1. TRANSPORT COLLOQUIUM 05 Infrastructure for the Rail Freight Industry Bryan Nye Chief Executive Officer

2. Today’s Challenge Look into the Future

4. Freight operations Industry structure Vertical separation on inter-capital city network and NSW Integrated networks in Qld, Vic, SA, WA, Tas - most with access arrangements in place Heavy haul sector all integrated, some with access arrangements

5. Freight operators Hire and Reward Queensland Rail (QR) Pacific National (PN) includes Tasrail Australian Railroad Group (ARG) Specialised Container Services CRT Group FreightLink Interail Australia Austrac Rail Silverton Rail Southern Shorthaul Railroad

6. Freight operators Ancillary BHP Billiton Iron Ore Manildra Group Pilbara Rail Company Comalco Sugar cane railways

7. Passenger Operators Rail Corp (NSW) Connex (Vic franchise) Yarra Trams (Vic franchise) TransAdelaide WA Public Transport Authority QR

8. Heritage and Tourist sector Approx 200 Operators, less than 10 major operators Great Southern railway 3801 Ltd South Spur Rail Pichi Richi Puffing Billy railway ARHS Lachlan Valley Railway

9. Track ownership QR9521 km RailCorp (pre ARTC/NSW lease) 7310 km ARG6622 km ARTC (pre ARTC/NSW lease) 4430 km Sugar Cane Railways 4150 km VicTrack (leased out) 3676 km Asia Pacific Rail 2251 km

10. Bulk Freight - All iron ore, 80% local Coal, 70% Grain - 20% Australia’s exports worth $15 Billion East/West Freight 70+% - Investment in infrastructure - Single access manager - Double stacking West Adelaide/Parkes - No passenger interface problems North/South Route <20% - Lack of investment in track - Multiple track access managers - Sydney curfews - Complex safety environments Freight Movement Today

11. Volume & movement of freight will double over next 10 years Congestion cost 13BN in 1995, 30BN by 2015 Current road & rail inadequate Transport Challenge

12. Benefits Safest form of land transport Environment 9 times more energy efficient one train, two drivers = 150 trucks & 45,000 litres of fuel Efficient rail is a cheaper mode of freight transport than road on all inter capital corridors

13. 20 15 25 23 31 27 25 Syd - Bris Melb - Syd Melb - Bris Melb - Adel Adel - Perth Melb - Perth Syd - Perth $ per '000 NTK's, at 2014 Source:PJPL Analysis RoadRail Cost benefit of Rail Variable Operating cost* Fixed operating cost* Capital recovery cost Externalities Below Variable operating cost Capital recovery cost Pick Up and Delivery (rail) Above Fixed operating cost *assumes 50% reduction in RIC's cost base and impact of volume growth on rail fixed cost base 68 64 73 64 63 60 58 48 50 48 42 32 33 Average = 20 Total Cost Comparison

14. Investment Challenges Ongoing microeconomic reform National plan development Industry reform

15. Microeconomic Reform The next big Agenda National Regulatory framework Access Pricing- certainty Heavy Vehicle/Rail Pricing

16. National Plan Development Auslink and Political agenda Focus on regional freight Long term plan for terminals Urban planning ARTC challenge

17. Industry Reform Align above & below rail investment Improve insurance arrangements Efficiency improvements Maturity – “Grow the Pie” Establish a framework for assessing and allocating incident costs Future structure of Industry

18. Technology and People Communication Train control systems Age, profile, skill levels Image Rail Skills & Career Council

19. Outcome Industry - return on investment - increase freight/passenger numbers - Improve price, time, reliability and service availability - continuous improvement to infrastructure - better investment environment Government - employment - regional and rural impacts - reduction in road investment costs - social benefits - an improved economy

20. Next Opportunity The Eastern Freight Corridor

21. Cryon Broken Hill Menindee Ivanhoe Condobolin Tottenham Griffith Willbriggie Hillston Burcher West Wyalong Yanco Temora Young Koorawatha Cowra Narrandera Junee Boree Creek The Rock Wagga Culcairn Albury Moss Vale Goulburn Harden Queanbeyan Canberra Bomaderry/ Nowra Cootamundra Gulgong Ulan Singleton Newcastle Sydney Maitland Dubbo Muswellbrook Blayney Weemelah Grafton Casino Taree Port Kembla Kempsey Narrabri Burren Jnct Merrywinebone Walgett Moree Camurra Nevertire Nyngan Coonamble Gwabegar Cobar North Star Armidale Dumaresq Warren Lithgow Narromine Werris Creek Tamworth Gunnedah Merrygoen Binnaway Bathurst Kandos Orange Parkes Naradhan To Adelaide and Perth To Melbourne To Brisbane Wee Waa Narrabri West ARTC Lease Possible extension to lease Eastern Corridor Intrastate lines (ARTC to manage as agent for NSW Government)

22. Eastern Freight Corridor - Why Rail has less then 20% share on the eastern corridor, Melbourne to Brisbane and declining share on the shorter Melbourne – Sydney and Sydney – Brisbane routes Sydney is a corridor bottleneck Range of track and operating constraints, single track, train length limitations, no double stacking, terminals, access pricing The eastern corridor is the highest volume freight corridor A new eastern route would carry Melbourne – Brisbane freight freeing the coastal route for the Melbourne- Sydney and Sydney-Brisbane freight

23. Eastern Freight Corridor - Benefits A major new microeconomic reform to improve the efficiency of the Australian economy A boost to Australian GDP of $12 billion 2,400 jobs per year in rural and regional Australia over five years during construction 2,400 permanent new jobs A 50 percent reduction in the number of heavy vehicles on our interstate highways A reduction in greenhouse gas emissions and a saving in road accident costs A reduction in road construction and maintenance costs An 80% rail market share of the Melb-Brisbane freight corridor A 50% rail share of the shorter Sydney-Melb and Melb-Sydney corridors

24. Achievables A new $2.5 billion Melbourne to Brisbane corridor will deliver transit times of 22 hours (35 currently) and unprecedented rail reliability Train speeds of up to 110 km/h 2 km trains and double-stacking of containers Major capital works in regional NSW, Victoria and Queensland This investment, together with already announced Government commitments, will give rail the following market shares: - Melbourne - Brisbane 80% (currently 21%) - Sydney - Melbourne 50% (currently 10%) - Sydney - Brisbane 50% (currently 10%)

25. Eastern Freight Corridor – the Business Case The Business Case is hampered by the costs associated with construction through the Toowoomba and Little Liverpool ranges The preferred route is through the ranges for a number of environmental, cultural and engineering reasons The costs of construction through the Toowoomba and Little Liverpool ranges is in the order of $850m

26. Eastern Freight Corridor – Investment Structure One option is a joint venture between Government and the private sector AusLink private/public partnership