Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Link to this | Hansard source

On behalf of Senator Sterle, I would like to present the report of the Rural and Regional Affairs and Transport References Committee on the state of Australia's rail industry together with the Hansard record of proceedings and the documents presented to the committee.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

On behalf of the committee, may I just thank the committee members and Senator Sterle, who, of course, chaired the committee. I think it's demonstrated that this is a committee that works particularly well on behalf of this parliament. This report into the Australian rail industry showed that this is an area in which we're able to gather evidence and reach a unanimous decision in support of recommendations, which are before the chamber at the moment.

I'd like to thank the witnesses for their testimony and the committee secretariat for their hard work in producing this report. Can I in particular take this opportunity to mention the former Senator Back, who participated in this inquiry, and of course Senator O'Sullivan, who stepped into his place in terms of working through the issues, which has led to us being able to bring forward a unanimous report. I would also like to acknowledge Mr Glenn Thompson from the Australian Manufacturing Workers' Union for his fierce public advocacy of the industry and the need to take action on this issue.

The committee, as I said, has produced a unanimous set of recommendations, and, as I said, it's a great opportunity here in the Senate to provide advice to the parliament. I hope the major parties in this parliament are able to take up that advice and provide direction for future government programs. I trust that this will be a matter that will be discussed at the forthcoming election that happens whenever that occurs, and I am hopeful that we are able to take advantage of what's been a 17-month inquiry where we have seen very substantive numbers of submissions and very detailed public hearings.

We heard from over 30 witnesses from industry, from government and from unions. We heard from workers on the shop floor in the railway workshops across the country. Overwhelmingly, all the witnesses—no matter what different companies they represented or what aspect of the industry they represented—testified that action needed to be taken to preserve the strategic capabilities of Australian rail manufacturing.

We know that railways have been very much at the heart of our national politics for a very long time. We understand, for instance, that in colonial times the difference in the rail gauges was one of the reasons that the six colonies decided to federate as the Commonwealth of Australia. What's disappointing is that, some 116 years later, we still haven't resolved some of those big differences between the states, especially around issues of procurement.

The plight of rail manufacturing is akin, in my judgement, to the plight of shipbuilding in this country. It is absolutely essential that we build a sovereign, national capability in rail manufacturing, as we have sought to do in naval shipbuilding. Australia has 150 years of experience in design, manufacturing and maintenance of railways and rolling stock. But the railway manufacturing industry is now facing a valley of death similar to that which has loomed at various points in shipbuilding. The industry employs 5,000 workers, with some 7,000 workers tied up in the supply chain. There are 3,000 jobs that have regrettably been lost in the past decade. Job losses have been particularly severe in regional Australia, in places like Newcastle, Rockhampton, Mackay, Townsville, Maryborough in Queensland, Ballarat and Bendigo. In fact, we have also seen Maryborough in Victoria suffer as a result of the deterioration in the industry. It's essentially because there have been insubstantial numbers of contracts. Investment by the Commonwealth and states in passenger and rail projects is expected to exceed $100 billion in the next two decades. So there is absolutely no reason for this, given the scale of investment that we can anticipate will occur in this country, with regard to projects that are being undertaken both by the Commonwealth and by the states across the Commonwealth of Australia. That's actually greater than the national spend on the Naval Shipbuilding Plan, which is $90 billion over 30 years.

I notice that Senator Sterle is now in the chair. Of course, this is exactly the evidence presented to the inquiry.

The difference, of course, is that in rail manufacturing there has been a lock in on this boom-bust cycle because the procurement decisions made by state and territory governments over many years have not recognised the need to actually build a national market and a national approach to the development of our industrial capabilities. We have, in fact, a situation where the purchasing decisions are taken by state governments on the basis of a very fragmented approach—fragmented in terms of the training opportunities, fragmented with regard to the research and development that's occurring within the industry and, of course, very fragmented in terms of the purchasing. The purchasing power that comes from these various government contracts has been lost. That's not even to begin to consider what's happening in the freight area, where our major resource projects are relying very heavily upon the importation of very, very significant numbers of rail cars from imported sources. We have state governments that all too often look towards the purchase of rolling stock from overseas. They don't consider the issue of the whole-of-life costs of contract; they rather look at the very limited, narrow view. Of course, that undermines our capacity to develop a sovereign capability.

Industries like rail manufacturing just don't emerge in a vacuum. It takes a commitment from governments at all levels. It takes a commitment to plan, to ensure that we keep jobs and skills and capabilities here in this country, and that we develop the necessary supply chains, efficiencies and the skills of our people so we can actually enjoy the benefit of what is, largely, government procurement. Similar lessons apply to private procurement, especially in regard to the resources sector.

The Australian government must develop—this is the recommendation of this report, which was unanimously agreed to—a national rail manufacturing industry plan to maximise the benefit of the $100 billion investment that's expected to be seen in this country over the next two decades. The plan should include a mechanism to remove those peaks and troughs in demand to create certainty for manufacturers and to encourage the investment by companies in Australia to secure the future for employment in the industry and to secure the capacity in the industry so we can be competitive and produce the rolling stock that we actually need.

We've seen in recent times that much has been made in regard to the use of steel in railways. We've seen in cases in recent times where state governments have actually imported the very steel that's used for railways. It's simply a situation that is unnecessary and ought not continue. States and territory governments need to endorse the plan, and under the proposals advanced in this report there is an opportunity here to agree on methods of supporting and resourcing such a national approach. A national rail procurement strategy should be able to complement such a plan, and such a strategy would need to be coordinated through the procurement contracts of the states and territories consistent with our international trade obligations. It would allow for the development of the necessary capabilities, particularly for our small- and medium-sized enterprises, and it would mean that we could maximise local content in the manufacture of passenger, freight and light rail rolling stock. That includes, in my judgement, trams as well. That's consistent with the very position that's outlined in the Commonwealth Procurement Rules and to ensure that we have the whole-of-life costs and quality examined, and also questions on innovation and environmental sustainability. Such an approach would require contractors to implement proper training programs for apprentices and engineering cadets. Such a method would also see us develop the necessary management of supply chains. I seek leave to continue my remarks. (Time expired)

Leave granted.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

I also stand to support this very important report. I commend the Rural and Regional Affairs and Transport Committee for the work that we've undertaken in bringing this report to fruition. I also want to commend Senator Carr for his advocacy and determination to have this really important subject put here and to have the outcomes of this report here for the Senate to consider.

The reason I think this is so important is because of the potential of the rail industry: the economic potential, the environmental potential and the social potential. We know that there is going to be a continued growth in rail across the country. There is $46 billion that's already there for rail projects that are going to occur and the $100 billion that can be mapped out over the next two decades. If you look at the direction—because of all the advantages—of rail, I would say that $100 billion is an underestimate, because we know that as part of shifting the way that we run our transport systems to a more sustainable future—in particular, decarbonising our transport systems—that rail has an incredibly important role to play.

So we can see the potential for future rail projects in suburban areas. We can see the potential of future rail projects connecting up regional centres. We can see the upgrading in systems in our interstate rail systems. We can see that there is cross-party support for the inland rail project. All of these sorts of project, whether passenger or freight, are becoming increasingly supported. There is increasing agreement across the political spectrum of the need to be having an increase in the amount of rail, both heavy rail and light rail. From the perspective of wanting to see increasing jobs, increasing employment, increasing economic activity and increasing attempts to reduce carbon pollution, rail has obviously got an incredibly healthy future.

There's the potential, but what do we need to do to realise that potential? That's where this report has really outlined what needs to happen. In particular, it has outlined the role of the Commonwealth and the role of national governments to be able to play a coordinating role and to bring together the investments that will be made by state governments. One of the factors, when you are looking at transport across the country, is that so many the decisions get made at a state level, so they can be made in isolation from each other. But the Commonwealth can play such an important role in getting the states working together so that we can be maximising that potential. As the evidence presented to our inquiry pointed out, where we can get uniformity, where we can get some states talking to each other and agreeing on some uniform standards, we can really move forward in getting the local industry to be building up an industry that can fulfil the delivery of parts of the rail industry, whether it is rolling stock, whether it's the rails—everything to do with the rail industry. The need for a national rail plan underpins that—and from that plan, having the procurement strategy. The national procurement strategy is going to be a difficult job. It will be difficult to get all of the different players in the same room and say: 'Okay, let's nut out what this procurement strategy is, so we can really maximise the potential of the industry. How do we maximise the economic benefit, maximise the amount of local content, maximise the amount of jobs, and maximise the amount of training opportunities involved in amplifying the amount of rail that's in the country?'

I am hopeful that—the committee having done the work and presenting this report today—it will really be a landmark that will enable us to move forward so that we can then agree that the future for rail has got so much potential that can be realised. I am hopeful about having the Commonwealth involved in a plan, in a strategy, and getting the states to endorse that strategy. I know getting the states to work together with the Commonwealth can be tricky, but it can be done. And I think that, when the benefits are there and outlined for everyone to see—the potential of having a particular state that might specialise in a particular area and then be selling to the other states, bringing the states together to actually work through this—then the difficulties will be overcome. It will be such an important part of our economic activity in the country in the future. Very sadly, this week we are seeing the very final end of the car manufacturing industry in Australia. So we are looking at the landscape and thinking, 'Where are we going to have advanced manufacturing? What is the potential part of the economy where there is a realistic chance, not just pie-in-the-sky thoughts of where it's possible?' The rail industry is where it's possible.

This is particularly so because so much of the procurement is done by state governments. Where you've got governments, they've got the control to be able to say: 'Let's work together, let's do this sensibly, let's make sure we have really high-skilled local manufacturing here that will bring the jobs with it, that will bring the economic activity with it and that will enable us to meet our sustainability outcomes that we know will enable us to have that homegrown industry. The expansion of the rail industry for passenger and freight will enable us to shift our transport system to a 100 per cent renewable energy powered transport system that's based on a really thriving rail industry here in the country.

I really do commend this report to the Senate and I look forward to its recommendations being enacted. I seek leave to continue my remarks.

Leave granted; debate adjourned.