A report from BIS Oxford Economics, commissioned by the Australasian Railway Association (ARA), has found that a lack of national rail coordination has cost states almost $2 billion in the past decade.
The report estimates states could have saved $1.85 billion over the past ten years had they better harmonised their heavy rail passenger rolling stock policies.
The report details how adopting a more nationally coordinated approach to rail procurement could also help grow Australia’s rail industry.
Assistant Minister for Manufacturing and Trade, Tim Ayres said the report confirms that a more integrated approach to rail procurement will deliver significant economic benefits and job creation opportunities.
“We know the different approaches by the states and territories to rail procurement and manufacturing leads to capabilities being duplicated.
“This pushes up costs, exacerbates skills shortages, and constrains investment.”
ARA Chair, Danny Broad, said state-based local content policies made operating in different states akin to operating in different countries.
He said the lack of coordination led to the duplication of facilities and inconsistency between states, and made it too hard for some organisations to bid for key contracts.
“It is unfortunate to see cost savings on such a huge scale being left on the table at a time when demands on government budgets have never been higher,” Mr Broad said.
“State-based policies make it harder for industry to gain scale, drive innovation and adopt greater efficiency and productivity across their operations.
“This hampers their competitiveness over time and puts local jobs at risk in the long term.
“Australia has fantastic capability in rolling stock manufacturing, but its effectiveness is hampered by inefficient state-based local content policies that make it difficult for organisations to work across state lines to build economies of scale.
“These lost savings could have contributed to funding the huge infrastructure pipeline currently underway, or supported 1500 health and education jobs over the ten-year period.”
The report identified foregone procurement cost savings from the last decade, which included:
- $717 million of savings from increased scale
- $811 million of savings from reduced complexity in planning and design
- $318 million of savings from major componentry harmonisation
Mr Ayres said the Albanese Government has committed to delivering the National Rail Manufacturing Plan, aimed squarely at coordinating a national approach to support and grow the Australian rail manufacturing sector.
Between 2011 and 2021, thousands of rolling stock manufacturing jobs were lost in New South Wales. Most of these jobs were lost in the Hunter Valley and Newcastle.
“The Australian Government wants Australia to be a smart nation that makes high-value products for the country, the region, and the world,” Mr Ayres said.
The National Rail Manufacturing Plan’s development is being led by the Office of National Rail Industry Coordination (ONRIC) in the Department of Industry, Science and Resources.
As part of the Plan, the government will shortly appoint a National Rail Advocate and Rail Industry Innovation Council to support and drive change in the rail manufacturing industry.
