CBH kept in the dark on rail arrangement

26 Jun, 2014 02:00 AM
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It is hard to imagine paying for a service and not knowing what you're getting in return for your mo

FARM Weekly grains writer Bobbie Hinkley comments on the ongoing Tier 3 debate.

OPINION: IT IS hard to imagine paying for a service and not knowing what you're getting in return for your money.

But that's exactly what CBH has been forced to do.

I wouldn't be too keen on pre-paying my rent without first knowing how many bedrooms there were in the house and on which street it was located.

I wouldn't hand over cash to Telstra without knowing which phone plan the sales assistant intended to sign me up for.

And while I know my argument doesn't compare to the $40-$50 million dollars CBH forks out to Brookfield Rail for rail access rights each year, the principle is exactly the same.

And worse, it's growers' money.

In this case, since CBH invested in and started operating its own rolling stock in 2012, CBH has been paying access fees to the rail company without knowing what services it will be provided with in return.

Last week's rail hearings have shed new light into the lease arrangement for our State's grain rail network.

It's little wonder CBH is embroiled in a battle with Brookfield in the hope of finding out where the money is going and what minimum track services should be expected.

In short, CBH relies on others (namely Brookfield and the State Government) to control what is in Brookfield's secret 49-year track lease.

And given Brookfield plans to close its Tier 3 services on June 30, leaving CBH's Tier 3 rolling stock high and dry, it only seems fair to know what CBH's access fees are being spent on.

When CBH negotiates with Brookfield Rail it doesn't know whether the service offered is below the minimum standard of the lease agreement or not.

CBH train drivers get the axle weights and speed restrictions they're served no two ways about it.

Of course Brookfield Rail, like any other company, is entitled to make a reasonable amount of money (word on the street is it makes a 26-27 per cent overall profit after tax) but I can see why Brookfield has been labelled "sneaky" and "closed-fisted" by pro-Tier 3 campaigners in the past.

CBH claims it has asked for a cost breakdown from Brookfield before where's the capital going, what's being spent on track maintenance etc but to no avail.

With a bit of luck that, along with the terms of Brookfield's 49-year lease agreement with the State Government, will be flushed out in order for CBH to commit to long-term planning and out-loading programs from Wheatbelt delivery sites that will be hampered by Tier 3 closures.

Then there's the issue of ageing infrastructure.

Some steel lines throughout the Wheatbelt are 70 to 115-years-old.

Brookfield's lease still has a further 36 years to run and at some point in time those lines will need to be replaced.

Brookfield would argue it's in no way obligated to pay for the work under its lease agreement.

But the reality is the lines could blow out at any time and every time that happens CBH trains will be forced to slow down further and the inefficiencies will be passed onto the above rail operators CBH.

So at the very least, let us hope the Economic Regulation Authority can help Brookfield come to terms with a floor and ceiling price.

In theory if CBH pays the floor price it should cover the cost of maintenance and there should be no recourse on Brookfield to be unable to maintain the track.

Although, word on the street suggests Brookfield Rail paid for the 49-year network lease up front, my guess is if it was to pay an annual amount instead it would be a lot easier to negotiate.

At the end of the day it seems the State Government is getting a heap of money from Brookfield, Brookfield is getting a heap of money from CBH and CBH (on behalf of WA growers) gets what it's served the bill.

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READER COMMENTS

reg
26/06/2014 10:24:21 AM, on Farm Weekly

Who will be responsible for road deaths and accidents caused by the amount of truck movements on roads not suitable for heavy loads especially road trains
Mad matt
22/07/2014 6:48:41 PM, on Farm Weekly

Of course no one as usual, Reg. And guess who will pick up the tab when this whole shambles ends. If Brookfield is the tenant then has the government not carried out regular checks to insure that they are maintaining the property that they lease is that not expected of any tenant?

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