NFF: get “fair dinkum” about inland rail

Speculation has continued heading into next Tuesday’s federal budget on what level of funding and potential methods the federal government will reveal, to start building the highly anticipated Melbourne inland rail project.

The NFF has cited inland rail funding as a top priority on the peak farm lobby group’s budget wish list to start construction - calling for a $1 billion budget allocation - along with “cementing” the popular farm asset write offs.

Ms Simson said the NFF was hearing “a lot of positive noise” around budget funding for the project suggesting it may deliver a figure of more than $1b.

She said the Coalition government had made a “clear commitment” to get the inland rail project moving, with next week’s budget a litmus test.

“This is a $10 billion project and to date there’s only been a relatively small amount of money invested into it,” she said.

“Anything over $1b delivered in next week’s federal budget is an indication that they’re fair dinkum about it but we understand there’s still a long way to go.”

Ms Simson said infrastructure was an NFF priority as it represented one of the biggest costs faced by farmers in moving product to markets, including agricultural exports.

“We’re dealing with incredibly crowded and cramped port facilities on the east coast so we need more options in terms of putting more freight on rail,” she said.

“The inland rail project has been talked about for many, many years so it’s important that it starts to get built.

“But having said that, $1b is not going to build the entire project so it’s important that we start building it and the government keeps investing in a rail line that serves us well into the future and is modern and efficient.

“We need that $1b and we need a commitment made by government to build the inland rail, rather than more talk and planning.”

Asked how much funding would be in the budget for the inland rail, Transport and Infrastructure Minister Darren Chester declined to provide an exact number - but he stressed it was a high priority project.

“I can’t speculate on the exact details of what will be in the budget for the Melbourne to Brisbane inland rail but the government has made it very clear that it’s keen to build the project and the Prime Minister expects construction to start this year,” he said.

“We’ve already allocated $894 million for some of the preliminary works but it’s obviously going to take a lot more than that to get the inland rail built and I’m very cognisant of the fact we’re at a critical stage in the project’s development.”

Other government sources declined to say how much the government may deliver in the budget towards the inland rail’s construction.

But one member of parliament, well-versed in the project’s intricate mechanics, and potential to cut farm-gate costs and deliver on domestic export market demands, stressed it wasn’t all about a big number of government grant money.

The source said a mix of funding options was likely, with the capacity to carry over the next four years in the budget forward estimates, including government financing facilities to help stimulate private sector investment.

“Pots of funding can be made available for contestable projects and some projects are more contestable than others but we’re going to build the inland rail; it’s going to happen,” the source said.

It’s understood strategic placement of intermodal hubs, to help drive more freight onto rail, in bulk cargoes and containers, as agricultural output expands, is a key aspect of the inland rail project’s ability to build profitability and subsequently attract the private sector’s attention for investment potential, with government.

Asked what percentage of funding would comprise government grants and any potential financing facilities, including investment from the private sector, to meet the inland rail project’s estimated $10b cost, Mr Chester said “I know but can’t say at this stage, it will be in next week’s budget”.

“Our aspiration remains the same and that is to finish the project as quickly as possible; I don’t want to set a strict timeline but at the moment it’s about 2024-2025,” he said.

“I can’t comment on the specific details of where the private sector will be able to participate in the Melbourne to Brisbane inland rail construction but there will be opportunities for us to work in close partnership with the private sector to get the job done over the next seven or eight years.”

Mr Chester said the inland rail was the biggest rail project in Australia for 100 years and it was “critical for helping our agricultural sector take full advantage of the free trade agreements that we’ve been able to negotiate in recent years”.

“Transport costs are a major component in ensuring we remain competitive on the world stage and the inland rail is all about, more efficiently, moving freight along the eastern sea board but also improving safety along our major road corridors,” he said.

“What we want to see with the Melbourne to Brisbane inland rail is a modal shift of heavy vehicles onto rail, to meet Australia’s growing freight needs.”

Nationals leader and federal Agriculture and Water Resources Minister Barnaby Joyce said the cost of rail freight was one of the nation’s “big problems” due to a system that’s not up to twenty-first century standards.

“We need to double stack containers; we need trains to move at 100 kilometres per hour or up to 120kms per hour; we need lines that are straight; and we need topography that is basically flat,” he said.

“We’ve got our second biggest city and our third biggest city, so we should have a rail line between them and that’s going to create massive economic opportunities for those two cities on either end and the places in between.”

Ms Simson said the NFF’s wish-list for next week’s budget also included a request for the continuation, in perpetuity, of the farm asset tax write offs of under $20,000 and those for fencing, water facilities and fodder storage, introduced by the Coalition in 2015.

She said the NFF was also calling for $60m per year for the Mobile Black Spot Program; $5m for digital technical support in rural areas; $290,000 for an analysis of labour market needs; and $30m to cover first year of revised seasonal worker program

“Tax write-offs on these assets are important to farmers and regional communities and so it would be good to get them cemented and to give farmers an assurance that  they can spend money on assets that will make their farm more sustainable and inject money into rural and regional communities to share those benefits,” she said.

“That’s a big priority for us.

“We’re also asking for $60m per year for black spots which was the amount spent in the last round of funding.

“This government was the first government to start attacking blackspots but we want a commitment to continue to work on black spots.”

Ms Simson said the NFF was also anticipating an announcement and budget funding for establishing the federal Regional Investment Corporation (RIC) to streamline the delivery of drought and other support loans to farmers.

The RIC initiative announced during last year’s federal election campaign to try and cut bureaucratic delays between commonwealth and state agencies.

Ms Simson said the NFF was looking forward to any announcement that makes it easier and more direct for farmers to access funds when they need support in times of need by cutting bureaucracy.

“The Productivity Commission report on agricultural red tape recently identified that the farm sector has to deal with multiple levels of bureaucracy and in some of these instance, especially in drought and times of need, more levels of bureaucracy only slow down the delivery of support to farmers,” she said.

“This is a good announcement but we need to do more work with drought policy.”

While hopeful of a positive budget result, Ms Simson said the NFF also understood the government’s finances were “under pressure”.

“We’re in a time of fiscal repair and we do want to make sure budget repair is a priority, but also that it’s done in a way that fosters growth - especially in the regions in our industry which is growing,” she said.

“At the moment we’ve seen record growth and record figures in farm gate production and we think that trend is continuing.

“We’re forecasting Australia’s agricultural output to hit $100b by 2030 but to do that we need continued investment in our industry and efficient infrastructure like road, rail and digital.

“We also need to make sure we can keep attracting a strong labour force and we also need real access to markets.”

On the overall budget outlook, Mr Joyce said “As much as people hate us, we’ve got to try and make sure the budget balances”.

“We’ve got to try and do that by making decisions that sometimes are fair but unfortunately sometimes can result in us making a saving,” he said.

“We’ve got to do that otherwise we’re just fooling everybody – because we’ll just be continuing on the Labor path of a high trajectory of debt.

“Never forget this - when Mr Howard and Mr Costello left the books with Mr Rudd and Mr Swan you people (the Australian people) were owed hundreds of billions of dollars.

“When we got the books back from Mr Swan, Ms Gillard and Mr Rudd, you owed the world hundreds of billions of dollars and more importantly than that, you were on a trajectory of crazy debt.

“But we have to first of all, turn that trajectory down to try and mollify some of these crazy contracts that you got tied into.

“We’re doing that.

“We’re going to try and get our nation into surplus and it’s going to be tough and there are going to be times when you’re angry with us and we understand that but we’ve got to do what’s responsible and we’ve got to do what’s right, otherwise we’ll be living in this massive mess.

“So we’re going to make the tough decision – sorry about it but we have to do it to get this nation back on the strong financial footing that it was on, before we gave it to the Labor party.”

Treasurer Scott Morrison said governments must live within their means and “that means continuing on our path of bringing the budget back to balance”.

“I’ll be looking forward to delivering a budget for the Turnbull government that ensures that we make the right choices (to secure) the opportunity ahead for us,” he said.

“But we must be able to make the right choices to secure that opportunity.”