070414 good instincts issuu
-
Upload
xmarx-design-melbourne -
Category
Documents
-
view
231 -
download
2
description
Transcript of 070414 good instincts issuu
The credible national grain infrastructure reform framework needed from governments
A Juturna Infrastructure market briefing paper - April 2014
Good Instincts
How serial public policy failure lets down growers, investors and the national economy
Why grower concerns over failing Australian grain transport infrastructure are wholly accurate
3Good instincts: A Juturna Infrastructure market briefing paper - April 2014
About the author
Luke Fraser BA (Hons)
UniMelb, M Mgt UNSW
Business School, MAICD is
the principal and founder of
Juturna, a specialist freight
infrastructure market reform
and investment advisory
retained by Infrastructure
Australia and the leading
proponent of commercial road freight
investments. Mr Fraser served for several years
as executive director of Australia’s peak rural
freight industry body, the Australian Livestock
and Rural Transporters Association, as a council
member of the Australian Trucking Association
and briefly as a chief of staff in the Howard
government. He is a regular contributor to
Infrastructure Australia’s Ports Expert Reference
Group and was a committee member of the
2008-09 New South Wales Grain Freight Review.
Mr Fraser is currently a board member of the
Council of Australian Governments Road Reform
Project, representing industry. He is also the
policy author for the Australian Rural Roads
Group.
Juturna’s recent work includes commercial
road access investment projects in the cotton
and grain sectors of north-west New South
Wales and southern Queensland, a national
road condition reporting pilot scheme for
Infrastructure Australia and the Mount Isa -
Townsville 50 Year Freight Infrastructure Plan. In
2013 Juturna completed an independent review
of Tasmania’s entire freight infrastructure sector
- its shortcomings, future demand prospects and
market reform opportunities – a report which
has since had all of its key findings endorsed by
the Australian Productivity Commission’s draft
report into the same subject.
Comments and questions
Mr Luke Fraser
Principal M +61 437 146 274
W www.juturna.com.au
Disclaimer
The views expressed in this paper are those of the author alone and do not necessarily represent those of his clients or other affiliations.
All reasonable attempts have been made to ensure the accuracy of the information contained in this report, but Juturna reserves absolute discretion in updating or amending this document.
2013’s failed multi-billion dollar attempt by global
food giant Archer Daniels Midland (ADM) to
take over the Australian grain handling business
Graincorp (the sale was blocked by the Australian
government) synthesised the concerns of many
Australian grain growers, who produce some of
the highest quality and least-subsidised grains
in the world, but who must watch as outdated
freight infrastructure arrangements add
spiralling costs and questionable competition
arrangements to their grain, once it leaves the
farm gate. Such concerns are magnified when
placed in the context of Australia’s declining
on-farm productivity levels and the rise of
competitor nation farm and freight infrastructure
productivity as a trade advantage.
In 2014, even obvious strategic issues facing
grain freight remain unexamined by the agencies
responsible for road rail and port assets. No
serious national planning of the task takes place.
This failure to act on improving freight – which
represents perhaps around 30% of the total
production costs of grain1 - cripples grower
competitiveness. For example, the unquestioned
ongoing subsidy of costly and entirely
disconnected pre-Federation branch line railways
across the east coast serves only to push
the transport costs of grain up, by atomising
tonnages across too many compromised
east coast sea ports, instead of working
strategically towards a mainline rail network
which serves fewer ports offering greater scale,
mix and competition efficiencies for growers.
Such challenges demand government policy
leadership if markets are to make investment and
operational changes for the better. Yet no such
leadership is in evidence.
About this briefing...
5Good instincts: A Juturna Infrastructure market briefing paper - April 2014
This is the landscape that confronts investors
in Australian grain, as well as growers. With
that in mind, moving on productively from
the damaging Graincorp sale ban of 2013 –
‘reopening Australian agriculture for business’
- requires development of a credible and internally-consistent policy framework for least-economic-cost road, rail and port infrastructure in support of Australia’s east coast grains industry – a national framework to guide stable
asset investments and in turn bring growers and
patient capital investors alike more reliable and
profitable returns.
It is in government’s power to provide such a
framework. Doing so would defuse much tension
between grower and investor by addressing the
common cause of many of their problems.
Without the sense of purpose and plan that
national policy leadership would bring, a great
irony will remain in the grains sector: the market
cost of capital is at historic lows. Global and
domestic investors alike have never been more
interested in making large capital investments in
Australian agriculture, yet freight infrastructure
financing – particularly for equity – is increasingly
seen as ‘just too hard’. Such a value proposition
is something that the many disconnected and
ramshackle local, state and federal government
road, rail and port plans of today – if they can
genuinely be called ‘plans’ at all – cannot deliver
to the market. The bleak alternative to genuine
national policy reform is for investors to continue
trying to make their own unguided investment
decisions on the same outdated, broken and
inefficient grain infrastructure patterns and
systems that exist today. This would condemn
the grain sector to retain all of its present
inefficiencies for another major asset investment
cycle – the world’s best and least-subsidised
grains consigned to further decades of freight
infrastructure stagnation.
Genuine infrastructure reform in grain freight
offers much wider benefits to the nation: A grain
reform framework would help to identify and
solve important structural challenges to road,
rail and port infrastructure. Australia’s freight
task is moving steadily towards a trillion tonne
kilometres of product annually2; national, value-
creating solutions need to start somewhere.
This briefing uses the failed takeover bid of
Graincorp by ADM as a prism through which to
examine this phenomenon. It leaves aside the
bona fides or otherwise of that bid to consider
why the freight infrastructure matters evinced
such divisive and passionate views. It examines
the most significant road, rail and port policy
failures in some depth and closes by advocating
adventurous national transport sector reform
that would complement the general optimism of
Australia’s grain growers.
State of play: Australia’s agribusiness sector not open for business?
The course of Australia’s grains sector has
not run smooth of late: in November 2013
the federal government rejected a proposed
$3.4 billion dollar takeover of the nation’s
largest listed agribusiness, the east coast
grain handler Graincorp Limited, by US-based
multinational food company Archer Daniels
Midland. The Australian government’s well-
reported argument was that the sale would be
‘contrary to the national interest’.
For more than a year after a first bid was
tabled by ADM, government inquiry into the
sale evinced much genuine grower discontent;
the Australian treasurer himself noted in his
eventual decision to bar that sale that:
‘Many industry participants, particularly
growers in eastern Australia, have expressed
concern that the proposed acquisition could
reduce competition and impede growers ability
to access the grain storage, logistics
and distribution network’3.
Other parties spoke of the importance of
ADM bringing significant new investment
to Australia’s ageing, capital-starved east
coast grain supply infrastructure: it had not
been refreshed in decades and in any event
it had never been planned and engineered to
support modern deregulated trading realities.
Still others speculated that grower-
shareholders in Graincorp had been resigned
to suffer transport infrastructure inadequacies
whilst much of the infrastructure was theirs
to own, but uncertainty over the prospect
of what a new owner might do to address
such problems would prove more compelling
motivation than the windfall that a sale to
ADM might bring.
In the period since the ADM bid for Graincorp
was rejected, no view has been advanced
on how the industry might move ahead
post-sale ban in a way that would offer a
value proposition to grower and investor
alike. Graincorp itself has signalled that
failure to secure new capital investment is a
major risk to sector productivity4. The lack
of any thorough and published government
vision for reform of these arrangements will
make prospective capital investors in this
sector increase their risk premia on new
investments, given the risks that the policy
vacuum represents; it will also reaffirm grower
cynicism that smart market-led revitalisation
of the grain supply chain is a very distant
prospect.
There are many different themes tied up in the
ADM-Graincorp takeover saga: resentment over the
transition away from monopoly wheat marketing,
information access concerns, future marketing
challenges and quality control are all
among them.
This briefing only seeks to deal with transport
infrastructure concerns.
The most important question to ask in this regard is
also the simplest: why did the proposed takeover so
anger many Australian growers? Was it emotional
overreaction? Was the Graincorp takeover controversy
a ‘cut and dried’ case of protectionists versus free
marketeers, as some have portrayed it?
Grain investors, politicians and government policy
makers should take the raw emotion around this issue
as an important cue, as real and significant ‘post-farm
gate’ transport productivity challenges do lie at the
heart of the instinctive concerns of many growers
and investors, who have been completely abandoned
through decades of policy failure and neglect in this
field.
Or to put it a little more colourfully, if the farm dog
who rarely barks suddenly cannot stop barking, it is
usually well worth the master going to see what the
problem might be…
The Graincorp – ADM saga: Never mind the result – ask why
the dog barked.
Grower instincts about the inadequacies of
Australia’s east coast grain freight infrastructure
are unfortunately all too accurate.
The road, rail and port assets that underpin the
world’s most productive and least subsidised grain
sector are, in many cases both in the physical
and policy sense, completely unfit for the high-
value, world-leading and deregulated grain export
purpose which they are presumed to serve.
Unfortunately, when such views have been voiced
in the past, they have too often been accompanied
by an overtly protectionist philosophy. This
appears to have led many economists, policy
makers and regulators to dismiss such concerns
out of hand. Yet when stripped back and examined
on their public policy merits, grower observations
about the problems deserve attention: they point
unerringly to abiding structural inadequacies in
Australia’s modern grain transport task that have
remained without any productive government
attention for decades.
The nature of the problem – no sense of purpose for grain infrastructureSuccessive governments – specifically, their
road, rail and port policy makers - have failed
to offer any sense of a system for grain freight.
Most responsibility has fallen to the states
rather than to Australia’s national government;
these governments have done next to nothing
to coordinate their road, rail and port planning
and investment approaches for a stepwise
improvement of the grains sector. This in turn
has retarded the operational efficiency and
reduced the profitability and scale of private
sector investments that can be made.
Even had ADM’s bid for Graincorp proved
successful, the new owners would be greeted
with an investment landscape resistant to truly
productive investment across the supply chain:
Roads
East coast Australian end-destinations for grain
shift markedly in response to global prices and
fluctuations in harvest quality. Such factors
can shift tonnages between feedlots, domestic
mills and export ports at very short notice.
High productivity road freight is therefore an
essential ingredient for such a dynamic trade.
Yet despite Australia leading the world in truck-
trailer productivity, many roads are too poor
to carry these modern vehicles, while fresh
public finance to upgrade politically-unloved
rural networks is not in evidence. Market-led,
user-pays investments in roads to feedlots, mills
and railheads are not permitted by the nation’s
monopoly provider road agencies, despite this
already being permitted in the mining sector, and
proven in many case studies by Infrastructure
Australia5. This means bigger more productive
trucks are not permitted to make their own
efficient investments to service key sites. In
addition, the failure of wider road reform efforts
to directly price the key interstate highways that
compete with major grain-friendly rail projects
such as Inland Rail means such national rail
aspirations will remain non-commercial, while
trucks will not recover the full cost on and of
their capital on these major highways. These are
first order national inefficiencies in the freight
network with implications beyond grain.
Rail
One hundred and thirteen years after the
Federation of Australia’s British colonies,
the rail system for grain remains the same
pre-Federation system of different gauge
railways made up of many disconnected and
maintenance-intensive branch lines across three
Australian states – Victoria (broad gauge), New
South Wales (standard gauge) and Queensland
(narrow gauge). These rail lines are ‘hard-wired’
to disperse their grains to many different east
coast ports – the railways follow the old colonial
paths of settlement (the Brisbane River Valley;
the Hunter River Valley; the Sydney catchment;
the Illawarra; Port Phillip). In effect these grain
Good instincts: Australia’s east coast grain supply chain is unfit for purpose and has no framework for improvement
9Good instincts: A Juturna Infrastructure market briefing paper - April 2014
rail networks amount to ‘short line railways’ –
modest in size, lightly-engineered and capable
of carrying only modest train lengths. This still
occurs today rather than grain rail freights
being part of a more productive, multi-freight
intensive east coast mainline- such as the big
transcontinental rail networks seen in the US and
Canada.
Rail economics suggests that ‘short line’ rail
only works profitably with high freight densities
and few (preferably one) origin and destination
points. For that reason, maintaining a series of
fundamentally disconnected railways where grain
is usually the only freight available – and only
intermittently, depending on where rain falls - is
in theory economically disastrous for the viability
of these networks and for the efficiency of grain
carried on them. Confirmation of this thesis can
be seen in train operators’ unwillingness to invest
in new dedicated grain locomotives and rolling
stock for grain tasks.
Rail’s inefficiencies for grain are also very much
the result of almost a decade of road reform
inertia, which has yet to establish like-for-like
highway and railway freight charges in those
specific places where road and rail compete
directly with each other for grain and other
traffics - meaning much east coast grain traffic
remains on roads rather than potentially moving
to a more cost-effective mainline inland rail
solution.
Ports As already alluded to, one direct consequence
of Australia not attending to its pre-Federation
grain rail footprint has been that most east
coast grain still moves in relatively small scale
consignments to what appears to be too many
east coast ports, which are the historical termina
of each of these disconnected railways. While
this might have made sense in colonial times,
most of these east coast grain ports now find
themselves cornered in the middle of Australia’s
largest capital cities or in expanding regional
centres: the high values of such locations bring
strong alternative use planning pressures, high
port site development and expansion costs
and compromised rail and road access through
higher urban road congestion; rail curfews can
occur and some grain train operations clash with
higher-priority urban passenger train timetables.
As a low-value commodity, grain suffers in these
places more than most products. Few ports
offer growers any competition in their terminal
infrastructure: the tonnages are too meagre,
the expansion costs to high, the land availability
uncertain.
This situation occurs rather than sending greater
consignments of grain to fewer ports, in places
where the economic prospects for competitive
terminals and bigger stockpile development
are better, where congestion is lighter and
competing land use and rail and road traffics
are less evident. This is the fault of laissez faire
government port planning, which has failed to
give any signals to patient investors about which
ports offer the best opportunity for long-haul
rail to ports, and market awareness of which
ports offer land planning and costs are more
sympathetic to competitive, large-scale bulk
operations in decades to come.
There are other misguided interventions by
government – such as continual road freight
upgrades to highways that compete directly with
the Inland Rail project – which serve to retard
development of a national framework for grain
freight still further.
Stagnation needs to be recognisedHow do national competition policy objectives
impact on the grain freight task and what is the
long-term structural path to align this sector with
a competition-reformed Australian economy,
so that it delivers more to growers, investors
and the nation? Not a single review of grain
infrastructure since the reform of Australia’s
economy through the 1990s has asked this
question, yet it lies at the heart of most
modern grain freight operational inefficiencies,
investment barriers and competition concerns.
By far the greatest challenge in grain freight is
the lack of appetite amongst road, rail and port
bureaucracies for a true ‘least-cost’ framework
for the sector. Instead, atomised public sector
plans – the status quo – continue to deliver poor
and disconnected spending patterns in different
places; a failure to deal with core financing and
11Good instincts: A Juturna Infrastructure market briefing paper - April 2014
planning challenges only reinforces underlying
and inherited inefficiencies. Too often, Australia’s
many-layered transport bureaucracies have
hidden behind claims that these matters are too
complex to deal with in a single framework, or
that simple and robust principles would over-
simplify extremely complex issues.
A serial tendency to over-complicate and resist
strategic reform is a sure sign of bureaucracies in
need of renewal.
Why the problem has greater impact today The grain market structure of earlier times
probably helped to mask the depth of public
sector grain planning failures: ‘single desk’
monopoly grain marketing and the more gentle,
scaled-up logistics arrangements that went
with it – such as quarterly grain marketing
movements from a single grain ‘stack’ – made
freight more manageable on traditional lines.
Also, from the 1960s onwards, grain’s underlying
road, rail and port assets were mostly at the
beginning or middle of their investment cycle.
Such factors have sheltered governments from
inherent failures in cross-border planning and
investment for grains.
The 1990s: infrastructure policy objectives changed, but grain infrastructure never adapted Much existing grain freight infrastructure was
put in place at a time when Australia held
quite different economic policy objectives. In
decades past, most of the infrastructure was
state-owned. Public good and the maintenance
of historical patterns of (white) settlement were
the principal economic policy objectives of the
day, not economic efficiency. The economy-wide
competition policy reforms that dragged Australia
out of economic stagnation in the early 1990s
made economic efficiency the new guiding priority
of infrastructure planning and provision, but grain
infrastructure was never considered as a ‘system’
in this latter context. As a consequence, much of
the transport bureaucracy directly responsible for
these networks – particularly road agencies and
state port authorities – were never restructured to
reflect the new realities. Grain has suffered from
these oversights ever since.
2014: still no government plan for value Today, the move to a dynamic, 365-day a year
trading reality has placed far more obvious new
stresses on the infrastructure and its operational,
planning, investment and competition
inadequacies. But on all the evidence, as
neither state nor federal governments know
what problem they are trying to solve in grain
logistics, the observed case is that they tend to
either do small and isolated things; or most often
do the wrong thing, by reinforcing the legacy
arrangements.
The absence of policy clarity and market guidance
in these matters left the ADM-Graincorp saga
without a much needed ‘landing strip’ of system-
wide structural reforms in grain infrastructure
and operations that all parties could aim towards
– investors, growers and governments alike. In
2014 continued lack of progress on that front will
further damage Australia’s reputation amongst
patient capital investors, at the very time when
such capital has never been cheaper or more
willing to invest in Australian agriculture, and
during a phase when existing grain infrastructure
has reached the end of its useful life-cycle and
major new investments are overdue.
Some viewed the Graincorp takeover as marking
‘battle lines’ between vulnerable grower and
ravenous investor. Yet both parties have much
in common: they both seek a value proposition
in grain logistics and find little on offer. Both
parties are right to question why the nation’s
bureaucracies and regulators have been so
demonstrably negligent in not outlining a vision
for how more efficient grain transport is to
come about on Australia’s east coast and how
the sector’s transport infrastructure is to be
aligned with the nation’s post-competition reform
economy.
Australian farmers see a great gap between the
quality of their own operations – which lead the
world in efficiency and lack of state subsidy – and
‘post-farm gate’ transport inefficiencies, which
often improve extremely slowly, if at all. This
situation is being exacerbated by a measurable
slowing in Australia’s on-farm productivity: as the
grower finds growth harder to come by on farm,
the costs beyond the farm gate loom larger on
the bottom line.
Productivity growth in Australian agriculture
between 1975 and 1999 was up to 4 times higher
than the rest of the Australian economy for
this period, and the Australian farm sector’s
productivity growth grew at twice the rate of a
selection of OECD countries over roughly the
same period6 This occurred even as the terms of
trade for Australian agriculture declined:
Australia: gold standard in farming efficiencyAustralian agriculture is recognised globally for its lack of subsidy:
Source: OECD agriculture producer support estimates 2012
Stalling on-farm productivity and competitor advances: why Australia’s grain freight efficiency matters more now
0.00
OECD Total Agricultural Support Estimate 2012
1.00
1.50
2.00
2.50
3.00
3.50
4.00
Au
stra
lia
Can
ada
No
rway
So
uth
Afr
ica
Mex
ico
US
A
New
Zea
lan
d
% o
f n
atio
nal
GD
P
EU
Swit
zerl
and
Ko
rea
Ch
ile
Ukr
ain
e
Icel
and
Turk
ey
Isre
al
Ru
ssia
Jap
an
Ch
ina
Bra
zil
OEC
D
kaza
khst
an
Indo
nes
ia
13Good instincts: A Juturna Infrastructure market briefing paper - April 2014
Source: Nossal, K. and Sheng, Y. (2010), Productivity growth: Trends, drivers and opportunites for
broadacre and dairy industries, Australian Commodities, March Quarter 10.1: 216-230.
But for a variety of reasons (still not fully
understood, but including more drought years,
an ongoing reduction in rural industry research
and development since the 1970s and the end
of economy-wide national competition reforms
in the 1990s) the rate of Australia’s on-farm
productivity growth is slowing:
Indeed, other research suggests on-farm
productivity in Australian might well have
been slowing from as early as 19947. Whatever
the result, there is at least a consensus that,
just as for the rest of the Australian economy,
overall agriculture productivity growth appears
to have been negative for too much of the
time since after 2000 for anyone’s liking8.
Revitalising strong on-farm productivity growth
will be difficult at best: the Australian Bureau of
50
50
1977-78
Terms of trade
Note: Light blue columns show drought years
Total factor productivity
Financial year ended
1987-88 1997-98 2007-080
0
100
100
150
150
200
200
1955 1975 19951965 1985 20051960 1980 20001970 1990
250
300
2.2%
2.3% -1.7%
350
Ind
exT
FP
Ind
ex
Broadacre total factor productivity and the agricultural terms of trade
Trend change in TFP for the broadacre agriculture industry, 1952-53 to 2006-07
15Good instincts: A Juturna Infrastructure market briefing paper - April 2014
Agricultural Research Economics and Sciences
(ABARES) has argued that:
Returning to (historically higher on-farm) growth
rates may be more challenging in the future,
and may increasingly depend on new sources of
productivity growth’9.
In the meantime: Australia’s neighbours learn fastOther countries are pursuing their own on-farm
productivity growth off far lower bases, often
by adopting Australia’s world-leading practices.
The scope for the growth of on-farm productivity
in these developing economies remains vast,
and should be of real concern to Australian
agricultural policy makers: in Indonesia, for
example, it has been estimated that shifting to
higher-value crops and adopting more modern
production methods could help that nation’s
cropping sector expand to 310 million tonnes by
2030; it has been further estimated that up to
130 million of these crops could be exports10.
In another indication of huge growth potential
off a low base, only around 4% of Africa’s
agricultural footprint is at present irrigated –
leaving enormous scope for significant crop
productivity gains11. More generally, one estimate
sees the world having nominal access to a
further 450 million hectares of lands suitable for
medium to high-value cultivation12.
While pursuing ongoing productivity gains on-
farm remains wise counsel for Australia, policy
attention is beginning to turn to what happens
to farm products when they leave the farm gate,
as this promises to be a more fertile new source
of significant productivity growth, other things
being equal.
In 2009, a Chinese study of 30 provinces found
that of transport, electricity, telecommunications
and irrigation infrastructure as well as training
and education, it was transport infrastructure –
most notably roads – that would induce the most
substantial impact on farm technical efficiency’13.
No doubt the Chinese government will orient
its future planning more strongly to this end as
it pursues food security and seeks to continue
alleviating rural poverty through farm productivity.
Similarly, the USA is endeavouring to turn
greater attention to transport infrastructure
post-farm gate: the US food sector has been
found to use more infrastructure per dollar of
domestic consumption than other industries
in the United States14; this suggests that the
efficiency gains from shrewd post-farm-gate
transport spending should be amongst the most
productive that a government could make. In
recent times, the US government has allocated
many millions nationwide to dredge key ports
to be ready for the bigger Post-Panamax ship
draughts and beams that will become the
efficient shipping standard once the Panama
Canal is widened by 2014-5 - doubling the
capacity of the canal.
The awakening of on-farm productivity elsewhere
should be a signal to Australia – already the
world’s most productive grower – that new
sources of productivity growth must be found
‘off-farm’, and fast.
Clear problem, much talk, no policy actionStructural and system responses from
government have, on evidence to date, been
entirely lacking. The Australian Senate’s Rural
and Regional Affairs and Transport References
Committee conducted an inquiry into the ADM
takeover of Graincorp in 2013. It received many
strong grower views in this regard. The New
South Wales Farmers Association told that
inquiry:
‘…our members need to see improvements
in competition. We cannot be locked into the
suboptimal bottleneck infrastructure that we
have’.
These improvements are not yet reflected or
even aspired to anywhere in infrastructure
planning and investment policy: this suggests
that Australian agricultural, transport and
infrastructure agencies have not grasped the
importance of post-farm gate logistics, or if they
have, they do not know how to implement a
better solution. There remains no government
planning in this sector worth the title.
17Good instincts: A Juturna Infrastructure market briefing paper - April 2014
Grain road freight is shackled from being more efficient and responsive: no commercial road
investment and access for private gain on public roads has been permitted the grain sector
– despite this being enjoyed in Australia’s mining sector for the past decade
No road asset reporting and no agreed national standards for road provision stifles road
spending efficiency: there is no national condition reporting of Australian roads, so
government has no means of identifying more efficient spending candidates, nor can grain
investors develop business cases for their own preferred commercial freight upgrades
Policy failures: grain and roads
2
1
Were one to ask Graincorp or anyone else in the
Australian grains sector to describe a transport
system for grains which they could influence
through their own efforts, roads would be left
out of the answer. Australia’s roads remain public
monopolies – the last entirely unreconstructed
economic infrastructure monopolies in the
Federation. There is no ability, outside a handful
of urban toll roads and the mining sector, for
the market to influence and invest in more
productive Australian road outcomes.
The wholly taxpayer-funded road infrastructure
on which the modern grains journey begins
– from paddocks and major storage sites
to railheads, mills and ports – remains far
outstripped by the efficiency of Australia’s
modern road freight vehicles, which lead the
world in productivity and innovation. Grain-haul
vehicles could be more productive still on many
routes, but most roads are not in a condition to
allow better access. Little taxpayer funding exists
for such upgrades: vote-rich urban, peri-urban
and inter-capital highway spending dominates a
politicised roads budget.
As a result of being solely reliant on taxpayer
funding and run by monopoly public sector
agencies, Australia’s key grain networks generate
less post-farm gate productivity than they
otherwise might. Local and state governments
make all decisions on vehicle access. These
governments have too little funds, so there is
never much incentive to grant access to larger,
heavier trucks, which would degrade roads more
quickly15.
Commercial road access and investment rights: written into Australian competition law, then ignored completelyThe Australian commercial access to
infrastructure regime, in part IIIA of the
Competition and Consumer Act 2010 – a key part
of Australia’s competition reforms - includes
Australia’s roads expressly as an infrastructure
asset that is legally open to commercial
investment and better vehicle access. This should
mean farmers, truck operators or financiers
would be allowed to pay for the cost of road
upgrades to allow much higher-productivity
vehicles to access the road in question; under
this arrangement, anyone willing to pay the levy
can gain access to the more efficient freight, but
other road users – while they can still access the
public road – cannot get access to the higher
productivity vehicle. If it makes sense to invest
for commercial gains, people will do so.
This same approach is the basis for commercial
rail access in Australia.
Mining enjoys commercial access and investment to roads, so why not agribusiness?Not only are roads mentioned expressly in
national open access legislation16, but parts of
Australia’s mining sector have been enjoying
even simpler road access and investment
arrangements for over a decade: typically,
this involves mines paying the local or state
government a negotiated extra cost in order to
access public roads with larger heavy vehicles
under safe and sustainable conditions. Miners
thereby gain productivity gains with bigger
vehicles, provided they pay for the cost of the
associated road upgrade17.
In other words, none of this is new. Yet grain
traffic is not given this opportunity.
Grain road freight is shackled from being more efficient and responsive: no commercial road
investment and access for private gain on public roads has been permitted the grain sector
– despite this being enjoyed in Australia’s mining sector for the past decade
1
19Good instincts: A Juturna Infrastructure market briefing paper - April 2014
Could some road freight tasks become over 50% cheaper with user pays freight investments?Infrastructure Australia case studies in north-
west NSW with grain carriers, farmers and
local road engineers show that commercial
upgrades to cash-starved grain roads to allow
longer trailer combinations would bring a
net road freight productivity gain to growers
of over 60%18. The resulting road upgrades
– made under user-pays arrangements –
upgraded priority grain arteries so that
product is not delayed for months by wet
roads; in this way, significant grower holding
costs are avoided. Those choosing to pay a
freight surcharge receive cheaper freight on
a larger vehicle. The rest of the community
benefits from a better road.
Despite this promise (and the fact that these
measures are already in place in parts of the
mining sector), such investment mechanisms
have only recently been ruled out entirely as
productive parts of a road reform landscape
by the formal national road reform process
and – remarkably – by Australia’s Productivity
Commission19.
Rail efficiency also suffers when no commercial road investment is allowed…The absence of this crucial commercial
investment facility means that higher
productivity vehicles servicing the key rail
mainline in more efficient ‘hub and spoke’
arrangement remain far from reality for
Australia’s grain task – something that further
undermines the commercial viability of rail.
…but on-farm storage suffers most of all
The absence of commercial road investment
mechanisms also limits the aspirations of on-
farm storage cooperatives of any scale – these
are a fast-growing phenomenon since the
deregulation of the wheat market. ANZ bank has
observed correctly that:
‘Australia should look to increase competition
in the supply chain to facilitate the presence of
additional land transport operators, traders and
handlers and encourage on-farm storage’20
But this aspiration – a means of farmers retaining
more profitability for their risk and effort –
cannot really occur without smart commercial
investments of scale being permitted in the road
freight network that services major on-farm
storages. The lack of commercial investment
models in roads is leaving post-single desk
cooperatives and other privateers high and dry.
It is important to recognise that any investor in
the network – large or small - will face all these
barriers to reshaping a more dynamic road
network. This needs to change.
One other major challenge to doing better
in roads is the lack of even cursory cost and
condition reports on the road network itself,
or measurement from year to year of how it
is or isn’t improving for funds spent. In simple
terms, Australia’s road agencies and local
governments spend over $19 billion from year to
year on roads21 , without bothering to measure
to common standards or service levels, as for
many other assets. This failure to require asset
condition reports falls particularly hard on rural
roads which service the grains sector, and which
cannot receive system-wide planning attention
without such condition reports.
At the same time, rural local governments
cannot debt-fund their road requirements but
do not have access to sufficient own-source
revenue streams (parking, property development
revenues) which might help improve their
degraded networks. In their lack of asset
reporting and commercial investment structures,
roads remain the ‘odd man out’ in Australia’s
economic infrastructure.
The unreformed road agency sector – a cautionary tale?Through the poor outcomes seen daily on
their rural and regional roads, Australians
have a chance to glimpse what might
have happened to the rest of their
telecommunications, water, energy and
railways assets had competition reforms not
taken place in the 1990s to encourage private
investment in these assets: many roads are
in poor condition and getting worse; nobody
in industry or the community has an ability
to influence the road spending pattern, short
of exhaustive and expensive lobbying; roads
are not maintained to any clear and agreed
standards, leaving rural and remote roads in
particular to languish as the construction cost
of expensive big highways increases at rates
far above CPI; around $19 billion in taxpayer
funds per year is now allocated to roads on
a flimsy basis, in which political influence
on spending patterns remains strong; no
asset condition reports are sought or kept
nationally for the condition of Australia’s
roads, much less made public, making analysis
of government spending performance and the
development of measurable road standards
impossible.
No road asset reporting and no agreed national standards for road provision stifles road
spending efficiency: there is no national condition reporting of Australian roads, so
government has no means of identifying more efficient spending candidates, nor can grain
investors develop business cases for their own preferred commercial freight upgrades
2
21Good instincts: A Juturna Infrastructure market briefing paper - April 2014
Infrastructure Australia’s recent judgement on
this state of affairs is damning:
‘Even supporters of the system find it
increasingly difficult to defend. Unlike almost all
other infrastructure and government services,
road spending comes with no expectation of
efficiency. There is not any evidence to show
that we are making the best decisions. This is
unlike any other critical function in the country.
In education, there are literacy tests, in defence,
performance reviews, in rail, on-time running.
In roads there is purely a photo-op of a fresh
piece of bitumen. Somehow it has been deemed
appropriate to spend $19 billion on something,
but never feel the need to measure the results’22
This lack of transparency about what roads are
worth and how much it would cost to upgrade
them to accept more efficient freights in key
places also makes it impossible for grain growers,
consignors and financiers to start considering
the cost-benefit of making their own targeted
investments in key parts of the road network for
grains.
Practical solutions are at hand…To prove that it could be done, in January
2014, Infrastructure Australia published a full
condition audit of almost 2% of Australia’s
road network, produced by the key grain
and cotton growing local governments of
north-west New South Wales and southern
Queensland.
Despite bureaucratic scepticism, these local
councils produced condition reports on every
kilometre of their roads in less than three
months, to Australian and international road
asset management standards, at no additional
cost to their budgets. Such information –
which could be reproduced nationwide on
a regular basis and could also be linked to
funding based on the achievement of basic
road standards - is therefore readily available,
but not yet used by governments to drive any
road spending and planning efficiency.
In the meantime, farmers must rely on a
diminishing pool of taxpayer funds to pursue
their road upgrades. In turn, Australian rail
investors cannot accelerate high-productivity
commercial road freight connections to their
railheads to reduce rail costs. In the years ahead,
grain growers also face the prospect of higher
and higher road user charges being required
just to keep pace with the $19 billion-plus annual
spending arrangements.
Infrastructure Australia has argued that road
reform is the most significant infrastructure
reform in Australia because this asset class is
the worst managed in the country23, but there
is little evidence this has been grasped by those
responsible. Certainly, as was the case with all
other pre-reform monopoly government utilities,
road agencies have shown little interest in
genuinely reforming themselves.
Not surprisingly, roads are the part of the grain
freight task that is the most dominated by the
public sector, which controls all planning and
funding, yet where productive policy is least in
evidence. A credible grains policy framework for
roads that involves more efficient spending and
potential commercial investment is a matter that
government alone can lead on.
23Good instincts: A Juturna Infrastructure market briefing paper - April 2014
There is no stated national planning and investment objective for what grain on rail should
deliver: east coast grain rail remains a series of degraded and disconnected 19th century
branch line operations which are hard-wired to disperse grains into too many ports.
This ‘system’ is ignored by rail investors for its sub-economic nature and subsidised by
taxpayers as a proxy. Ongoing government and market investment in such arrangements
are likely to reinforce national inefficiencies in grain movements and directly undermine
the prospect of mainline rail-to-port solutions, like those seen in Canadian grain logistics.
The east coast grain rail ‘system’ continues to push most grain the ‘wrong way’ in terms of
a least-cost freight path: that is, the majority of grain tonnage is railed to the busiest and
often most expensive city ports, where grains are not the dominant freight and compete
unfavourably with coal and passenger rail, urban congestion, operational restrictions and
higher terminal and rail development costs, instead of railing north or south to bulk ports
with better future prospects for scale, mix and competitive efficiencies in grain.
No government planning priority on the relative future amenity of different ports to mainline
east coast rail operations only reinforces inefficient grain movement patterns on old branch
lines: governments are failing to send the investment market any clear development signals
about scaled port investments that will support a least-cost mainline rail solution.
Continued government funding of major heavy vehicle upgrades to highways that run
parallel to mainline rail, combined with a lack of reference pricing for full cost recovery
from heavy vehicles on these specific intercapital east coast routes, continues to sterilise
a market for commercial mainline rail investments that would benefit grains, such as the
Inland Rail project.
Policy failures: grain and rail
1
2
3
4
Australia’s rail sector has been through
significant market reforms in the past two
decades. The planning and investment
arrangements for rail today are out of all
recognition from the monopoly public sector
rail providers of previous decades. Operational
productivity has risen markedly since these
reforms. Yet in the past twenty years, there
has yet to be a national framework agreed
and implemented for rail as it relates to the
grains sector. Instead, growers and investors
have continued to experience underdeveloped
and ageing legacy branch line infrastructure
without questioning whether there are not better
solutions for the long term.
In effect, Australia’s grain on rail network
amounts to a series of disparate and outdated
branch lines, on different rail gauges, which all
service different local ports – much as they did
before Australia’s colonies federated in 1901.
The failure to think long-term and collegiately
- as a Federation - has been exacerbated by old
parochialisms: it is state governments rather
than the Australian government which have
most control over east coast grain freight
infrastructure:
‘Overall, no coherent vision or policy yet exists
for rail at either Commonwealth or State
level – either in its own right, or as an integral
component of wider policies covering freight
transport and logistics…Regional lines in
Australia, in particular grain lines, have suffered
from the policy vacuum and from a generally
‘hands-off’ attitude by state governments’24.
Inaction has bred grower and investor frustration, but not productive answersGrain growers and consignors live this failure of
infrastructure planning on a daily basis. Investors
in the supply chain receive little to no returns for
their freight investments, while growers see little
efficiency in the status quo.
In the absence of government being frank about
the long term challenges and realities of grain
freight infrastructure, as discussed above, many
growers look nostalgically to a better past: in
2006 many Victorian growers saw the answer as
government takeover of the grain branch lines:
‘It is clear that the government’s vision for the
performance of the privatised track owner in
maintaining the asset or making it available for
third party operators has not been fulfilled. The
simplest resolution to this long standing issue
would appear to be the re-acquisition of the track
by the government’25.
Such solutions would have the taxpayers
of Australia subsidise the grain sector’s
fundamentally non-commercial, disconnected
19th century rail assets. This is indeed more or
less the current approach to such lines in most
states: the New South Wales Independent Pricing
and Regulatory Tribunal’s 2012 report into that
state’s grain railways found that:
There is no stated national planning and investment objective for what grain on rail should
deliver: east coast grain rail remains a series of degraded and disconnected 19th century
branch line operations which are hard-wired to disperse grains into too many ports.
This ‘system’ is ignored by rail investors for its sub-economic nature and subsidised by
taxpayers as a proxy. Ongoing government and market investment in such arrangements
are likely to reinforce national inefficiencies in grain movements and directly undermine
the prospect of mainline rail-to-port solutions, like those seen in Canadian grain logistics.
1
25Good instincts: A Juturna Infrastructure market briefing paper - April 2014
‘The (NSW) grain line network is old, and
many parts of it have fallen below a standard
considered fit for the purpose of transporting
grain. Currently, the government funds over
95% of ongoing maintenance costs… at current
levels of usage and access prices, rail users
contribute less to maintenance costs than the
value of benefits they gain privately from using
the network’26.
Presumably, these matters are well understood
by the public sector, yet no bureaucracy has
yet felt compelled to speculate on a better
alternative.
To understand the real prospects of branch lines, look at the locos…Where governments cannot speak clearly
about their intentions for branch lines,
markets will. One only need examine the
commercial locomotive and rolling stock
fleets that service much of eastern Australia’s
grain task to see what faith the market places
in the viability of this part of the supply
chain: the aged Class 48 locomotives that
service the New South Wales grain branch
lines (locomotives first built in the 1950s)
were undoubtedly depreciated to a nominal
value long ago by their present owners; very
little new expenditure is apparent on such
locomotives and few new wagons exist for the
grain task: today’s east coast grain wagons
are often pensioned-off and ‘rebirthed’ coal
hoppers.
In this way, the rail freight market itself is
offering very clear signals to Australia’s east
coast governments about the viability of the
current east coast grain branch line network.
Yet on all the evidence, these market signals
are being ignored by the public sector.
In theory: what would ‘better’ look like?A more efficient, system-wide approach to
east coast railing of export grain – one that
helps grain ports and grain rail to become
more viable together - is not hard to describe
in theory. Following well-established economic
principles of ‘least-cost financial and economic
pathways’ for grain would involve:
� bringing the grain from farms and initial
storage points to a core mainline as
reliably and inexpensively as possible;
� taking that grain on a (north-south)
mainline that does not lose significant
efficiency by competing for scarce space
with (eastbound) coal, passenger and
other rail traffic congestion; and
� railing these (north-south) tonnages
to fewer ports for far more efficient
operations – places where expanded grain
stockpiling, access and operations are
least challenged and where more terminal
competition can be encouraged due to the
larger scale of operations.
The required discussion revolves around why
a comprehensive and efficient open access
commercial grain supply chain can’t be planned
and delivered. Capital markets seem to have
noticed this problem: ANZ noted in 2012 that:
‘Significant underinvestment in some areas of
infrastructure, particularly in Australia’s east
coast railways for grain, also needs urgent
attention as they have become major growth
constraints’27.
However, the efficient answer for rail is unlikely
to be blind investment across an existing rail
network that is of questionable value to the
21st century grains task. A first step lies in
appreciating what an efficient grain commodity
rail system might look like, drawing on the best
international examples.
When compared to the grain haul rail systems
employed by other modern global grain
exporters, such as Canada, the shortcomings of
Australian government decision-making in post-
farm gate infrastructure become obvious.
The east coast Australian grains task hardly
exhibits many economy of scale features – east
coast grain today is moved to 13 different ports
(ie excluding Western Australia and Tasmania
ports28), overwhelmingly across separate rail
corridors already congested with coal and
passenger trains.
Even though Canada and Australia often export
a comparable tonnage of grains, Canada gains
greater export efficiency by bringing the
overwhelming majority of export grain from
its central grain growing regions via a trans-
continental mainline railway; it rails the majority
of this grain in long trains to just a few large
scale ports on its east and west coasts.
Canada’s grain on rail task is itself not without
its own capacity, competition and efficiency
challenges29, but one challenge it does appear to
have solved is inherent scale in its rail and port
grain operations.
The charts opposite show the market shares of
Canadian and Australian grain ports. The big
shares enjoyed by the major mainline Canadian
rail destinations such as the port of Vancouver
help serious heavy rail companies to service
fewer places with bigger tonnages, more
profitably.
The Canada comparison
27Good instincts: A Juturna Infrastructure market briefing paper - April 2014
By contrast, the market share of Australian ports paints a sad picture for would-be rail and port
investors: there is no obvious port of scale to pursue greater tonnages at less cost:
Source: Ports Australia data FY 11-12 supplemented with Port of Geelong data (excl. Tasmanian ports)
Although it operates on different regulatory and ownership models in other senses, Canada’s rail and
port arrangements for grain can help to shed light on the sub-scale nature of Australia’s rail and port
sector when it comes to east coast grain movements.
Canada grain export million tonnes by port 2011-12Source: Canadian Grain Commission 2011-12 (*excl. Prairie and Ontario Elevators);
Australia grain export million tonnes by port 2011-12
Fremantle 12%
Melbourne 10%
Kembla 9%
Adelaide 9%
Geraldton 8%
Lincoln 8%
Geelong 8%
Brisbane 6%
Albany 5%
Esperance 5%
Newcastle 5%
Sydney 3%
Giles 3%
Portland 3%
Wallaroo 3%
Thevenard 1%
Mackay 1%
Gladstone 1%
Vancouver 53%
Prince Rupert 17%
Quebec 8%
Baie Comeau 5%
Trois Rivieres 4%
Montreal 3%
Thunder Bay 2.5%
Port Cartier 1.75%
Churchill 1.75%
Sorel 1%
Goderich 1%
Sarnia 1%
Halifax 0.85%
Prescott 0.15%
29Good instincts: A Juturna Infrastructure market briefing paper - April 2014
An alternative arrangement for Australia’s east
coast rail for grains - and for many other freights
- would be to replicate the sort of productive
Class-1 rail network to larger-scaled export ports
which Canada enjoys. To drive scale economies
at port and freight densities on rail, the Inland
Rail would most likely need to run to fewer, larger
ports – thereby retaining some competitive
tension, but offering greater rail tonnages
to give port owners encouragement to make
investments of greater efficient scale and mix.
This sort of systems approach for efficient
mainline grain logistics is a long way from the
present situation – a fact that many in the grain
sector appreciate, to their cost.
The perennial ‘bridesmaid project’The Inland Rail has been shelved and rerouted
by successive federal bureaucracies. At times
even the concept itself – a common gauge
mainline railway linking eastern seaboard
states and thereby the nation - has been at
risk: as late as 1999, the Queensland transport
agency entered serious discussions with
the federal transport department to build
a narrow gauge Queensland rail extension
to link Narrabri in New South Wales with
the Port of Brisbane using Queensland’s
obsolete narrow gauge track. Fortunately
this proposal was finally rejected, but the
incident nearly unravelled 100 years of effort
to resolve Australia’s break of gauge problems,
and served to underline how little store is
actually placed in Inland Rail by the nation’s
bureaucracies.
Since this time, the Inland Rail has languished
as successive governments have diverted
limited rail funds to the east-coast port
rail networks – in very many cases these
ports are direct competitors for Inland Rail
freights. In the meantime, multi-billion dollar
heavy vehicle spending on direct competitor
highways to the Inland Rail – the Pacific,
Hume and Newell Highways – continues apace,
making Inland Rail an ever-less competitive
investment proposition.
Inland Rail: a ‘scaled-up’ freight solution for grains’ future?
All east coast grains ports – Brisbane, Newcastle,
Botany, Kembla and Melbourne – are challenging
destinations for grain railing. This is because
each of these ports have railways which are
always very busy with other traffic, such as
minerals (such as coal at Newcastle – the world’s
largest coal export port) and/or passenger trains
(Botany, Kembla and Melbourne). Such ‘high-
competition’ ports further disadvantage grains
by being in major cities, which brings significant
urban congestion (Melbourne, Sydney and
Brisbane) – all of which leads to higher operating
costs at these ports. The higher value of port
real estate in major cities (Melbourne, Brisbane,
Sydney) exacerbates the situation for grain; in
some cases, the higher unit value of other port
trades, such as containers, means stockpile space
for grains can be very limited.
Together, these factors make the spasmodic
railing of grain eastwards a difficult and costly
process. In almost all cases, grain’s persistence
in travelling to high-value, space-constrained
eastern ports has meant mostly sole operator
terminal arrangements, with no competitive
tension in such places to assist growers and a
corresponding pressure placed on third parties to
enter complex, costly and overly-litigious access
regimes.
The fact that almost 10 million tonnes of grain
travelled through these busy urban east coast
ports in 2011-1230 is a triumph of logistics over
very challenging circumstances. Perhaps it is
also a triumph over long-run common sense.
Notwithstanding the significant sunk investments
on the east coast by many freight forwarders, for
as long as Australia’s east coast grain industry
persists in dispersing its harvest tonnage to too
many high-competition ports on largely separate
rail routes, instead of investing in a long-distance
mainline railway to fewer dry bulk ports of more
scale, efficiency, competition and development
potential, the status quo inefficiencies in rail look
set to remain.
Given relative advances in the on-farm
productivity of emerging grain export nations,
the costs to Australian farmers and investors of
persisting with such grain export arrangements
look set to become much more significant as
time progresses.
This situation - or at least its symptoms - appears
to be understood to Graincorp too: it told the
Productivity Commission in 2009 that:
What has impacted on the efficiency of the supply
chain more than anything is the availability of rail
capability across the east coast’31.
The east coast grain rail ‘system’ continues to push most grain the ‘wrong way’ in terms of
a least-cost freight path: that is, the majority of grain tonnage is railed to the busiest and
often most expensive city ports, where grains are not the dominant freight and compete
unfavourably with coal and passenger rail, urban congestion, operational restrictions and
higher terminal and rail development costs, instead of railing north or south to bulk ports
with better future prospects for scale, mix and competitive efficiencies in grain.
2
31Good instincts: A Juturna Infrastructure market briefing paper - April 2014
Ports remain a ‘poor cousin’ in grain system
planning: for the first 110 years since Federation,
Australia did not even possess a coordinated
process for ensuring that key ports were
protected from competing land uses and given
economic development certainty for the longer
term: only in 2011 did Australia’s governments
agree to a National Ports Strategy; even now
in 2014, these matters remain in their infancy
in many jurisdictions: most state planning
arrangements still tacitly promote the long-term
accretion of commodity handling in Australia’s
most congested and expensive ports.
Better land-side commercial access to ports: all too hard?
One important agreement which Australia’s
political leaders signed up to with the National Ports Strategy – namely, that all jurisdictions
would trial commercial road and rail access
models to their main ports – was quickly
abandoned altogether by risk-averse transport
agencies.
Such government failures impact lower-
value freight tasks like grain exports most of
all: commercial rail investors are offered no
planning and land use insights at state and local
government levels for prospective corridors that
might - in the long run - offer less congested
grain movements that would reduce the cost of
railing grains.
Without better national planning, the sort of
efficient long-haul rail corridors to large scale
grain port terminals seen in Canada probably
remain only a dream in Australia. For the same
reasons, nationally-significant grain logistics
initiatives such as the Inland Rail remain very
high-risk commercial investment projects.
No government planning priority on the relative future amenity of different ports to
mainline east coast rail operations only reinforces inefficient grain movement patterns
on old branch lines: governments are failing to send the investment market any clear
development signals about scaled port investments that will support a least-cost mainline
rail solution.
3
The promise of Inland Rail - a commercial
mainline railway linking the east coast - becomes
a more distant proposition with each new heavy
vehicle investment that road agencies make on
those trucking routes that compete directly with
rail. Such upgrades are priority programs for
road agencies.
This sort of practice is antithetical to any credible
economic policy for a least-cost financial and
economic system of grain movements. In that
sense, it is probably the most compelling proof
that Australia’s transport bureaucracies have no
plan for efficient freight whatsoever.
For as long as government agencies continue to
build heavy vehicle upgrades on roads that run
parallel to or otherwise compete directly with rail
freight, Australia is unlikely to see commercial
investment in inland mainline rail and the value
of its below rail assets will be marked down
accordingly.
Even more importantly, governments have
not established full cost recovery truck access
charges for the highways which compete with
Inland Rail, so as to make the genuine economic
price of road and rail on these routes clearer to
all investors and freight customers.
The Newell Highway: the road that stops the Inland Rail? The Newell Highway stretches the length of
central-western New South Wales between
the small towns of Boggabri in the north,
on the Queensland border, and Tocumwal
in the south, on the Victorian border. The
Newell is one of Australia’s busier interstate
linehaul trucking routes, including agricultural
commodities. In this sense the Newell is a
more or less direct substitute - and a fatal
patronage risk - to any commercial Inland Rail
investment.
There can be no question that the Newell
Highway is a vital asset for the connectedness
of rural communities, local freight needs and
tourists in caravans, but should it form the
core east coast commodity movement system
at the expense of Inland Rail?
This is the question which, self-evidently,
transport agencies and governments have
not asked. Even in 2014, the New South Wales
transport agency has plans which would see
further heavy vehicle upgrades occurring on
the Newell Highway at Inland Rail’s expense.
More ironically still, a March 2014 Inland Rail
forum opened by Australia’s transport minister
in Moree, a grain-growing centre on the Newell
Highway, included a federal government
update on Newell Highway truck bypass
developments. That is, town bypasses to make
the interstate road freight task more efficient
at Inland Rail’s expense were announced at an
Inland Rail symposium.
Continued government funding of major heavy vehicle upgrades to highways that run
parallel to mainline rail, combined with a lack of reference pricing for full cost recovery
from heavy vehicles on these specific inter-capital east coast routes, continues to sterilise
a market for commercial mainline rail investments that would benefit grains, such as the
Inland Rail project.
4
Such examples underline the troubling lack of
understanding amongst government transport
policy makers to the nature of system-
wide freight infrastructure planning and its
commercial development imperatives.
Such policy ignorance in turn builds snares
for politicians, who are unfairly blamed by the
public for problems which should be resolved
by better policy, but which aren’t.
Cheaper freight needs clearer freight pricingUnder a strict competitive neutrality approach
to maximise the efficiency of road and rail
freight to growers and investors, the Newell
Highway would be given a specific access
truck charge by governments; this would
ensure that heavy road freight on the Newell
pays an appropriate element of capital and
operating cost for maintaining this road
freight network; such a charge would very
likely encourage investors in an Inland Rail
development. In return for direct highway
charges heavy vehicles should receive
guaranteed service levels and better truck
access. But this remains a distant prospect
– no access charges for specific highways
have as yet been developed; this is despite
the formal national road reform process now
entering its eighth year of deliberations.
In the meantime, the next best step towards a
viable Inland Rail network – if that is indeed a
genuine objective of governments – would be
to make hard decisions about the future of the
Newell Highway as an increasingly amenable
heavy road freight corridor, rather than as
simply a well-maintained regional highway
for local freight and passenger vehicle
connectedness.
The unpalatable economic reality is perhaps
that Australia cannot have both productive
inland road freight highway and productive
inland rail freight railway. It is certainly
a reality understood by any prospective
commercial investors in Class 1 heavy railways,
who recognise the enormous risk posed by
relentless freight upgrades on the Newell to
any viable Inland Rail investment.
35Good instincts: A Juturna Infrastructure market briefing paper - April 2014
No long-term government land use and planning signals for the most prospective grain port
expansions significantly reduces the chances of seeing investment in large-scale grain ports
with access to competitive terminals.
Australia’s ports remain only a primitive offering to the investment market, with
significant but hidden downside risks to land-side access and investment.
Lack of terminal competition for grains - in part a symptom of grains being sent to the ‘wrong’
ports - forces port access seekers back to dealing with Australia’s overly litigious open access
system.
Policy failures: grain and ports
1
2
3
The policy failings that still beset Australia’s
ports – the dominant physical assets in the
supply chain - still represent another major
hurdle to greater farming profitability and to
higher road and rail investor returns for grain
trade.
In this, ports, the state agencies still responsible
for many of them and regulatory and economic
reform advisers such as the Productivity
Commission, the National Competition Council
and the Australian Competition and Consumer
Commission have presided over almost two
decades of failing to do anything credible to drive
better port planning and investment outcomes
for either farmers or infrastructure investors.
In simple terms, the pursuit of greater scale in
ports requires sympathetic government planning
in order to attract patient capital investment of
scale. Long planning envelopes from government
can provide certainty and a clear program of
land release around key sites can encourage
investments – including by competing terminal
operators, to promote access competition at
grain ports of scale. In most cases for east coast
grain terminals, this has not occurred. In the case
of many east coast ports such as Sydney and
Melbourne, port land is expensive, and therefore
often not very affordable for grain logistics uses
in any event; in other cases, clear land release
plans for port-related land use have been absent.
This makes life especially hard for low-value
commodities such as grain.
No long-term government land use and planning signals for the most prospective grain
port expansions significantly reduces the chances of seeing investment in large-scale
grain ports with access to competitive terminals.
1
37Good instincts: A Juturna Infrastructure market briefing paper - April 2014
Port Metro Vancouver on Canada’s west coast
is Canada’s largest grains export port. Sensible
long-term government planning combined with
natural advantages has built scale and mix
efficiencies for the bulk trade at this port and
this has encouraged terminal competition and
future investment certainty – thereby lessening
access regulation headaches. In the years ahead
the efficiency brought about by these planning
efforts is likely to see Vancouver compete
increasingly not only for Canadian grains, but for
much US grain exports as well.
The high-value mainline rail and port relationship
for Vancouver is symbiotic: the port’s successive
expansions arrangements breed competition
and scale of service: there are now 6 different
grain loading terminals available to growers
at Vancouver (Alliance Grain; Viterra; Cargill;
Neptune Bulk Terminals; Pacific Elevators;
Richardson International32). In turn, the
economies of scale and mix on offer for grain at
this port and certainty around port development
capacity make it profitable for no less than 3
major railways to come to the port (Burlington
Northern Santa Fe; Canadian Pacific; Canadian
National). Train lengths have increased steadily
in recent years. In contrast, Australia’s east coast
grain ports can rarely accommodate grain train
lengths over 650 metres.
Australia has no comparable ‘port of scale’
for its east coast grain exports: there is not
yet any planning and land use signal from any
government in Australia that would encourage
a Vancouver-style outcome. This greatly lessens
the likelihood of commercial investors risking a
major investment in an Inland Rail development
across eastern Australia.
Even basic facts about Australia’s ports are
not readily available to would-be investors: no
national government report identifies ports
by value of goods moved33; no national report
identifies the shipping depths of all commercial
ports and any restrictions on further depth
development. In government terms, ports remain
a matter for their owners, rather than assets
which benefit from long-term land use and
development planning. Investors and growers
alike suffer from this neglect.
Port Metro Vancouver: how grain freight scale, mix and competition efficiencies can follow when governments offer leadership in port planning.
Over the two decades since Australia embarked
on competition reform of its economy, ports
– despite being one of the most thoroughly
commercial asset classes - have largely escaped
genuine reform.
Some ports have been sold to private operators,
yet new owner/operators have been offered
no certainty of access and investment into
the roads or rail lines which service the port,
or for the future maintenance of competitive
shipping channel depths beyond the wharves.
Ports in Australia therefore continue to be sold
primitively, as isolated assets, despite the fact
that many of the big cost pressures they face lie
outside of the owner/operator’s control34.
The Productivity Commission – Australia’s
economic reform adviser - has failed to signal
that ports are a problem; an extremely meek
review of port operational arrangements in the
1990s35 did nothing to consider access issues, or
the prospect of port investors having the ability
to make complementary investments upstream
and downstream of the wharves. Australia’s
primary economic regulator, the Australian
Competition and Consumer Commission – has
been similarly silent on the control, planning
and expansion barriers facing ports that wish
to achieve greater scale and cross supply chain
efficiencies, although a recent ACCC media
statement about container ports did at least
advocate the need for further reform in ports36.
Australia’s ports remain only a primitive offering to the investment market, with
significant but hidden downside risks to land-side access and investment.
2
39Good instincts: A Juturna Infrastructure market briefing paper - April 2014
Australian ports don’t make much money, so why isn’t reform a priority?On the evidence of their recent low returns on equity by international standards, port efficiency should
also be of real concern to investors and farmers alike. Quite recent statistics suggests that Australia’s
ports are overall a poor investment proposition:
Australian ports versus the world – could preventing whole of freight supply chain investment be harming individual port asset performance in Australia?
Average Average global Average all ports Australian ports (1) comparator ports (2)
Total debt/shareholder’s equity 58.9% 166.4% 109.1%
Total debt/total assets 21.2% 25.6% 23.3%
Return on assets 2.1% 5.2% 3.5%
EBIT return on assets 5.0% 7.5% 6.2%
Return on equity 3.6% 9.2% 6.2%
Interest coverage ratio 7.30 7.31 7.30
Debt coverage 0.60 1.45 1.00
Revenue/total assets 0.20 0.23 0.21
Current ratio 2.59 2.00 2.32
Quick ratio 2.19 1.53 1.88
These returns should serve as a spur to consider
alternative investment models that would allow
owners or renters of ports to invest in and
control more of their upstream and downstream
productivity and investment risk.
Parts of the whole problem are glimpsed on a
regular basis, but seemingly, nobody joins the
dots: the Victorian Switchpoint: Review of Rail Infrastructure (‘The Fischer Review’) identified
the grain logistics problem clearly enough:
‘The changes occurring in the grain industry
through new super-sites and closure or reduced
use of smaller, limited service storage silos
are part of a trend towards rationalisation of
the grain handling system. This has a critical
influence over the shape of the sustainable
intrastate rail network as rail services to ports
are concentrated on fewer sites for increased rail
efficiencies and greater economies of scale at the
grain terminals’37.
No government since has asked how this
insight might be extended to a national port,
rail and road review of the sector’s transport
infrastructure. Grain freight’s history is one
of opportunities for clear thinking ignored,
repeatedly.
(1) Australian ports analysed were: Melbourne, Port Kembla, Newcastle, Townsville, Fremantle, Bunbury, Tasports, Port Hedland (NB: 5 of these 8 ports include grain export facilities)
(2) International ports analysed for comparative purposes were: Singapore, DP World ports, Lyttelton, Auckland, Sydney, Toronto, Vancouver
Source: Infrastructure Australia/Deloitte Review of Port Balance Sheet Capacity Draft Report (2012) p. 11
Access regimes for Australian ports – allowing
third parties access to key facilities on fair and
open commercial terms – remains an area of
competition law where access disputes can
only be resolved through extremely costly and
time consuming litigation. In the case of the
now famous Pilbara rail access dispute between
mining companies, the litigation is going into
its eighth year, having cost millions of dollars in
legal fees to all parties without yet producing a
definitive result.
The overly litigious nature of Australia’s port
access regime should be of concern to farmers
and investors alike. No less a figure than a lead
architect of Australia’s access regimes paints a
bleak picture of current arrangements:
‘To me the (access) regime is set up in a way…
that there is no doubt that the system facilitates
the delay and frustration and difficulties that deal
with it... the Americans are absolutely appalled
at the time-wasting that goes on in Australian
courts and I’m told by many, many Americans
that they won’t bring deals to Australia to be
assessed in the competition area because we just
take too bloody long – excuse the expression’38.
The simpler alternative to messy access regime
reform is to inject competitive tension at ports,
by encouraging development of competing
grain terminals where grain is the dominant
freight or where land values and land release
can encourage multiple operators; in this
way, the grain supply chain can set itself up
around competitive ports of scale and mix
efficiencies. This will be challenging of course,
as it foreshadows port losers as well as winners,
but if governments, investors and producers
have lowering the cost of grain freight as their
main goal, competitive terminals forms a logical
part of any comprehensive grain infrastructure
framework.
Can’t the market solve these problems without the government? The problem of differing objectives in the sectorIt might be argued that it is not within the
remit of governments to plan for grain ports of
national scale and that this can be established by
market forces alone. Indeed, some recent grain
infrastructure development at east coast ports
such as Newcastle is impressive39. The problem
appears to lie in what objectives one sets for
Australia’s grain freight: different objectives
require different depths of leadership and
certainty of government.
If the prime objective is for one east coast
port to out-compete all others in grain freight,
then market effort and investment alone might
suffice (although the upstream inefficiencies on
all of the ageing and disconnected east coast
rail corridors would make even this objective
ambitious).
Lack of terminal competition for grains - in part a symptom of grains being sent to the
‘wrong’ ports - forces port access seekers back to dealing with Australia’s overly litigious
open access system.
3
41Good instincts: A Juturna Infrastructure market briefing paper - April 2014
If on the other hand the simple goal is to
lower transport cost inputs to grain growers, investors and buyers, then a more holistic
solution – one which considers the long-term
efficiencies in mainline rail for grain, and what
this might require in terms of stable and future-
proofed ports, is an area in which Australia’s
governments need to be clear and consistent
with the grains sector. Governments need not
‘command-plan’ port infrastructure, but they do
at least need to offer investors certainty about
the long term options.
Can I invest with certainty in the grain supply chain? A checklist of investor access and investment roadblocks by Australian governments:
Barrier to trade
Port ownership or long-term lease
Connecting high-productivity rail investment
Connecting high productivity road
investment
Connecting high productivity shipping
channel investment
Ability to invest in market solution
Patchy, many ports remain GOC
Usually unavailable as single investment,
even with 3rd party access
No: roads government monopolies - costly/
lengthy ‘trials’ are only option
No legal right granted as part of port owner/
lessor entitlement, subject to separate
government processes, sometimes separate
government agency
Failed commercial road freight investment trials: road agencies prove incapable of (and unwilling to deliver) market-led solutionsIn 2008, Australia’s Prime Minister and Premiers
tasked road agencies with trialling commercial
approaches to roads, where the farmer or
truck operator could nominate road upgrades
or access for bigger trucks and receive better
freight access in return for a fair additional user
fee.
Truck operators and road freight customers
nationwide applied. Two road agencies
abandoned the trials before they had begun,
stating (amongst other things) that the
information about the road conditions was
too hard to assemble. Only two trials were
completed. One was to allow a meat processor to
move marginally heavier truck weights from its
processing facility in central NSW to its railhead
– a distance of just 750 metres. That project took
years, not months to establish – at considerable
cost to the would-be customer.
An independent review of these failed trials
found that road agencies did not favour this
market-led approach to road freight investment:
one road agency commented that ‘if hundreds
of vehicles and multiple operators were
participants, this system would be a far too
onerous administrative burden’ and ‘it would lead
to messy, ad hoc networks arising’40.
Following precedents in rail and other utilities, a
more market-driven commercial freight model
demands considerable structural reform of
large monopoly road agencies. It also needs
to welcome private investment in grain freight
solutions, where it makes commercial sense, in
order to ‘top-up’ taxpayer spending – yet these
things are not yet conceded by the public sector,
which has full control over the shape and pace of
any reforms.
Trucking grain harvest management schemes: the ‘save now, pay later’ strategyIn the absence of real road investment reform,
government offers growers additional weights
on grain trucks (typically, an extra 5-10% of
maximum legal weights). These measures are
popular with growers, but such schemes only
accelerate road failure without generating any
new funds to pay for this. The result is that
local governments are forced to levy higher
rates in future years to pay for roads that fall
apart sooner, or impose future weight limits on
prematurely broken roads.
Grain branch line reviews: ‘kicking the can down the road’Governments regularly deal with the
inadequacies of grain branch lines and grower
and investor discontent by holding ‘reviews’ of
these branch line networks.
The NSW Grain Freight Review of 2009 took a
typical approach: as noted since by that state’s
rail regulator, it recommended that:
‘most of the lines be stabilised at a minimum ‘fit
for purpose’ standard through a non-recoverable
NSW government grant, contingent on industry
investment in other supply chain improvements’.
Such reviews suffer from insufficiently broad
remits: the 2009 review was another report
which in effect left efficient grain on rail in no-
man’s land: no national plan for a move to shift
more rail to a commercial mainline service, such
as through Inland Rail, no detailed plan to pursue
Poor excuses: today’s proxies for real grain transport reform:
43Good instincts: A Juturna Infrastructure market briefing paper - April 2014
serious road freight pricing and abandon costly
substitute highway infrastructure upgrades that
crowd out a commercial Inland Rail solution.
Other reports have advocated for reinvestment
in the same old obsolete colonial rail networks
while blithely assuming that wider system
efficiencies will flow as a matter of course – that
somebody else will fix the wider problems. The
Switchpoint review of Victorian freight rail (‘The
Fischer report’, 2007) advocated for the state’s
mostly broad gauge colonial rail to be divided
into ‘Platinum’, ‘Gold’, ‘Silver’ and ‘Bronze’ line
classes – with all but Bronze class to be given
increased taxpayer funding. For the ‘Silver’ lines
– being most of Victoria’s remaining operational
grain branch lines (ie the equivalent of NSW Class
4 and 5 lines) - the report advocated increased
government funding conditional on wider market
efficiencies – efficiencies that were a distant
prospect then and which have not substantially
occurred since:
‘high priority lines to be rehabilitated to original
track classification conditional on grain industry
collaboration and commitment to improve overall
supply chain efficiency to support rail. This
should be done by establishment of a sustainable
fleet of rolling stock; further centralisation and
upgrading of silos and port facilities with longer
sidings, fast train loading, fast truck turnaround
and extended operating hours’41.
Public-sector-driven planning still dominates the Inland Rail project The Inland Rail is commercial infrastructure of
national significance to the efficiency of a future
east coast grain network. Yet this project remains
locked in a public-sector led process, with
government wrongly assuming that they must
lead in the funding, planning and development
of how and where the Inland Rail would develop,
rather than allowing private investors and
growers as well as other prospective freight
customers to lead the process.
This attitude and approach - leavened by
intermittent ‘industry consultation’ - endures
in 2014, with a government-dominated
Implementation Group being provided with
taxpayer funds to decide on such matters,
despite acknowledged international best practice
being clear that commercial rail projects like
the Inland Rail should always be developed as
straight commercial investment decisions:
‘The market and technical challenges and
(international) policy experience imply that the
policy aims for rail freight…are best provided by
the private sector. Success in winning market
share depends on the sustained commercial
focus and agility of a private company to confront
and prevail against a highly-decentralised,
competitive and entrepreneurial road haulage
industry’42.
Continual improvement in government policy outcomes are not in evidence – is it time for a peer review?The Organisation for Economic Cooperation and
Development’s International Transport Forum –
of which Australia is a member - made the point
earlier in 2014 that when it comes to effective
transport infrastructure reform:
‘Policy cannot be well-formulated without
improved techniques for planning and
regulations’43.
The OECD made this observation in its peer
review of Mexico’s rail freight sector. Perhaps a
first step to challenging the status quo would
be to invite a similar international peer review
to be conducted on Australia’s east-coast grain
infrastructure sector?
A catalyst for improvement is required if
Australia’s continued response to the grain task
challenge ahead is merely to subsidise failed
and expensive branch lines, reject commercial
investment models in better road freight, make
taxpayer investments in roads which directly
sterilise productive grain mainlines and offer no
market-led planning and regulatory certainty to
truly national scale rail and port investments for
grains.
Reform leadership from growers and investors is vitalMarket reform will not work well without market
leadership. In this sense, a political will for
national reforms to post-farm gate infrastructure
must be matched by agribusiness and its
boardrooms being prepared to look beyond the
aspects of their business over which they have
direct control, and enter the frustrating field of
public policy reform for the betterment of the
sector.
Market-based reforms imply winners and losers,
but the process of reform is something all in
industry and the investment community can
influence for the better; without market-led
insight, ‘efficient government reform’ remains
a contradiction in terms. Other countries seem
more willing to recognise this fact: the giant
Burlington Northern Santa Fe Railway in North
America noted recently that:
‘Transportation professionals need to do a
better job of educating politicians, legislators
and shippers on transportation networks…they
need to help define transportation networks
of the future and they need to help define a
better process for allocating federal and state
transportation money’44.
Given the demonstrably poor track record of
Australian bureaucracies in leading the effort
on these challenges, new alliances across the
Australian freight, grower and investment
sectors to guide a national framework appear to
be a faster route to a better place.
45Good instincts: A Juturna Infrastructure market briefing paper - April 2014
Adventure and optimism are the ingredients
in shortest supply in Australia’s grain sector
transport infrastructure landscape. Governments
and industry must find these qualities quickly
and harness them, if anything like a credible and
internally-consistent framework for Australian
grain transport infrastructure is to emerge.
There are many reasons why Australian grain
has competitive advantages. One is the near-
dauntless optimism of the Australian growing
community: harnessed to the right government
reform framework, much can be achieved
with such enthusiasm and goodwill. Growers
themselves are well aware of the real challenges
ahead:
‘We are confronted with a deteriorating road and
rail situation and (hopefully we are) confronting
an ever-expanding grain transport task…so yes,
the solution is money. The solution is a futuristic
view and faith in the grains industry and until
there is the political will to back the belief of the
farmers, I despair somewhat of the solution, to be
quite honest’45.
This note of despair is an indictment on
successive state and federal Australian
governments: they have failed to complement
- through good plans and investment reforms -
what any behavioural economist would recognise
immediately as the ‘strong optimism bias’ of
grain growers.
‘Reopening agriculture for business’ post-
Graincorp-ADM will require governments to
listen to grower and investor concerns alike and
confront the one thing that always proves most
intransigent in the policy debate: government
bureaucracies themselves, which too often see
change and structural reinvention as a threat,
to be ignored where practicable or strung out in
endless government committee processes and
complexities, where unavoidable.
Is there truly an appetite for the reforms
needed? Time will tell. If it is to occur, the grains
sector sorely needs all parties to bring a spirit
of adventure to their efforts; as one architect of
Australia’s world-leading competition reforms
has noted:
‘To my way of thinking one of the great problems
of our country is that we’re afraid of tackling
serious problems properly and adventurously and
getting to the heart of an issue’46.
‘Adventure and optimism’
1. Australian Export Grains Innovation Centre The Cost of Australia’s Bulk Grain Export Supply Chains: An Information Paper (2014)
2. In 2006-07 Australia’s domestic freight task was already estimated at 514 billion tonne/kilometres. See Bureau of Infrastructure, Transport and Regional Economics Research Report 123 Truck Productivity: sources, trends and future prospects (2011) p. xiii
3. Australian Treasury transcript of Treasurer’s media announcement in relation to the proposed ADM takeover 29 November (2013)
4. See comments by the Graincorp chairman reported by ABC Australia March (2014): http://www.abc.net.au/news/2014-03-09/grain-handler-graincorp-reveals-downsides-of-failed-takeover/5301528
5. See for example Office of the Infrastructure Coordinator Submission to the Productivity Commission into Public Infrastructure (2013)
6. Mullen J and Crean J Productivity growth in Australian agriculture: trends, sources, performance Research report Australian Farm Institute (2007)
7. Sheng, Y, Mullen J, Zhao S Has growth in productivity in Australian broadacre agriculture slowed? ABARES conference paper 10.1 presented to the 54th conference of the Australian Agricultural and Resource Economics Society Adelaide, ABARES (2010)
8. Mullen J, Tester M, Goddard M, Goss K, Carberry P, Keating B and Bellotti B Assessing the Opportunities for Achieving Future Productivity Growth in Australia Agriculture Research Report of the Australian Farm Institute (2012) Op Cit p.20
9. Deards B, Mobsby D, Thompson N and Dahl A, Australian Grains Outlook for 2013-14 and industry productivity ABARES research paper (2013) p. 18
10. Obermann R, Dobbs R, Budiman A, Thompson F, Rosse M The Archipelago Economy: Unleashing Indonesia’s Potential McKinsey Global Institute (2012) pp. 44-45
11. Pinstrup-Andersen, P Contemporary Food Policy Challenges and Opportunities: A Political Economy Perspective Contributed paper for the 56th Australian Agricultural and Resource Economics Society annual conference, Fremantle WA (2012)
12. Byerlee, D Exploring sustainable solutions for increasing global food supplies: report of a workshop Committee On Food Security for All as a Sustainability Challenge, Science and Technology for Sustainability Program, Policy and Global Affairs, National Research Council of the National Academies, Washington DC The National Academies Press (2011)
13. Li, Z and Liu, X The effects of rural infrastructure development on agricultural production technical efficiency: evidence from the data of the second National Agricultural Census of China Contributed paper for the International Association of Agricultural Economists conference Beijing, China, (2009)
14. Brown, Dennis, Faquir Bagi, Chin Lee, Constance Newman and Richard Ree Pacific Food System Outlook 04-05: United States Pacific Economic Cooperation Council (2005)
15. ‘Road agencies cannot be certain of receiving adequate funding of road expenditure from general revenues. In response, road agencies and local governments often regulate road access by heavy vehicles to contain road maintenance and replacement costs. Such blunt mechanisms have the potential to significantly constrain freight transport productivity’ Productivity Commission Inquiry into Road and Rail Infrastructure Pricing (2006) Final Report p. 347
16. The Australian third-party (commercial) access regime, in part IIIA of the Competition and Consumer Act (2010), provides for the declaration of “services” and (in s 44S and other provisions) for third-party access to declared ‘services’. Such ‘services’ expressly include the use of a road, noting paragraph (b) of the definition of that word in s 44B: ‘service’ means a service provided by means of a facility and includes… the use of an infrastructure facility such as a road or railway line;
17. See discussion of deed-based commercial mine access to and investment in public roads for the South Australian mining sector in Infrastructure Australia COAG Road Freight Incremental Pricing Trials: prospects for a more commercial focus in road reform Juturna (2011) pp.18-19
18. Infrastructure Australia National Road Asset Reporting Pilot Juturna Infrastructure and participating local governments (2014) see Part Five: Commercial road access case studies)
Endnotes
47Good instincts: A Juturna Infrastructure market briefing paper - April 2014
19. See COAG Heavy Vehicle Charging and Investment Reform Project submission to the Productivity Commission Review of the National Access Regime, January (2014).
20. ANZ Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand ANZ INSIGHT Issue 3, October (2012) p. 60
21. Bureau of infrastructure, Transport and Regional Economics Infrastructure Investment Macromonitor Information Sheet 52 p. 4 Public Road Expenditure, Construction and Maintenance 2012-13 and including private road tolls
22. Excerpt from a speech by Australia’s Infrastructure Coordinator, Mr Michael Deegan, delivered in Bingara NSW to launch The Bingara Accord for Rural Roads, Australia Day, 26 January (2014).Full text at: http://www.infrastructureaustralia.gov.au/publications/files/The_Bingara_Accord_1_Speech.pdf
23. Infrastructure Australia State of Play in Australia’s Economic Infrastructure (2013)
24. John Hearsch Consulting Rail Productivity Information Paper commissioned by the National Transport Commission (2008)
25. Grains Australia Single Vision: Victorian Grain Freight Infrastructure Stakeholder Views Analysis (2006) p. 10
26. Independent Pricing and Regulatory Tribunal Review of Access Pricing on the NSW Grain Line Network (2012)
27. ANZ Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand ANZ INSIGHT Issue 3, October 2012 p. 64 ‘Policy discussions vital to lead change’ (2012)
28. Ports Australia statistics for grains exported by port, (2011-12)
29. See The Economist Prairie Pile Up 5 March 2014 for a summary of Canada’s latest capacity challenges in confronting a record 2013 harvest: http://www.economist.com/node/21598414/print
30. Ibid
31. Productivity Commission Inquiry into Wheat Export Marketing Arrangements (2009) Transcript of public hearings p. 211
32. Research based on the author’s discussions with Port Metro Vancouver’s administration (2014).
33. The Australian Government’s Waterline statistical report on major Australian ports only measures tonnages and TEU as port throughput metrics.Most of the bulk ports in Australia relevant to grain are not tracked by this report in any event.
34. For more detail on this challenge see The Game Has Changed But Not Yet The Rules Juturna briefing paper N0. 1 (2013) www.juturna.com.au/publications
35. Industry Commission Port Authority Services and Activities Report No. 31 (1993)
36. http://www.accc.gov.au/media-release/accc-identifies-reform-priorities-to-support-competition-at-australia%E2%80%99s-growing-container-ports
37. Victorian Department of Infrastructure Switchpoint: Victorian Rail Freight Network Review (‘The Fischer Review’) (2007) p. 33
38. Productivity Commission Inquiry into Wheat Export Marketing Arrangements (2009) Transcript of public hearings – evidence of Professor Bob Baxt AO p. 115
39. http://www.theland.com.au/news/agriculture/cropping/general-news/newcastles-new-grain-port-offers-opportunities/2689159.aspx
40. GHD COAG Road Reform Review of Incremental Pricing Trials report (2011)
41. Victorian Department of Infrastructure Switchpoint: Victorian Rail Freight Network Review (‘The Fischer Review’) (2007)
42. Organisation for Economic Cooperation and Development’s International Transport Forum: Peer Review of Railway Freight Development in Mexico February 2014 p. 10 ‘Freight policy principles for rail’
43. Ibid p. 26
44. Vann Cunningham, Assistant Vice-President Economic Development, BNSF Railway, Inland Ports and High Capacity, Asset-Intensive Transportation Networks (presentation) (2012)
45. Productivity Commission Inquiry into Wheat Export Marketing Arrangements (2009) Transcript of public hearings – evidence of Mr Derek Clauson p. 100
46. Productivity Commission Inquiry into Wheat Export Marketing Arrangements (2009) Transcript of public hearings – evidence of Professor Bob Baxt AO p. 109