Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

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Railway Reform: Toolkit for Improving Rail Sector Performance Case Study: Australian Rail Track Corporation As a result, long-distance general freight traffic was loss-making on most corridors in the 1980s and the level of service was poor. Although most state governments were more concerned with politically sensitive shorter-haul traffic within their own states, the federal government wanted to create a more efficient industry for long-distance general freight traffic and in 1991 established the National Rail Corporation (NRC) as a train operating company responsible for all interstate services and it began operations in April 1993. State railways were paid track usage charges. 145 Long-distance general freight traffic was a minor share of most state railway operations, but represented about 80 percent of Australian National (AN) traffic. 146 When NRC began, AN train operations therefore shrank considerably although AN was still responsible for infrastructure maintenance and train control on their network. AN responded by reorganizing internally and establishing a dedicated track access unit, the first of its kind in Australia, which developed a set of access charges for the rail operators mentioned above. At around the same time, a major policy development, known as the Competition Policy, affected the overall framework for managing infrastructure in general. The policy emerged from the finding of the 1993 Hilmer Report, and the 1995 Competition Principles Agreement (CPA) between the federal and state governments. The agreement covered electricity, water, gas, transport, and telecommunications and laid the foundation for competition reform in these sectors. In the rail industry reform had two main phases. • Several vertically integrated government-owned railways were separated into their ‘natural monopoly’ below-rail components and ‘potentially competitive’ above-rail components. • Provision was made to facilitate third-party access to any below-rail facilities that were deemed nationally significant. Next, Government decided to sell AN residual above-rail operations, which comprised passenger services and freight operations in Tasmania and rural South Australia, raising the question of what to do with track owned by AN and managed by the AN track access unit. This was part of a broader problem facing the interstate network, which now had to comply with competition policy. Five options were considered, of which the following two were the most important. • Transfer the interstate network to NRC, which would become an integrated operator for most of its operations, but allow other operators track access. • Create an independent authority to manage and control the interstate rail network. The two options were compared in terms of the following broad criteria. • Net economic benefit, which took the following into account. 145 Initially, state railways were paid for rolling stock operation and maintenance, but most of these activities were transferred to NRC within a year or so. 146 A further 15 percent was a stand-alone coal movement to a power station; local general freight made up the remaining 5.0 percent. The World Bank Page 322
Railway Reform: Toolkit for Improving Rail Sector Performance Case Study: Australian Rail Track Corporation − − − − allocative efficiency (‘doing the right thing’) in encouraging market-based pricing and investment and optimizing the traffic split between road and rail productive efficiency—combining technical efficiency and productivity; and optimizing maintenance and renewal policies dynamic efficiency—encouraging competition through competitive neutrality, thus stimulating innovation and above-rail productivity administrative efficiency—minimizing transaction costs, administrative complexity, and the need for external regulatory oversight • Operational robustness, with operational interfaces as simple and few as possible • Supporting a financially sustainable interstate rail freight sector, which would inevitably mean facilitating external funding Government selected the option of an independent track authority, established as a Government-owned corporation. In November 1997, AN was sold to three separate private investors—South Australia, Tasmania, and passenger services. At the same time, the Australian Transport Council agreed to establish an Australian Rail Track Corporation (ARTC) to manage access and infrastructure development on the interstate rail network, and provide access to operators through a single organization. Subsequently, in February 1998, the AN access unit was corporatized as ARTC and became a public company, with shares wholly owned by the Australian government. The AN main line interstate track was transferred to the ARTC, which commenced operations on 1 July 1998. The World Bank Page 323
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Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

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