Uncertainty over Tier 2 rail line

18 Oct, 2013 01:00 AM
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THE grain on rail debate went to new levels last week when it was revealed it is not only Tier 3 rail lines that are under threat of closure.

The future of certain Tier 2 lines could also be in doubt, after Brookfield Rail indicated its plans to close the Miling to Toodyay West Tier 2 line within the next two years.

That decision has already sparked concern from local growers, particularly on the back of the State Government approving almost $188 million in a package for Tier 1 and 2 lines in 2010.

That money was set for improvements in Tier 1 and 2 lines.

To most those lines appeared safe from closure on the back of the heavy State Government investment and the focus purely being on the closure of Tier 3 rail lines – due to lack of infrastructure investment.

The Tier 2 Miling line will operate at just half its capacity this year adding to the clear relationship battles between Brookfield Rail and CBH.

Member for Moore Shane Love said it was pointless having a public asset just sitting there and not being used.

"Certainly given the fact that CBH was talking about spending money up there after the harvest period to improve it, it came as a shock," Mr Love said.

"It appears that there needs to be a separate business case put into this line, (away from other Tier 2 lines)."

Mr Love said he was disappointed with the decision by Brookfield Rail and the State Government should be looking at exiting the lease agreement with Brookfield should the company not wish to use the rail lines.

"I am disappointed considering the Miling line was named as being viable, but it needed more money," he said.

"I am not aware of any other lines that are in this position, but all lines will need ongoing maintenance and capital so we have been mindful that any of the Tier 2 lines in the future may need to become an investment (for State Government)."

Last week former Nationals leader Max Trenorden and former Nationals member Phil Gardiner said only the State Government had the power to close the rail lines (see page 10 for a letter to the editor from Mr Trenorden and Mr Gardiner on the Tier 3 issue).

"I think that there has to be a view to utilising the asset, if there is no intention of utilising the asset then you have to wonder whether it is time to relinquish the asset to allow somebody else to do something with it," Mr Love said.

"I think we need to get a better understanding over what is actually in the lease and I think it needs to be tabled in parliament.

"We need to start discussing exit strategies for Brookfield if they don't want to use the lines."

Mr Love also called for an audit of how the $188m was spent on the improvements of Tier 1 and 2 lines to find out where the money had gone.

As part of the Nationals' pre-election agriculture policy 'Seizing the opportunity' it included $2m to conduct a Statewide infrastructure audit.

Last week, Member for Central Wheatbelt Mia Davies indicated she would push for that to be a priority for this year's budget allocation.

A decision has not yet been made on what commitments would be the priority for government.

CBH general manager of operations David Capper said the co-operative had information the Miling line would have between one to two years of operational life.

"Brookfield has informed CBH that the Miling to Toodyay West line will operate with limited capacity this harvest," Mr Capper said.

"This will mean that the trains that run on the line will be approximately half the size of the current train.

"These changes to capacity will mean that more grain will have to be taken by road from sites along the Miling line."

Brookfield Rail chief executive Paul Larsen said it would be inappropriate for Brookfield Rail to respond to the claims while in confidential commercial negotiations with CBH.

Transport Minister Troy Buswell said it was also inappropriate for the State Government to comment on ongoing commercial-in-confidence negotiations on operational usage of rail lines between CBH and Brookfield Rail.

"However, it is our expectation that both parties continue these discussions," Mr Buswell said.

"The Miling to Toodyay West line is still operating and statements saying a decision has been made to close the line or to cease operations is incorrect.

"The $187.9m approved by Cabinet is being spent in accordance with the recommendations of the Strategic Grain Network Committee Report.

"The project is being managed by a joint Public Transport Authority/Brookfield Rail Project Control Group.

"This group meets monthly and monitors the progress of the works and available budget.

"Regular site inspections are carried out to ensure the work is completed to all required standards.

"The terms and conditions of the lease agreement between Brookfield Rail and the State Government are confidential."

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READER COMMENTS

drowning in debt
18/10/2013 7:31:28 AM, on Farm Weekly

so let me get this straight. cbh has just bought ens of millions of dollars worth of narrow guage trains? why would you invest in trains when so much uncertainty over the viability of the lines exists. more wasting shareholder money at a time when they should be returning equity to farmers. we can get by without trains but not without farmers!!!
Gibbo
18/10/2013 8:17:05 AM, on Farm Weekly

I'm sure there's an answer to this but why isn't the idea of handing the lines over to CBH being investigated, perhaps on a peppercorn lease arrangement? They've got the rolling stock and vast majority (if not entirety) of freight so why not take complete control of the lines?
X AG Socialist
18/10/2013 8:37:15 AM, on Farm Weekly

Drowning in Debt is taking a long time to go under I admire your perseverance against the odds of still being in the industry old chap , well done.
Hoegrass
18/10/2013 8:45:04 AM, on Farm Weekly

If CBH was listed on the ASX they would have the financial clout to invest in the lines themselves if the long term business case compels. As it is they are now left with a bunch of expensive trains hamstrung in their capacity to do any good for shareholders.
Bearded spring wheat
18/10/2013 10:04:03 AM, on Farm Weekly

the liberal/national should sell the T2/3 lines to CBH as at a piecemeal price, at least they will full control over the lines to use
frosty
20/10/2013 1:02:11 PM, on Farm Weekly

rail is essential but lets open up the marketplace first to encourage investment all along the supply chain. as it stands cbh with its virtual monopoly at the ports disincentivises investment in all things up-country & cannot invest itself because its balance sheet is not strong enough. the decision into trains was pure speculation with other peoples money (banks). now growers are left to foot the costs. freight rates will go up again to cover the malinvestment.

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