Inland Rail axed, but Labor's pet railway projects are set to squander billions more

… "from our limited analysis, the proposed inland railway emerges as an investment of uncertain economic merit….Also unclear from our results is whether the inland railway makes more economic sense than investing a similar amount in the existing coastal railway.

It was obvious at the time that duplicating the Newell Highway (at a small fraction of the cost) was a far better alternative and could be used by motorists as well as for freight. There was already an existing freight line from Melbourne to Brisbane via Sydney, which many also felt should be upgraded instead. The Melbourne to Sydney rail link is currently a loss-making basket case with rail accounting for just two per cent of total freight, and nearly all the rest going by road down the Hume Highway.

A submission to the Independent Review of ARTC Inland Rail prepared in 2022 stated that the 2015 Business Case was developed with the predetermined purpose of making the project look viable. Inland Rail was claimed to have significant flaws, which were exposed during the Senate Enquiry into the Management of the Inland Rail project by ARTC. The initial estimated cost at commencement of construction in 2018-19 was only $9.3 billion. A Senate Enquiry reported on ongoing concerns about the cost of the project. The final Committee report indicated an increase in cost from $4.7 to $14.3 billion, with predictions that it would exceed $20 billion.

The financial analysis found the project "would not generate enough revenue to provide a return on its full construction cost" but would be "cash flow positive once operational". This was misleading according to the submission.

Based on current planning, it will take at least 10 years to build the railway. Interest on the ARTC loans will multiply rapidly over those years, and it will take another 10 years of freight traffic to generate enough revenue to start repaying the loans. The venture may bankrupt ARTC. The Business case states that the project will take 35 years to break even. However, this is against the cost estimate of $9.7 billion, not the current projected cost of over $20 billion.

In the wake of the dumping of the Inland Rail project, almost all prominent National Party figures associated with the project (from John Anderson through to Matt Canavan, as well as Barnaby Joyce) have been in the media bemoaning its demise. They must all have hides thicker than a Rhinoceros!

Australia has form in respect of funding expensive rail projects known to be uneconomic.

The most prominent such project was the Alice Springs to Darwin Railway. The Commonwealth, SA and NT governments put up a total $560 million towards the $1.1 billion cost, with a private consortium committing $740 million. The all-up cost back then (in 25 years' ago prices) was $1.3 billion . The FreightLink consortium was contracted to build and operate the line with ownership to eventually transfer back to public hands after 50 years.

David Hill, then Chief Executive of NSW Rail, conducted a study on the costs and benefits of completing the line, and concluded that the investment "would constitute a major misallocation of the nation's resources". The Bureau of Transport Economics also investigated the potential of the line and recommended instead that the highway be upgraded . Other critics of the project said it was destined to be a white elephant, with insufficient demand for domestic and export rail freight to cover operating expenses.

The project indeed turned out to be an economic disaster. After failing to make a profit and later being placed in voluntary administration, FreightLink agreed to sell its ownership. Since 2008 it has been owned by US railroad company Genesee & Wyoming Inc, which purchased it for a mere A$334 million .

While Labor has dumped Inland Rail, it is instead pouring billions into its own favoured rail projects. The 2026 Budget provides funding for the following rail projects:

• Melbourne's Suburban Rail Loop East – an additional $3.8 billion for the project. This brings the Federal Government's total investment to $6 billion.
• National rail freight network upgrades – $1.75 billion in additional funding for the Australian Rail Track Corporation (ARTC) to support the maintenance, upgrade, modernisation and resilience of the national freight network.
• High speed rail – Continued funding ($229.6 million over three years from 2025-26) for development works for first stage, from Newcastle to Sydney.
• Melton Line electrification – $76.4 million for the electrification of the rail line in Victoria.
• Fuel incentive scheme – $55 million for the Transport Resilience and Capacity Kickstart (TRACK) program to promote use of rail freight in response to the fuel crisis.
• Sydney-Canberra rail corridor upgrades – $50 million (in addition to $25 million each from the NSW and ACT governments) to deliver upgrades to the rail network.
• National Freight Data Hub – $1.9 million to continue efforts to standardise accessible freight data.
• Supply chain – $1 billion in interest-free loans through the National Reconstruction Fund's Economic Resilience Program to provide cashflow relief to manufacturing and logistics businesses, including freight businesses, in critical supply chains.