The Inland Rail project enjoys the rare benefit of bipartisan support from both sides of politics, but Anthony Albanese says the government needs to lift its game on project financing and planning for port links.
Mr Albanese, Infrastructure Minister in the former Rudd Government, told the Inland Rail conference in Parkes today that the Federal Government’s decision to fund the project with an off-budget investment risked its ongoing viability.
The $9 billion rail development was funded by the Federal Government in this year’s Budget through an $8.4b equity investment.
That means the dollars don’t show up on the Budget bottom line, but it also means the project needs to turn a profit to prevent the funding cost becoming a financial liability down the track.
The Inland Rail project is expected to deliver only a small margin of $1.10 return for each dollar invested.
ARTC chairman John Fullerton told a Senate Estimates hearing earlier this year that the “revenues that flow to us wouldn’t cover the full capital cost and provide a return”.
“The Government might be justified to have some financing off-budget, but they need to explain how this project will make a return on investment,” Mr Albanese said.
“Also, including the Australian Rail Track Corporation’s full balance sheet on the project finance (including the busy Hunter Valley coal network) in order to justify the off budget financing weakens the ARTC’s financial position - and it plays a critical role in UAstralia’s rail networks.
“It wouldn’t be the first time the National Party have been guilty of not properly financing projects… (Finance Minister) Mathius Cormann is responsible for saying how the financing adds up.”
Mr Cormann told the estimates hearing equity financing could be justified against the value of the Inland Rail as a future asset.
“It is not only a matter of the cash flows, that is the revenues. It is also a matter of the impact of the expected future capital value, the expected future sales value,” he said.
While the rail corridor between Melbourne and Brisbane has been selected, the last leg of links into port are yet to be determined.
Mr Albanese said he has raised concerns with the Government that the port links had not yet been selected or funded - especially because rail construction through built-up metropolitan areas is expensive and the likely need for tunneling on the Brisbane route could be particularly costly.
“Just because it’s called Inland Rail doesn’t mean it should be taken literally. It should go to a port.”
Mr Albanese welcomed the announcement from April that the Federal and Queensland Governments would jointly fund a $1.5 million study on the Brisbane port link.
The former Labor Government backed the incipient Inland Rail project when in office with $600m to fund upgrades to the exisiting track which forms the backbone of the line.