Hogsback and the problem with railways in Australia

IF A few billion dollars were not involved Hogsback could be excused for imagining two of Australia’s top mining entrepreneurs suffered the same childhood frustration of not being allowed to own a toy train set.

Staff Reporter

For much of the past decade Andrew Forrest has coveted the iron ore railway systems of BHP Billiton and Rio Tinto in Western Australia.

This week Clive Palmer showed his angry side when castigating the Queensland government over competing plans to build a coal railway.

Before considering the similarities (and differences) of what’s irritating two of Australia’s richest men, there is a serious point at the heart of their railway woes – the fact that coal and iron ore have less to do with mining than with transport, economics and infrastructure.

On that score, their real beef is with Australia’s government process which has never (as in never ever) been able to get it right on matters to do with railways and ports.

From the day the states opted for different railway gauges there has been total railway mismanagement in Australia. So, after a century of bad decisions why might we imagine the government would suddenly get it right?

There’s neither the time nor the space (nor any interest from readers) to debate government railway policies of the past 100 years.

There is, however, a need to explain why Forrest and Palmer are so annoyed because the common thread, not surprisingly, is government.

On one side of the country there is government not doing enough to enforce its own agreements. On the other there is a government doing too much.

In Forrest’s case it is government which should have ensured access to railways. In Palmer’s case it is government effectively turning itself into a competitor with the unfair advantage of being a regulator and rival.

Forrest, before he was forced to build his own railway and port, believed (and still does) that the rail access agreement between the government of WA and the big iron ore miners ensured third-party access, at an appropriate haulage charge.

The big iron ore miners do not see that piece of 20th century history as applicable in the 21st century, arguing their railways are part of an integrated mining system of three parts, mine, rail and port, and any third party using the system would mess up their business.

Palmer’s beef varies in that he argues, loudly, the Queensland Government has become a commercial rival in the business of building and operating a rail and port system.

Worse still, Palmer believes the government has acted unfairly by sharing his plans with its 40%-owned railway arm, QR National.

Domestic Queensland politics has a role to play in Palmer’s claims against the government and its railway operation with the man himself alleging “duplicity” and saying he would sue for $8 billion in damages.

The Queensland Government, in turn, accuses Palmer of being too close to the conservative side of politics.

Perhaps a few months in court will deliver a verdict on the Palmer vs. Government fracas, but waiting for a result will simply add to the problem of Australia not being able to devise an efficient way to operate its railway systems – an issue which is already costing the country dearly in missed export opportunities.

All Forrest wanted was what the late Sir Charles Court, when he was Premier of WA, negotiated with the iron ore miners – access, for a fee. Governments, state and federal, even invested some of their capital in railways and ports in the belief that eventually more than one miner would use the system.

All Palmer wants is government approvals to build and operate a railway system that will connect proposed mines in the Galilee Basin, and perhaps haul coal from other mines, for a fee.

He says that to advance the rail and port proposal he invested around $40 million in planning, engineering, and land access work for the rail corridor, all the while assuming he was working in confidence with the coordinator general of the Queensland Government.

Late last week Palmer discovered QR National (don’t forget that 40% government ownership) had come up with “its own” rail proposal which, interestingly, follows some of the route Palmer had mapped out.

The core of his allegations is the government was acting as both regulator and competitor, and it shared his private proposals with its rail business.

If it wasn’t for the political cloud enveloping Queensland as it heads into an election more people would take the time to understand the seriousness of what Palmer is alleging.

As it is we are left with the same round of claim and counter claim of a rich man vs. government. Good for media headlines. Not good for the country.

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