Inland Rail: Critical section in limbo amid cost blowout

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A critical section of the Inland Rail freight link running across half of NSW into Queensland has been halted indefinitely as the federal government audits the scheme’s finances following revelations its cost has blown out to more than £30 billion. Infrastructure and Transport Minister Catherine King said on Thursday just one section of the proposed 1700-kilometre rail line – from Beveridge outside Melbourne to Parkes in Central West NSW – would be completed by 2027 as she warned of sweeping changes to the rest of the project.

An artist's impression of a double-stacked freight train on the Inland Rail between Melbourne and Brisbane.

An artist’s impression of a double-stacked freight train on the Inland Rail between Melbourne and Brisbane. A review by former Commonwealth energy adviser Kerry Schott, published on Thursday [1], found the project would cost at least £31.4 billion but had run so far off the rails it was not possible to speculate on an end date, a final cost, or whether it would generate a return.

“You can’t do a benefit-cost ratio analysis until you know what the cost is,” Schott told media. The Inland Rail was expected to cost £8.4 billion when announced by the Turnbull government in 2017, and slated for completion in 2025. However, it was not counted against the budget bottom line because the federal government treated it as an investment that would pay for itself.

King said more than £2 billion had already been sunk into the project and the government would commission an independent cost assessment before deciding the future of the remaining rail line from Parkes to Brisbane. Bad designs and administrative bungles had delayed the project indefinitely, said Schott, who was critical of the skills mix on the Australian Rail Track Corporation board and the lack of a permanent chief for more than 18 months. King laid blame on the former government, saying: “This is what happens when you let the National Party be in charge of a national project.”

She said the Inland Rail [2] remained an important project that the government aimed to complete.

It could potentially reduce road congestion and emissions, lower road maintenance costs and secure future freight capacity to cope with a growing population. The Inland Rail was designed to deliver a 24-hour connection between Melbourne and Brisbane, with double-stacked freight cars traversing central Victoria and inland NSW from north to south. By attracting freight from the congested road network, it is forecast to cut carbon emissions by 750,000 tonnes a year and reduce annual truck movements by 200,000.

Former deputy prime minister Barnaby Joyce, who championed the project in government, defended the federal government’s role on Thursday and blamed delays on state governments, farmers who opposed the track being laid on their land, and a series of long-run reviews into the scheme, most of which were commissioned by the Coalition government. He also argued the corporation’s directors had the appropriate skills to oversee staff charged with delivering technical engineering and design for the project, and questioned Schott’s £31.4 billion cost forecast for the “vital piece” of national infrastructure. “I want to see the details of how they came up with the extraordinary amount,” Joyce said. “I hope this is not a tactic to kick it into the long grass.”

Australian Rail Track Corporation chairman Peter Duncan said his organisation would work with the government to implement recommendations made by the Schott review to rectify the scheme’s shortcomings. Grattan Institute’s transport and cities program director, Marion Terrill, said the chief benefits of the Inland Rail would have been generated by the intercity connections, and removing that link left a question mark over the project. “Presumably it still has some utility … but it started out in 2015 with a very skinny cost-benefit ratio and it is very hard to see how the project could do anything other than destroy value,” Terrill said.

“Trying to stem the flow has to be an important part of the response from the government.”

Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.Connect via email [4].[3]

Inland Rail: Critical section in limbo amid cost blowout

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