On Track To Become A Nice Little Earner With Public's $500m
Sydney Morning Herald
Friday February 1, 2002
Rail freight could well get a new lease of life out of the $1.17bn deal, analysis by Brian Robins reveals.
The $1.17 billion sale of FreightCorp and National Rail could give the rail freight industry new life and take more long distance truck movements off highways
But that will need big spending to upgrade track and signalling equipment.
An audit last year by the Australian Rail Track Corporation for the Federal Government found that if more than $500 million was spent on rail track and signalling $400 million of it on the corridor linking Melbourne, Sydney and Brisbane it would take more than 110,000 long distance truck movements a year off roads.
The three governments Federal, NSW and Victoria have $1.2 billion between them and ``should move quickly to continue the $500 million of new investment called for by the Australian Rail Track Investment Corp", said Dennis O'Neill, of the Australia Council for Infrastructure Development.
For Chris Corrigan, the attraction of the two rail companies is clear. With ports in Sydney, Melbourne, Brisbane and Perth, the ability to move freight in and out of port by rail gives him a big cost advantage over rivals.
It also means that strikes or delays in one port can be overcome by shipping goods through another port.
A merged FreightCorp and National Rail could generate annual earnings of as much as $500 million after about five years or so, some private forecasters estimate.
Under state ownership, the combined FreightCorp and National Rail operation was only marginally profitable, though the State Government's decision last December to pay FreightCorp employees as much as $35,000 to agree to the transfer, a total cost of as much as $77 million, probably helped avoid industrial action by employees opposed to the privatisation. In 1998, Corrigan showed a readiness to take on his staff by locking out his port workers for several weeks as he pushed for changes.
Combined, the two railway freight companies give Corrigan and Toll control of a nationwide rail freight operation with annual revenues of more than $1 billion, with more than 2000 employees.
© 2002 Sydney Morning Herald