Bridget McKenzie (Victoria, National Party, Shadow Minister for Infrastructure, Transport and Regional Development) Share this | Hansard source

I rise to speak tonight on shocking revelations from the rail industry that this Labor government, through the Office of the National Rail Safety Regulator, is proposing to increase fees on smaller rail operators by some 700 per cent from July. These fee increases will have a significant impact on the affected businesses, who will have no recourse but to pass the costs on to Australian consumers.

Last Friday, I visited the Ettamogah Rail Hub, just north of Albury. I met the owner, Mr Colin Rees, who runs the hub, which helps manage the movement of freight on and off rail and trucks. These intermodal hubs play an important role in ensuring that freight can travel in the most economic and efficient way. Mr Rees explained that his annual accreditation fees to the regulator are set to go from $16½ thousand a year to $140,000 a year from July 2023. These changes are simply unfair and punitive. The Ettamogah Rail Hub is not the only business affected by significant fee increases. Southern Shorthaul Railroad is facing similar increases, with fees rising from $119,000 per year in 2020-21 to $700,000 a year from July this year. It is understood that other rail operators such as Qube, SCT Logistics and Watco are also looking at steep increases of between 400 and 600 per cent.

These fee increases are not something that the minister has been up-front about with the Australian public. A train tax is not something that was disclosed in the May budget, unlike Labor's truckie tax and farmer tax. The impact of these cost increases will be more trucks on our roads transporting products which should be moving by rail, as businesses look to the most cost-effective means of transporting goods. This will also mean higher emissions, as moving goods by trucks rather than rail actually impacts our emissions profile. These changes will further distort the logistics sector, place increased pressure on road infrastructure, increase congestion in our cities and suburbs and increase fuel emissions.

Why is the Labor government doing this? How did we actually get here? Our railways have long been symbolic of the failure of colonial governments to plan for the future infrastructure needs of our continent. Different rail gauges in different colonies—now states—resulted in trains coming to a stop, literally, at borders. More than 110 years after Federation, as rail gauges still plague the nation, we maintained a system of different rail regulators in each state. COAG agreed to establish one national rail safety regulator, replacing these state regulators, in 2011. The Office of the National Rail Safety Regulator was established in 2013 as a new national regulatory authority to focus on addressing rail safety risks, replacing the state based regulators. Since then, it has been funded by a mix of direct government contribution and cost-recovery industry contributions from rail infrastructure managers and rolling-stock operators.

The current cost-recovery arrangements are based on annual fixed fees, annual variable track and train kilometre fees, application fees and major project fees. These fees have varied in each state, reflecting the cost of regulation in each jurisdiction prior to the establishment of the national regulator. Since this time, the regulator has worked towards a nationally consistent cost-recovery model, and governments of all colours, at the state, territory and national levels, have supported the delivery of that agreement in the years since.

As part of this cost-recovery reform, the states have still been contributing, including New South Wales, which contributed $7.6 million in 2021, and Victoria, which contributed $5.1 million in the same year. They were to cease those payments in 2023. In total, the withdrawal of state funding will see a reduction of $12.9 million from the regulator, which has a budget of $40 million. Inevitably, the removal of these state contributions will result in higher costs to our rail industry.

Industry understands the reality of this position. Cost recovery is not the complaint of industry. What industry is concerned about is the bungled and patently unfair implementation by this Labor government. After years of engaging with experts, the government was prepared to approve a cost-recovery model that punishes small private sector operators with massively higher fees, such as the Ettamogah Rail Hub, and I'm advised rewards large state owned public transport networks and state rail infrastructure managers with reduced fees. Allegedly, the proposed cost-recovery model to tax the small private freight rail operators and reward the large state owned entities is determined on risk based calculations.

But that claim fails to pass even the most cursory of pub tests when we assess the regulatory activities undertaken by the office of rail safety. If we look at the recent prosecutions and compliance activities undertaken by the regulator listed on their website, the overwhelming majority of these prosecutions aren't for privately owned operators but are actually for government owned rail entities: the V/Line passenger service had a near miss at Seymour in 2021; a Queensland Rail collision that actually resulted in the death of a loco driver near Rockhampton; the New South Wales TrainLink XPT and Australian Rail Track Corporation derailment of a passenger train near the Wallan Loop in February 2020; the Sydney Trains passenger rail fatally hit a rail maintenance worker at Clyde in June 2016; the Metro Trains Melbourne incident; the ARTC with a train hitting scaffolding erected over a rail line; Queensland Rail with two near miss events. By comparison, there are only two incidents for freight operations: four carriages breaking loose from a train west of Parkes, New South Wales, and a collision of freight and grain trains in Western Australia in 2019.

The regulator's own annual report in 2021-22 reports 'significant regulatory activities', with 12 for passenger rail compared with six for freight. Responding to incidents shows there were nine cases concerning passenger rail and level crossings, and nine in relation to freight operations. These examples of incidents and activities which the regulator itself has had to respond to demonstrates the significant risk arising from state owned passenger rail services—not freight operators. It is not a fair response to these incidents, detailed in the regulator's own website and annual report, to massively increase the fees on small private rail operators and reduce the fees paid by large Labor government-owned train services and networks.

The regulator has been developing the new cost-recovery model for some years; however, I understand the regulator provided industry with only vague indications about possible cost increases through consultations around the time of the 2022 election. These estimates appear to have been around 50 per cent in some cases. I'm advised the regulator only advised businesses in March this year what their actual fees would be when they come into effect months later in July. Industry has sought to engage with Minister King on massive fee increases. The Ettamogah Rail Hub logically hoped that ministers would see the increases and ask for an urgent rethink. Unfortunately, in her letter of response dated 27 April 2023, Minister King was locking in the massive fee increases. She said:

New annual fee categories have now been calculated by ONSR and the Ettamogah Rail Hub was advised of the indicative changes to their regulatory costs on 22 March 2023.

…   …   …

I recognise that these fee increases will be impactful on some operators. I understand that ONSR is prepared to enter into an agreed instalment/payment plan with the Ettamogah Rail Hub so that the fee payments are spread over the financial year.

It's hard to imagine a less compassionate response for the fee increases actually outlined by the changes. It is only by being on the ground in the Ettamogah Rail Hub with the operator and the media, pressing and raising this issue, that ministers have now actually chosen to review this particular issue. This is not the end of the fight. We need to get more freight off rail— (Time expired)

Senate adjourned at 20:45