Reform promise to make rail access easier

Reform promise to make rail access easier

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 Treasurer Ben Wyatt has claimed proposed changes to the State's freight rail access regime will benefit grain growing areas by making access for grain trains to the rail network "easier and quicker" to obtain.

Treasurer Ben Wyatt has claimed proposed changes to the State's freight rail access regime will benefit grain growing areas by making access for grain trains to the rail network "easier and quicker" to obtain.

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Changes are proposed to the State's freight rail regulations to streamline customer access from the benchmark seven years it took CBH Group and rail network operator Arc Infrastructure to reach an agreement.

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CHANGES are proposed to the State's freight rail regulations to streamline customer access from the benchmark seven years it took CBH Group and rail network operator Arc Infrastructure to reach an agreement.

Treasurer Ben Wyatt last week announced that the State government was about to begin drafting regulatory changes to the Railways (Access) Code 2000 to make access to the rail network "easier and quicker".

Mr Wyatt said the government has approved "significant changes" to the access regime to make it more effective, speed up negotiations and ensure railway access arrangements are fair for all parties.

The changes will particularly benefit regional areas, Mr Wyatt's office said in a statement issued by his office on Thursday.

"Grain growing areas are expected to benefit from obtaining agreements to transport grain on rail faster and potentially at a lower price," the statement said.

"Other regional areas, where there may be new mining projects for example, will also benefit from these projects experiencing less delays in accessing railways."

CBH's agreement with Arc, which established 15 train paths and running times for grain trains while requiring Arc to provide fit-for-purpose rail infrastructure, was the first and so far only commercial rail agreement negotiated under the railways access code the government intends to modify.

The agreement came into effect on January 1 and is due to expire at the end of 2026, but financial details of the agreement cannot be released unless both CBH and Arc allow it.

In 2013 CBH first approached Arc - then known a Brookfield Rail, a wholly-owned subsidiary of Canadian-based rail, road and port logistics, energy and gas storage and transmission conglomerate Brookfield Infrastructure Partners - with the aim of negotiating a 10-year agreement for its grain trains.

All grain train rail access prior to January 1 and access by mining, regional freight and fuel trains has been negotiated with Arc by private arrangement outside of the railways access code which is supposed to ensure existing rail customers and potential new customers are treated fairly in costs of access and competition for train paths and running times.

Under the last interim arrangement with Arc, before it was replaced by the current agreement, rail access cost CBH grain growers about $7.40 a tonne.

CBH's extended negotiations with Arc and the Economic Regulation Authority (ERA) - which administers the railways access code - and three and a half years of arbitration, with CBH and Arc sharing the cost of flying Queen's Counsel and retired Federal Court judge Kevin Lindgren to and from Sydney, was closely watched as a test case by other rail users.

Early on, WA Salt Group had seen enough and deterred by rising costs of running regular salt trains from Koolyanobbing rail siding near Lake Deborah on the edge of the eastern Wheatbelt, moved to a fleet of trucks and trailers in 2014 to replace trains.

Treasury officials have been working with CBH and other freight rail stakeholders on the proposed changes to the access regime for up to two years, a point hinted at by CBH chief executive officer Jimmy Wilson last year when announcing an agreement with Arc had finally been achieved.

Apart from 5000 kilometres of urban and regional freight lines west of Kalgoorlie in south-west Western Australia, the modified access regime will also cover two privately-owned iron ore lines in the Pilbara.

These are 620 kilometres of line operated by The Pilbara Infrastructure, a Fortescue Metals Group (FMG) subsidiary, between FMG's mines and Port Hedland and the 350km Roy Hill Infrastructure Railway carrying ore into Port Hedland from the Roy Hill mine, where Australia's richest woman Gina Rinehart has an interest through majority stakeholder Hancock Prospecting.

Little detail of the proposed changes has been released, but they appear to reflect recommendations from the last two statutory reviews of the railways access code.

The ERA is required to review the code every five years but changes recommended to the previous government after reviews in 2009 and 2015 - to which CBH and Arc made submissions - were not acted upon.

The sought-after in rail user submissions and ERA-recommended principal change proposed is to the method of calculating asset value, used in determining a ceiling price as a starting point for negotiations over access to the rail network.

The last ERA review recommended the valuation method be changed to allow for depreciation of the asset - rail lines and network infrastructure such as signals and level crossings - to be factored into determining a ceiling price.

Treasury has confirmed the draft regulations expected to be published for comment late this year will propose a change to the depreciated optimised replacement cost (DORC) method used for other regulated regimes to calculate asset value.

The current railway access code is the only statutory regulated regime in the State and the only rail access regime in Australia to use gross replacement value (GRV) as the asset valuation method.

The switch from GRV to DORC valuations could eventually have implications for the future of some of the 508km of tier three grain lines withdrawn from service and placed into care and maintenance by Arc on June 30, 2014.

In November, when the agreement with Arc was announced, CBH chairman Wally Newman confirmed CBH had sought to have some tier three lines reactivated, but the capital cost of refurbishing the lines plus paying access fees to use them made that proposition uneconomic.

The lightly-railed tier three lines, which serviced Bruce Rock, Corrigin and Yealering, Wickepin, Harrismith, Dudinin and Kulin, Kondinin, Narembeen and Muntadgin and also extended the Perenjori line to Latham and Maya, had axle loading restrictions down to 16 tonnes and speed limits as low as 20 kilometres an hour in some places because of poor track conditions when they were withdrawn from service.

Under the existing code using the GRV method, the ceiling cost for access to them theoretically could be equivalent to the cost of building new rail lines beside the existing poor condition tier three lines.

A proposed change to DORC valuations may reduce access ceiling costs sufficiently for CBH to reconsider asking Arc to reactivate them.

The proposed changes will also require "standing offers" for regular rail tasks to be published, provide better protection from "unfair discrimination" and better acknowledgment of "foundation customers", as well as provide increased transparency, Treasury claimed.

They will also make the regulatory process more efficient by adding timeframes, introducing information provision obligations and standardising some requirements.

CBH has previously argued there should be a time limit on arbitration -there is no limit under current legislation - and Arc should be required to provide certain freight rail operational information within a set time.

Mr Wyatt said stakeholders would continue to be consulted as the new regulations were drafted.

"The McGowan government has agreed to a series of important reforms to the State's rail access regime which will make attaining access to railways easier and quicker, supporting regional communities," Mr Wyatt said.

"The reforms include a new valuation methodology which better reflects the conditions of railways, along with improved transparency and information requirements to assist negotiations.

"These reforms will encourage greater use of the rail network and support the efficient movement of freight across the State to support exports, regional businesses and jobs," he said.

The ERA is scheduled to undertake its next statutory review of the railway access code this year.

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