Re: Latest from the NSW rumour mill

[mauried@commslab.gov.au (Maurie Daly)]

In article <7kh62u$sgj@ob1.uws.EDU.AU> "Ben Staples" <98711576@student.hawkesbury.uws.edu.au> writes:
>From: "Ben Staples" <98711576@student.hawkesbury.uws.edu.au>
>Subject: Re: Latest from the NSW rumour mill
>Date: Sun, 20 Jun 1999 08:35:29 +1000


>Maurie Daly <mauried@commslab.gov.au> wrote in message

>**SNIP**

>> Privatising Freightcorp makes sense, but not 49% of it .
>> You would have to sell the lot to get a good price and you would also have
>to
>> sell or lease the tracks , a la Victoria.
>> It needs to be done soon though before the Hunter Valley is opened for
>> competition, I beleive this is 2002.

>I really don't agree with selling or leasing the tracks. If that happens,
>bye bye Austrac, bye bye Silverton, bye bye NRR, bye bye NR intrastate work.
>I agree RAC needs to be fixed and the access charges have to be consistent
>and transparant, but you don't have to throw the baby out with the bath
>water.

>Ben Staples


Yes you do unfortunately.
The only  examples in Australia of where rail is actually making a profit 
are ASR and Tasrail, both vertically integrated railways , ie the operator 
also controls owns or leases the track.
The same is true with Qrail and in the Pilbara with the Iron Ore lines,all 
vertically integrated.
In the sale of FV all of the potential bidders indicated that they wanted a 
vertically integrated structure , ie the tracks as well as the rolling stock.

The problem with horizontal integration , ie one mob owns the tracks and other
companies run trains over it ,is that the owner of the tracks has no incentive 
at all to maintain them to any standard.
Since they have a natural monopoly ie there is no competition in the provision 
of track access, its a like it or lump it mentality,the track owner will 
simply collect as much revenue as they can and pay it to their shareholder who 
is in most cases a state Govt, ie rail track access is nothing more than extra 
state taxation.
A vertically integrated regime doesnt prevent other operators from running 
over the tracks, it just means that they have to come to some agreement with 
the owner,and if agreement cant be found the ACCC can arbitrate.
Note that they cant whilst the State owns the tracks.
If a private company owns or leases the tracks and also runs its own trains 
over those tracks then it has an incentive to maintain them to a high standard 
as its own customer base depends on it.
If we have to have a horizontally integrated regime where one mob owns the 
tracks and other rail companies run over them , then it has got to be a 
National solution with a fully publicly disclosed access regime and guaranteed
track standards.
Since we have no hope in hell of ever getting the above , the next best 
solution is to privatise the whole lot, tracks included.

MD