicising it and watering it down will just reduce the impact of it and, from my perspective, it will also reduce the impact of anything done about our industry, which is just ludicrous." Asciano cites statistics revealing that rail uses two-thirds less fuel than road per tonne of goods carried and is three times more environmentally efficient. And, according to the Australian Department of Transport's 2008 statistics, road transport accounted for 84.9 per cent of Australia's domestic transport greenhouse gas emissions in 2007 and 1616 deaths, compared with respective figures for rail of 4.6 per cent and 37 deaths. Yet Rowsthorn concedes that breaking the dominance of the all-powerful road transport sector will be tough, and that federal and state assistance will be required.

At some point governments need to sit up and take notice of the benefits from a congestion, from a safety, from an environmental climate change perspective and say, well, there's actually enormous benefit in switching from road to rail. Yes, there are lobby groups and the trucking industry is quite powerful and the rail industry has been fragmented, (but) I think I'm seeing signs now of the rail industry coming together and pushing some very common agendas." Asciano has had its own well-publicised issues, with high debt levels and a slumping share price getting headlines.

Another distraction has been a scorned takeover attempt in August from investment firms TPG Capital and Global Infrastructure Partners. Nevertheless, with Australia's freight task expected to double over the next 15 to 20 years and bottlenecks at ports such as Newcastle and Gladstone already threatening resources exports, it is clear that the opportunities for rail are significant. There are issues to confront, though. Infrastructure shortfalls have been well chronicled, while the fragmented ownership of rail lines across the country on top of different rail gauges between the states represents a major barrier to the greater uptake of rail transportation.

Rowsthorn says action is long overdue. "There's no common ownership of the track between Brisbane and Perth," he says. "There are all sorts of regulatory impediments in getting the job done and you've got a lack of spending on the infrastructure that really limits rail's ability to take the market share off road.

"So how are you supposed to, as an above rail operator, get any confidence about the future of the business? How are you supposed to plan your (freight) paths running trains between those capitals with all the different track ownerships? You've got misalignment of investment." Bureau of Infrastructure, Transport and Regional Economics figures point to part of the problem. For the 2006-07 financial year, $11.85 billion was spent on roads and bridges compared with $2.48 billion on rail.

Rowsthorn suggests such lack of investment, if continued, will compound supply line difficulties in the future and increase dependence on roads. "You know, if the freight task doubles we have an expectation that the number of trucks on the road is going to double. I think that's just an incredibly asinine thing to do." Improving rail networks may take at least a decade and cost tens of billions of dollars. However, Rowsthorn says if upgrades are completed in "chunks" through upgrades of Sydney-Melbourne lines, then Sydney- Brisbane and ultimately a Melbourne- Brisbane rail project the investment will be manageable.

Asciano takes heart from the federal Government's appointment of respected industry figure Michael Deegan as the inaugural infrastructure co-ordinator, saying it is a sign that Canberra is taking freight transport issues seriously. "He's got a deep knowledge of rail and road," Rowsthorn says. He understands the bottlenecks and I think he's the sort of person that can see the sense in spending more on rail." Rowsthorn acknowledges "self-interest" in pushing for more rail freight, but is adamant it will have benefits for government, the environment, business and the public. "I think that just ticks a lot of boxes for the community, the country and not to mention ourselves. It's an important thing for the country to get right."