We are seeking today to move onto a more contemporary footing.  We will not address specific local proposals and reviews, but we will be taking a look at our logistical infrastructure’s place in the political & economic world.  We will also still be applying historical references that we see as contemporaneous in infrastructure investment priority terms.  
 
We will start today’s review of Australia’s Eastern rail network with a situation report:
 
http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/#series=EOSQrailroad
 
Hence Australia’s railway infrastructure is ranked by the World Economic Forum at no. 36 in the world for competitiveness, and it cites a negative trend in their survey.  Besides the major western & eastern powers, Australia ranks behind states like Ukraine, Estonia, Azerbaijan, India, and we are only 2 positions ahead of Indonesia which has a fast rising trend.  
 
Crucially, our WEF survey rail ranking is 18 places behind Canada, which is our closest economic analogue.  This is despite our overall WEF cited competitiveness ranking being 22, and only 6 spots behind Canada.  Our lesser rail competitiveness is a part of that difference.
 
We should also pay particular attention to the existing higher rail infrastructure rankings of the emerging soft and energy commodity producing exporter states in international markets, those same seeking status in the One-Belt-One-Road initiative such as Russia and Ukraine.

First trainload of Russian wheat arrives in China:


In the first half of the 20th century Australia had a rail infrastructure competitiveness lead over many of our contemporaries.   We gained that lead by seeking to invest in order to facilitate an export-oriented economy, and by means of our ports competing among themselves for that same trade.  We also made wise down-payments in cities, especially so in Sydney, in urban heavy weight rail corridors (as we did in other renowned first world urban infrastructure like water and sewers). 
 
In citing the aforementioned we should not avoid confronting the “Gold Plating” cultural overhang that my father said his post-WWII generation believed they had to bear the tax responsibility for.  Neither should we allow a ticket-of-leave to the accompanying economy-of-scale orthodoxy employed by monopolists in having secured the exclusive or duopoly license regimes that accessed it, and served to restrain or degrade its economic potential.  We will not dwell on these elements further here, but we will mark them as noteworthy contestable subjects.
 
In respect of redress to the historical anti-competitive issues that affected rail freight in Australia, we must mention that the Standard Gauge network, based upon the historical NSW state gauge, has grown in the post war period.  It now corresponds with the Commonwealth government owned ARTC line network that is shown in deep red on the map in part 1 of this series, plus the remainder of the NSW operating lines.  The majority of these standard gauge lines are leased from the respective States.  Otherwise states retain their legacy gauges.

There is also an access regime and competition supervision (more on that later).  Together with the proposed additional sections that should come together to form a contiguous Melbourne-to-Brisbane rail line, which in the northern corridor will mainly will be dedicated to freight operations, there may well be the basis of a spine for a future rail freight network as conceived in many other more economically competitive countries. 
 
In NSW there has been substantial capital investment in urban rail yards, and in dedicated freight lines in Sydney.  There has, however, been little investment by way of comparison in regional rail yards (we will also be returning to that issue later).
 
While we are on the subject of contestable government sponsored infrastructure history, however, I will mention the two incongruous state funded infrastructure developments in the post war period.  The first was the Snowy Mountain Scheme which is well known for its hydro electricity component but less so for its boost to the Murrumbidgee Irrigation area.  Twenty years later were the NSW black coal-fired power station developments delivered during the 1980s.  In an era when infrastructure project funding typically reached only 0.40c in the required dollar, these were a return to the pre-war gold plating. 

The released Fraser Government Cabinet papers to date do not confirm the view, held by some, that the raison d’être of Commonwealth support for the level of investment in electricity supply growth in the 1980s was that the Government saw East Coast intercity and regional rail electrification as an appropriate strategic response to geopolitical events surrounding the ‘70s oil crisis.  Having been involved in the import and delivery to site of the major electrical control equipment for the new black-coal stations I can recall that view being held by engineers at the time.
 
I have also heard the above proposition firmly denied by those that claimed to have been Fraser Cabinet attendees, but my point here, in citing this controversial matter, is that strategic ends have a habit of being revisited in history.  Australia has long had dwindling local oil reserves, and we do not have significant diesel or avgas fuel production capacity.  It is, therefore, also strategically noteworthy that Australia’s logistical backbone is, in the absence of rail electrification, or some new technology, heavily dependent on these same refined energy sources. 

From the 80's onward, however, there was political blowback led by the NSW Greiner Government in particular, and governments reverted to neglecting investing in baseload electricity generation capacity.  Today we have a crisis as a result.  We won't be revisiting this matter later in the series as our proposals revolve around diesel powered traction, but these abrupt investment cycles are noteworthy, and form part of the dysfunctional environment we are confronting.
 
Finally, we have delivered a smaller sized post today, more in line with norms for this genre.  Still, however, we have yet to address specific contemporary proposals, or their reviews.  We promise to make more headway on specifics next time.

If you thought we were well done with the historical elements of Australian East Coast inland trade, today you will be disappointed.  So brace yourself.  My hope is that you will trust that your labour-in-reading will ultimately prove worthwhile in respect of interpreting more contemporary events.

We need to make more of an impression in respect of the detrimental impact of political legacies upon the relative productivity & economic capacity of the Australian nation versus contemporaries.  This applies especially from the latter half of the 20th century when investment in the rail sector was curtailed.

Today we intend talking about Australian monopolies and duopolies, but to do so we must once more return to the 19th century.  And yes, principally, our chain-of-events involves the issues of protectionism, state political borders, and state controlled primary hub ports.  We are concentrating on the period through to the political birth of the Australian nation (the Federation of the Commonwealth), which was finally proclaimed in 1901 after 20 years of negotiation.  

Starting from the 1850’s, the individual colonies that were later to become states, each shared the bright idea that they would implement different rail gauges.  This was driven by trade protection interests that sought to secure goods emanating or destined for their state, to depart or arrive through their state’s ports.  Likewise, produce or manufactures from interstate would become subject to a form of non-tariff barrier.  The duties, taxes, and economic spin-off associated from port derived activity, were the colonial politicians & their treasurers’ primary impetus.  In contrast, the priority in practically & collectively arranging for the defence of terrestrial Australia from foreign invaders was obviously an interest of lesser political weight.

Approaching Federation (which was proclaimed in 1901), the convention vote for Commonwealth (national government) control of the railways was only narrowly lost.  This was despite the entrenched positions of the existing colonies.  Moreover, there were several other curious aspects in respect of Australia’s Federation negotiations.  First among them was that the Victorian leadership, and their citizenry, were at the time the strongest proponents of Federation, while the majority of the NSW elite were the most resistant.  The NSW populace, in contrast, were shown to be supportive of Federation in the two referenda in the decade preceding the Proclamation.  

What is confounding about the above is that the state of Victoria, otherwise in its history, has been regarded as the most protectionist of the Australian States; with NSW widely regarded as the most open & inclined toward trading externally.  Further, the financial and fiscal responsibility shown by NSW was far stronger during the aforementioned period, as was demonstrated when Victoria had over-indulged itself fiscally (on asset price bubble spin off) during the goldfields boom, and then paid the price in the 1890s bust.  My great-grandparents had indeed physically separated themselves from this bust  by means of emigration to NSW.

Even more confounding, was that during the Constitutional bargaining, the delegates finally agreed to the supposedly legally commanding wording of Section 92 of the Australian Commonwealth’s Constitution:

“... trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.”

But if you thought this surely had established some productive high road in the Commonwealth, one that would, in and of the wording, regulation, and judicial decisions to follow, you would be quite wrong.  You would indeed be omitting a century of state and federal licensing, monopoly/duopoly protectionist evidence of the same type that our friend Mr Gordon Barton willfully confronted as a young man.

Indeed, perhaps too Gordon took inspiration from his Sydneysider namesake Edmond Barton, Australia’s first Prime Minister, and a founding High Court judge.  Edmond, despite his position among the NSW elite, was co-author of the “trade and intercourse ... shall be absolutely free" proposition at our first constitutional convention in 1891.

A small mercy to our readers is that we won’t labour through Australian High Court Constitutional case law in this blog series.  It is sufficient to have observed that various licensing/regulatory regimes, & government mandated market monopolies/duopolies, had their place in restraining domestic ocean, air, rail, and trucking productivity nationally for over a century on our High Court’s watch.   

In my own time, I can still personally reflect on several aspects that continued to debilitate the national transport market when I was a young man.  I can recall in the mid 1980’s our trucking organisation having to secure interstate number plates in order for our linehaul fleet to be compliant with state and federal regulation when operating on interstate routes.  

I also recall in the same years representing the Australian Federation of Air Freight Forwarders at the Aviation Law Association lectures in Sydney.  There, a paper (presented by Peter McQueen) documented the constitutional legal questions in respect of a business operation of East West Airlines.  This airline had sought to disrupt the then license backed airline duopoly accorded to Commonwealth government-owned airline TAA, and Ansett a privately owned competitor.  The latter were licensed to exclusively carry air freight & passengers on interstate routes.  East-West Airlines sought to fly freight from Sydney-to-Melbourne and return in competition.  East-West then attempted to do so legally by undertaking a landing at the intermediate point at the state border city airport at Albury in order to utilise two intrastate licences to perform the task they were prohibited from performing on a direct flight basis.

Given the above as context, we will finally return today to an essential matter that we briefly raised in our first post.  Protectionist State Government regulatory and capital expenditure biases in Australia created an essentially spineless domestic railway system.  The rail network supported individual sea ports, and at each state border what may be called a defacto intermodal transfer was required (from one rail gauge to another).  In the face of later competition from disruptive truckers, those that challenged state permit/licensing requirements, the government-owned intrastate rail freight networks degraded for lack of profitable business, and subsequently collapsed.  In many cases, branch line operations (track and their rolling stock) reached such a low standard that they became unsustainable. Such is the state of much of the smaller retained branch line network bulk-carrying rolling stock that their employ also effectively requires de-facto intermodal transfers (to higher standard rolling stock) at junctions with mainline operations.  

The reason that the rail network in the East Coast inland remains essentially spineless is derived of historical events, but these same political and monopolistic forces remain elemental influences in planning policies espoused today.  

When we speak of a spine in rail, it is best to talk first of the contrary case, where Australian rail transport loads are primarily moved to-and-from ports.  In most cases these ports coalesce with our major state metropolises and commercial distribution centres.  When combined with the historical perspective, it may be easier to relate to my description of the rail network as it stands today as having, in the main, being framed as independent sets of tentacles emanating from the major sea ports.

In our next post we will seek to finally move on to a more contemporary footing.  We will also start to look at recent Australian rail planning proposals and reviews.  Moreover, as a counterpoint, we will start to discuss the shape of contemporary rail networks in the major developed regions of the world, those whose primary transportation infrastructure includes rail lines that not only serve as a spine, but also support a multiplicity of ribs.  Moreover, the objective in pursuing of a spine and rib based rail network model is to seek to provide frequency, access, and economy for shippers and consignees in all parts of the network.