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Railroads

Australia's infrastructure investment is 3.6 percent of GDP, including $1 billion for rail over five years. Sixteen operators provide passenger rail service. Other than the national railway system and commission, funding of state-owned railways has been a state responsibility. Funding for an 880-mile rail line completed in 2004 was financed 37 percent by governments, 57 percent by the private sector and 6 percent by commercial loans. After 50 years of private sector operation, the infrastructure and trains will revert back to the government in 2054.

In the 1850s railroads offered a significant advance in transportation, and several railroad companies began laying track and competing for business. Australia's first railway line opened in Victoria between Melbourne and Port Melbourne in 1854. The first railway line in New South Wales opened in 1855, South Australia in 1856, Tasmania in 1868, Western Australia in 1871, Queensland in 1875; the Northern Territory in 1889; and the Australian Capital Territory in 1914. The railways were operated initially by private companies but a shortage of private funds meant that the colonial governments had to take up the task of continuing railway development. In 1889, a narrow gauge railway of more than 500 km was built from Palmerston to Pine Creek which became the North Australia railway.

Before Federation, rail transport had been a function of each of the colonies. Little thought had been given to connecting a state's railway system with that of other states. Due to the vast distances involved, states had tended to regard themselves as stand alone entities and not part of a unified nation. By Federation, that sentiment had changed somewhat. However, its legacy remained alive and well, more than 20,000 km of track had been laid by 1901, three difference gauges, or widths of track, had been used. It is a well-documented story of engineering complexity and courage that included laying rails through mountain passes and across rivers.

One major challenge was that different railroad companies were building rails to different standards. The distance between the rails, called the gauge, varied. Some rails were 4 feet 8 ½ inches apart. Some were 5 feet. Some were 5 feet 3 inches. All three gauges are good, but they are incompatible. Most trains couldn't switch from one network to another. The American continent had multiple, incompatible networks instead of one interoperable network. Fortunately, in the late nineteenth century, thanks to some extraordinary leadership, the industry finally settled on a gauge of 4 feet 8 ½ inches. America benefits from a single interoperable rail network to this day.

More than a century later, the Australian rail industry has still not settled on a standard. Australia is crisscrossed by incompatible networks.

Australia's transportation infrastructure is mature and well developed with 16 separate passenger train and tram operators offering services ranging from intensive suburban and metropolitan commuter trains and electric street tramways in major cities to commuter trains, rustic rural mixed trains, and long distance interstate and luxury trans-continental trains. Its largest passenger railway operates along three of the country's most important intercity corridors. "The Overland" links Melbourne and Adelaide; "Indian Pacific" travels from Sydney to Perth and the remote West coast; and "The Ghan" connects Adelaide and Darwin via Alice Springs. The Australasia rail project, completed in 2004, is an 880-mile line from Alice Springs to Darwin. The public-private partnership agreement for this project involved construc-tion of the new line; leasing and maintenance of the existing line, ports and terminal developments in Darwin; and operation of infrastructure and trains for 50 years before the network reverts back to government. Governments provided $395 million, effectively as grants, and another $65 million loan on commercial terms. The private sector funding contribution was around $618 million. There is no on-going government subsidy support for the operation.

Australia's largely privatized rail freight industry is stronger today than at any time over the last few decades and is competing aggressively for a greater role in the national transport and logistics market. Privatization of freight railways has allowed industry consolidation across state boundaries, but the government has had to step in to fund some of the regional and light-density railways.

Australia's infrastructure investment has fallen from 7.2% of GDP in 1970 to 3.6% today. Other than the national railway system and commission (privatized in 1997), funding of state-owned railways has been a state responsibility in Australia. The government has provided some loans and grant funding for rail projects. Substantial funding is now available for freight railways through the Australian Rail Track Corporation (ARTC) and the AusLink land transport funding program. AusLink is the government's 2002 national transportation plan, which funds projects that benefit Australia's future, whatever the mode. Of AusLink's five-year, $7.7 billion commitment, $1 billion is for rail. The Rail Track Corporation is a federal government-owned corporation that owns, leases, maintains, and controls the majority of rail lines on the mainland.

The Transcontinental line is owned and leased by the Australian government through the ARTC. The Adelaide-Darwin line is owned by the ARTC as far as Alice Springs, with a coalition of two state governments owning the rest, but it is leased to its builders, the Asia Pacific Transport Corporation, for 50 years under a Build, Own, Operate, Transfer contract. Private operators also provide intercity service. Privatization of long-distance passenger rail in Australia appears successful, with improved marketing and profitability, although questions remain about its ability to fund renewal of capital. Long-distance passenger services benefited from the private owner's focus on the high-end tourist market using refurbished rolling stock. Rail privatizations have resulted in reduced operating subsidies (whether directly funded or as an opportunity cost through reduced dividends) and reduced calls to fund capital investment.

The government will never be removed entirely from financial responsibility for supporting the rail network because of lighter average densities.