Vic: Government seals deal on freight buy-back

AAP General News (Australia)
04-16-2007
Vic: Government seals deal on freight buy-back

MELBOURNE, April 16 AAP - The Victorian government has bought back the state's rundown
regional rail network because its privatisation was flawed, Transport Minister Lynne Kosky
says.

The government has bought back the track network for almost $134 million, though the
above-rail business remains in private hands.

The previous Kennett government sold the network to Freight Victoria, a subsidiary
of United States operator RailAmerica for $163 million, in 1999 under a 15-year renewable
lease over 45 years.

Ms Kosky said that lease was "fundamentally flawed" in that it did not allow the government
to access the track to upgrade the infrastructure and failed to promote competition.

The deal was signed on Friday and follows a pre-election announcement by Toll Holdings
last year that it had sold back its lease of the regional rail network to the government
for $133.8 million.

At the time, Toll chief executive Paul Little said the Victorian regional rail network
had always struggled to be commercially viable because of under-utilisation.

He said rail networks generally struggled to generate commercial returns, and government
objectives for enhancing rail networks did not always meet normal commercial returns.

The main reason for the lack of commercial viability in the Victorian network was that
it relied upon the cartage of grain, he said.

Ms Kosky today hosed down any hope the government would also buy back Melbourne's public
transport system, saying privatisation of that system was working well.

"I think there is a distinction between the metropolitan system and the regional system,"

she said.

She said the government built arrangements for access to infrastructure in 2003.

"That's working very well, I have to say, with Connex and Yarra Trams, but it didn't
work at all well with the regional rail track, which is why it is so run down and why
we will have to invest significant amounts of money in it," Ms Kosky said.

She said problems on the city's troubled system would be solved under a $7.5 billion
investment in transport over the next 10 years.

"The bus contractors, the rail and the tram networks are all cooperating very well
with it," she said.

Earlier this year, Melbourne commuters endured a spate of train cancellations on Connex
services caused by a braking problem.

In March, 90.5 per cent of Connex trains arrived within six minutes of their scheduled
time and 460 of the 53,507 scheduled services were cancelled.

AAP kl/gfr/cjh/mn

KEYWORD: FREIGHT

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