South Australia’s Freight Transport Infrastructure Principles and Project Priorities

April 2005 Executive Summary

South Australia’s ability to achieve its maximum growth potential is linked to the timely development of efficient and cost-effective transport infrastructure.

The South Australian Freight Council has identified nine projects which, in its view, are vital to ensure the State continues to grow free of transport bottlenecks or inadequate infrastructure that add to costs and reduce the State’s competitiveness. The transport initiatives identified by SAFC, with an overall cost in the order of $2.4 billion, comprise the centrepiece of the Council’s submission to the State Government which is currently developing a series of plans that affect the freight and logistics sector.

The Council also believes the Australian Government has “short-changed” SA relative to other States with the lowest per capita payments for new road and rail developments. This situation must change with further Auslink funding of $127 million (ie. a total of $636m) required to put SA on an equitable footing with the rest of the country. With a population that is dispersed over an area greater than several other States, SAFC believes the case for increased funding is compelling.

In the absence of financial support for the projects identified, and in light of the fact that efficient transport infrastructure is integral to interstate and overseas trade, SAFC believes the State Government’s Strategic Plan goal of almost trebling SA’s exports by 2013 will not be realised.

Improving the flow of commercial and private transport will also deliver significant environmental gains for the community with a reduction in greenhouse gas emissions high amongst them.

In its submission to the State Government, SAFC’s members, who represent over 10,000 businesses, have encouraged the Government to consider a number of projects as “high priority” initiatives. These include:

• The deepening of channels and berths at Outer Harbor ($169 million including associated berths and transport connections but not including Expressway costs);

• Construction of the including closed bridges ($220 million);

• Addressing a “desperate” backlog of road infrastructure maintenance ($160 million);

• Extending the Sturt to benefit the near north and beyond ($300 million);

• Development of a North-South corridor through ($1.3 billion); and

• Construction of passing lanes on the in the south-east ($10 million).

SAFC’s submission is underpinned by a Statement of Principles that highlights the economic, social, and environmental benefits of an effective and comprehensive freight transport infrastructure.

Rail freight photograph on front cover courtesy of GRMS Media

1 Introduction

Safe and efficient freight transport is an absolute requirement of today’s world.

It underpins every aspect of the South Australian economy. It must also be provided in a way which is economically, socially and environmentally sustainable.

The provision and maintenance of an effective and comprehensive Freight Transport infrastructure is a core responsibility of government. Achieving a regime that strikes the best balance of air, sea, rail and road transport throughout the State, interstate and overseas is a fundamental pre-requisite for the economic and social viability of South Australia.

The South Australian Freight Council (SAFC) advises the State and Federal governments on all aspects of planning for and meeting South Australia’s freight related infrastructure needs. It is focussed on identifying key freight logistics issues and developing solutions for implementation by Government and within industry. SAFC’s members are drawn from all industry sectors along the supply chain, ranging from buyers and users of freight to freight service providers and Government.

SAFC has released this position paper – including prioritising the State’s top nine projects – to clearly and objectively identify the infrastructure requirements of the State and support the emerging business and community demand for freight movement over the next 20 years.

SAFC has prepared this document to assist governments and other stakeholders by communicating its views on:

• The core principles that must underpin the State’s infrastructure and its management;

• The priorities in infrastructure planning and implementation; and

• A qualitative triple bottom line assessment of the freight infrastructure priorities.

Fundamental Objective

The fundamental objective in the provision of freight infrastructure must be to ensure that South Australia has an efficient, effective, internationally competitive, multi-modal, state-wide freight system to meet the economy’s ongoing and projected freight demands.

2 Government Planning Background

The South Australian Government is due to release an Infrastructure Plan and has also been developing a State Transport Plan and State Freight Strategy. SAFC has provided comments during the development of both the Transport Plan and the Freight Strategy and understands that these plans will now be embodied in the State Government’s broader Planning Strategy. The SAFC remains interested to see the extent to which its comments have been taken into account.

At a national level, the Australian Government has released Auslink as its platform for a planned approach to nationally significant infrastructure development. While supporting the concept of Auslink, as an otherwise logical and strategic approach, SAFC is highly critical of the gross inequities of the funding allocation under Auslink for South Australia.

SAFC played a key role in the pre-election campaign that succeeded in increasing the State’s initial allocation by $118m (a 37% increase), but this still falls well short of a “fair share”, and a further $127m is required to put South Australia on an equitable footing with the other States.

Auslink Funding

Road and Rail Transport Infrastructure Allocations ($ Per Capita)

Average $418.20 ACT $146.06 NT $623.07 TAS $422.02 SA $335.54 SA WA $364.94 QLD $492.08 VIC $384.42 NSW $441.54

$0.00 $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00

SA Population Share 7.6% SA Share of Auslink Funding SA National Roads 11% 6.9% SA Regional Roads 15%

The inequitable allocation of Australian Government funding is confirmed by South Australia’s per capita allocation for road and rail infrastructure lagging behind grants to the other States – even after including the $118m extra funds committed during the 2004 Federal Election.

3 Core Principles and Policy Issues;

Freight Transport Underpins the Community: Freight infrastructure and the industry exist to serve the interests and daily needs of business and the community.

• Freight transport is a derived demand – it arises from the original demand from businesses and the community for specific products and their transport and handling. People demand the product, the freight transport sector moves it to them, and it also removes the by-products and waste of the community and manufacturing.

Core Government Responsibility and Community Acceptance: The State and Federal governments have a core responsibility to provide and properly maintain transport infrastructure to meet the needs of the community and the commercial sector today and for future generations.

• Proper and full funding of transport infrastructure, for new projects and maintenance, must be a first order priority of governments; including, where appropriate, through private public partnerships (PPP) or other funding mechanisms.

• Governments and Businesses must raise the community’s awareness and acceptance of the fact that transport infrastructure is necessary to support the community’s needs. In turn, the community must acknowledge, rather than ignore, the need to allocate substantial government funding for infrastructure as a high priority.

Facilitate Multi-modal Balance: The infrastructure assets, policies and regimes implemented by Governments must facilitate genuine and effective modal choice and a sound balance in the use of the various modes – air, sea, rail and road. The SAFC has no underlying preference for any given mode and it therefore supports, as a fundamental cornerstone, the utilisation of the most appropriate mode(s) for any given freight task and region.

Governments should not artificially manipulate modal choice, through subsidies or other means, for essentially political purposes because the resultant outcomes can only be counter-productive for the economy and the environment.

Where Government does exercise its responsibilities in influencing modal choice, it should only do so on a basis that is genuinely commercially sustainable in the medium-to-long term, in so far as freight rates and service are concerned, to meet projected demand.

Long-term Confidence and Certainty: Freight infrastructure planning and development must be managed in a manner which provides the community and the business sector with the necessary certainty and confidence to facilitate the sound commercial decisions and long-term investments required for the State to be nationally and internationally competitive.

• Governments and industry partners must deliver the infrastructure as planned, and on-time, and the network must perform reliably, to the desired standard, on a consistent and sustainable basis.

• Freight corridors, infrastructure and precincts must not subsequently be encroached upon or be denigrated or downgraded by urban sprawl and inappropriate adjacent developments.

4 Triple Bottom Line Considerations:

The following triple bottom line factors must be considered when assessing infrastructure proposals.

Economic The economic aspects associated with freight transport infrastructure projects take many forms including: • Investment Attraction – quality infrastructure is a key influencing factor in business investment decisions; • Business/Operational – improvements in the cost structure for operators generally manifest themselves as reduced freight rates, and • Tr ansport activity is an economic activity in its own right, contributing up to nine per cent of GDP. It therefore warrants close consideration from an economic perspective.

Share of GDP

Rest 56%

Mining, Wholesale Construction and Utilities and Retail Trade 12% Logistics Manufacturing 11% 9% 12%

Source: BTRE Working Paper, Logistics in Australia, October 2001 (based on 1999-2000 GDP) figures.

Social There are significant social benefits arising from freight transport, including the fundamental benefit of support for the quality of life the community demands.

This includes: • Community Development – the transport network contributes to a community thriving (or not) through benefits such as improved connectivity and positive economic development impacts;

There are also some costs accruing to society that arise from transport and logistics activity, which include: • Tr ansport Safety – costs associated with individual accidents and injury and death that occur on the transport network are high; although in the case of road transport for example, evidence clearly indicates the vast majority of such injuries and deaths on roads are directly attributable to the behaviour of a small minority. Over 80% of car-truck fatal accidents are caused by the motorist involved, according to the Federal Office of Road Safety. This is due to unsafe decisions by a minority of motorists. • Community Dislocation – especially for rail; and • Costs associated with Regulation – controlling economic, social and environmental outcomes (eg: Adelaide Airport Curfew limits levels of service and flexibility available to get product to market);

5 Triple Bottom Line Considerations: Continued

Environmental There is increasing concern in the community regarding the negative impacts of inefficient freight transport activities on the environment, including:

• Greenhouse Gas Emissions – There are many misconceptions around environmental issues, including that road transport is a major contributor to greenhouse gas emissions. In reality, transport as a whole contributes less than 17%, including just six per cent from heavy vehicles, with light commercial vehicles and cars contributing significantly more. Nonetheless, freight transport is increasingly a target because its activities are growing and highly visible.

Greenhouse Gas Emissions Per Tonne of Freight Moved

AIR

INCREASING ROAD EMISSIONS RAIL

SEA

• Noise – some transport activities are noisy. Efforts to create buffers between the transport network and the community should be encouraged along with the adoption of improved and quieter technologies within the freight transport sector; • Amenity – Amenity can also be affected by freight activity, especially along key corridors and at key facilities. However, such activity is generally crucial to the efficient functioning of freight networks and systems, and governments should adopt and actively pursue a policy of ensuring that the community is aware of, and accepts, the vital support role played by Freight Transport in their daily lives. Governments could then implement sound infrastructure planning by quarantining designated freight corridors from unwarranted constraints and regulations that are imposed in response to community concerns, often arising from subsequent urban development along the freight routes.

There are some opportunities to improve the environmental performance of the freight and logistics sector, including: • Alternative Fuels – limited supply networks, conversion and operating costs often make these technologies prohibitive; and • Larger Units/Vehicle Combinations – represent an opportunity to improve environmental performance (as well as economic and social outcomes) through reductions in the number of units required to perform a given task, and reduced unit freight costs.

Providing the right infrastructure and regulatory regime will facilitate potential improvements in the environmental performance of the freight transport sector.

6 Core Infrastructure Criteria

Given these principles, the aim must be to ensure that South Australia has freight transport infrastructure that meets the following criteria:

• Is efficient and effective; – Efficient and adequate freight infrastructure advantages the entire community by reducing costs and increasing economic viability through: • Decreasing congestion which, in turn: –Reduces safety risks, and –Reduces the adverse environmental impacts of fuel and noise emissions.

• Is fit for the purpose; it is able to accommodate the desired task and reliably perform at the level of safety, efficiency and effectiveness demanded by industry.

• Facilitates internationally competitive transport outcomes including: – Access – meeting the accessibility requirements of industry, including connectivity; – Accommodating the vehicles, trains, vessels, and aircraft that industry requires now, and in the future, to remain competitive in their markets; – Competitiveness / pricing – freight logistics costs are a significant component of overall manufacturing and commodity costs and as such the marketability of the products is very sensitive to increased freight transport costs. Freight transport costs must be kept to an absolute minimum to avoid any negative impact upon the competitiveness of South Australian (and Australian) products in their markets; – Be attractive to business and potential investors in the State; and – Delivering Competitive Advantage to SA businesses by being efficient and effective in international markets.

• Is genuinely multi-modal and provides for efficient modal-interchange;

• Is state-wide and supports connectivity – facilitating seamless statewide linkages, as well as to interstate and international markets, with appropriate linkages;

• Provides the capacity to meet ongoing and projected freight demands of the community and the economy;

• Provides the flexibility to facilitate a responsive freight transport system capable of meeting emerging needs and trends;

• Optimises the balance between freight transport logistics and appropriate and sustainable environmental and social outcomes;

• Supports economic development so that industry can, as a minimum, compete on a level playing field in its markets;

• Is funded for the life of the project and the asset – both new infrastructure, and importantly, the maintenance of existing infrastructure for its effective working life must be fully funded; and

• Is sustainable in economic, social and environmental terms, as well as for individuals.

7 Priority Projects:

HIGH PRIORITY Channel Deepening (Grain & Container Terminals)

HIGH PRIORITY HIGH PRIORITY Port River Expressway Outer Ring Route (Underway) (Closed Bridges & no toll)

HIGH PRIORITY North-South Corridor Development HIGH PRIORITY Upgrade South Road (including Inner RingRoad (Underway) over/underpasses at key intersections) Also develop Marion/Holbrooks/Hanson Rd corridor as alternative route

8 Priority Projects: Continued

9 Priority Projects: Continued

10 High Priority Projects

The projects listed below have been assessed and prioritized in terms of their adherence to the core criteria outlined above, and the contribution that they can make to the achievement of economic, social and environmental objectives.

PROJECT NAME & DETAIL REASONING

Outer Harbor Channel Deepening Larger vessels requiring improved facilities are The deepening of channels and berths at the increasingly entering the Australian trade lanes Outer Harbor container terminal and the new (Panamax and Cape Size grain vessels, 4,200 teu grain terminal currently under construction. container vessels). Deepening of the channels Cost: $169 million and associated facilities at the Outer Harbor will ensure South Australia’s access to international This total includes $60 million for the container markets expands, and deliver economic benefits terminal (including channel deepening and through enhanced existing and increased berth extension), and $109 million for the grain shipping service levels and cheaper unit freight terminal (including associated berth and costs. Sea freight is rated as the safest mode transport connections, but not including Port with the lowest impact on the environment. The River Expressway costs) State’s ability to attract direct shipping services will improve due to the enhanced capacity. Failure to fund this project would have resulted in losing substantial shipping trade to other Australian States with a broad flow-on loss to the SA economy.

Port River Expressway including associated This project will contribute economically through works – road connections, rail upgrades. improved access to the port area (including New road access from to reduced operating costs). The social benefits of Port Adelaide and the Outer Harbor, and new the project are high with freight traffic being rail access crossing the Port River. Road diverted away from local communities and the element funded and underway. Road and rail historically significant Port Adelaide centre. bridges partially funded under AusLink. The The improved access to the port area for both SAFC considers that the bridges MUST NOT rail and road freight will also have a positive be opening bridges. environmental impact. Cost: $220 million Construction of opening bridges will add approximately $100 million to the cost, and will substantially reduce efficient freight movement. Tolls would have further reduced the benefits available to the State’s economy and community.

Accelerated Maintenance Poorly maintained transport networks increase The Draft State Transport Plan outlined the operating costs, discourage business investment desperate need to alleviate the maintenance and can increase total maintenance costs. backlog through increased funding. However, Safety outcomes also improve on well the State Government is yet to make the maintained networks, as do environmental significant increase in funding necessary to outcomes through smoother running leading both clear the backlog and to maintain the to reduced emissions. network in a “fit for purpose” condition through Specific priorities within an accelerated its useful life. Whole-of-life costs should be maintenance program also needs to be identified, standing policy when funding specific projects. and at the very least, a plan and funding to Cost: $160 million address the backlog within 15 years is required.

Sturt Highway Extension • part-funded under Economic benefits will accrue from improved Auslink program. access to and from the port area, rail terminals Construction of new national highway linking and transport depots. Producing areas to Gawler to Pt Wakefield Road ($190m) and benefit will include Virginia, the Barossa Valley ultimately on to the Port River Expressway and Riverland areas, as well as areas of the ($110m) and into the port area. Approximate mid-North and Far North of the State using Angle Vale/Heaslip Rd alignment likely, replacing Main North Rd today. A significantly improved Gawler to Gepps Cross section of Main North social outcome through improved interaction Rd. Widening of Port Wakefield Road from the with other users (especially on Main North Rd junction to the Port River Expressway will be below Gawler, with its high commuter traffic necessary to accommodate the increased traffic. levels). Reduced congestion will deliver Cost: $300 million environmental benefits.

11 High Priority Projects Continued

PROJECT NAME & DETAIL REASONING

North-South Corridor Development linking to A large percentage of the total SA freight task the Regional Network and Key Intermodal and volumes are moved within urban Adelaide Facilities. warranting development of key freight corridors The movement of freight between the northern to ensure the efficient and effective movement and southern suburbs of Adelaide is critical to between producer, manufacturer and key industry efficiency. Sections of South Road facilities, including Port Adelaide and Adelaide were added to the national AusLink network in International Airport. Freight activity will be recognition of the key role played in north-south funneled along these key corridors, generally freight movement. Grade separation ($117 away from local communities. Free flowing million), widening and junction improvements freight will reduce congestion and improve are needed. access and operating costs. The proposed development of the Marion/ Specific improvements will need to be investigated Holbrooks/Hanson Road ($110m) corridor will (eg: which junctions and rail crossings should go some way towards accommodating be grade separated?). projected freight demand. The Committee for Adelaide Roads (CARS) has identified an alternative route linking the Extension with the Southern Expressway, utilizing much of South Road and incorporating grade separation at key intersections to facilitate efficient and effective movement of traffic ($1.3b). Cost: $1.41billion (does not include separately listed costs for improvements to South Road which are incorporated in the CARS proposal)

Riddoch Highway Expansion (10 passing lanes) Upgrading of the existing road will ensure a and Eventual Duplication. viable road network is available to this key This key route connects the State’s Upper and producing region (in the absence of a viable rail Lower South East regions to the operation). The South East of the State produces and key ports, airports and facilities. a variety of products, including grain, meat and livestock, seafood, timber and timber products There has not been a regular rail freight service (including woodchips, paper and panelboard), to the region since 1995 (when the Adelaide – horticultural products, some processed line was standardised, cutting off (eg: potatoes to chips), wine, dolomite and the broad gauge SE Network). Recent attempts more. Good road access will facilitate regional to reopen parts of the SE Rail Network have not development and accommodate these met with any sustained private sector interest). expanding industry sectors. Safety benefits Cost: $10 million (passing lanes only) will accrue from improved interaction between trucks and other users, especially tourists visiting the regions many attractions. Smoother running and more efficient access will improve environmental performance.

Eyre Peninsula Grain Transport System – both The Eyre Peninsula is a key grain producing road and rail improvements. region of the State with a large proportion of Upgrade sections of the EP rail track, rail receival production destined for export markets. Rail and out-loading facilities and other road & rail has historically played a dominant role in access projects on Eyre Peninsula targeted at moving large volumes of grain to port. The improving the flow of grain to Pt Lincoln. condition of the isolated, narrow gauge rail Cost: $40 million network has declined to a critical point where its future operation requires an injection of investment funding. This investment will improve the flow of grain to port and ultimately grain industry sustainability. Safety benefits will accrue from continued rail usage. The interaction of freight traffic and the community will improve. Congestion in Pt Lincoln will reduce and greenhouse gas emissions will decrease as rail maintains market share.

12 High Priority Projects Continued

PROJECT NAME & DETAIL REASONING

Ring Route – Bakewell Bridge, Britannia Considerable investment has been made in this Roundabout, Fitzroy Tce upgrade. route over recent years (eg: upgrade to Robe Tce Continued development and enhancement of an and Torrens Road connection). Nonetheless, Inner City Ring Route to funnel traffic around additional investment is required in areas such the Adelaide City Centre. Route incorporates as the Britannia Roundabout, the Bakewell Toll Gate – Glen Osmond Rd – Fullarton Rd, Bridge and for continuing enhancement and Dequetteville Tce, Hackney Rd, Fitzroy Tce, Robe upgrades. Tce, Park Tce, and either Torrens / Churchill Rd Project will increase the efficiency of traffic flow option (and on to the port and rail terminals) or around the city fringe, improve safety for all Park Tce to Port Rd, Railway Terrace and City road users including the freight industry, and West Connector link to South Rd. Ring route create more pleasant streetscapes for residents element is completed with a connection and road users. between South Rd and Fullarton Rd, using Greenhill Rd (no cost included). Cost: $42 million

Outer Ring Route Considerable investment has already been made Continued development and enhancement of the in this route over recent years (eg: upgrade to Outer Ring Route, funnelling traffic through the Portrush Road). Nonetheless, additional Adelaide metropolitan area. Route incorporates investment is required in areas such as South Toll Gate – Portrush Rd – Ascot Avenue – Rd (especially between Port Rd and Torrens Rd) Hampstead Rd ($6m), Grand Junction Rd, Gepps and for continuing enhancement and upgrades. Cross Intersection ($45m for grade separation) Project will increase the efficiency of traffic Ring route element is completed with a flow around the city fringe and to/from the port, connection between Gepps Cross Intersection, airport, rail terminals and key facilities. It will South Road (costs included under North-South improve safety for all road users including the Corridor Development), and Cross Roads (South freight industry, and create more pleasant Road to Portrush Rd – no cost included). streetscapes for residents and road users. Cost: $51 million

Medium Priority Projects

PROJECT NAME & DETAIL REASONING

Rail Intermodal Terminal Development The establishment of commercially viable rail Establish intermodal terminals in key areas of terminals will facilitate achievement of the State, and ensure efficient road access is government and community goals relating to available. modal shift for freight. Cost: $1 million – $20 million depending upon Improved modal choice may also have a development proposed downward effect on freight rates as the choices available to industry expand.

Adelaide to Melbourne, Dukes Highway Principal route to Melbourne, which carries high duplication volumes of freight moving to market or export Duplication from the Victorian border to Tailem exit points (and imports). Key regional areas Bend. Traffic volumes, particularly between such as the Murraylands and South East of the Tailem Bend and Keith warrants the duplication State funnel traffic onto this route. It is therefore of this road. significant from an economic perspective as any Cost: $600 million efficiency improvements arising from access improvements will reduce production costs.

Improve Adelaide International Airport Freight The Adelaide International Airport Master Plan facilities. includes a proposal to develop a freight park Extend Richmond Rd into the airport precinct, on the eastern side of the Airport. Efficient providing connections to the proposed freight connections between the park and the freight park at Adelaide International Airport. network will facilitate the movement of freight Cost: to be determined (depending upon and will assist industry expansion. development proposed)

13 Lower Priority Projects

PROJECT NAME & DETAIL REASONING

Adelaide – Melbourne rail The current clearance problem represents a Upgrade Adelaide to Melbourne rail line to significant constraint on the national rail facilitate double stacking of containers and network. Double stack capability is currently maximum length trains allowed elsewhere on available from Adelaide to Perth, Darwin and the network (1800m). Parkes (NSW). The current 1500 metre maximum Cost: $300 million plus train length also limits operations, on a link which is near service capacity.

South East Rail – Stage 1 Investor interest in this project is waning. The Upgrade and convert to standard gauge the $10m offered by State Government has not been Wolseley to Mt Gambier, Mt Gambier to taken up. Nonetheless, the South East of the Heywood, and later, the Mt Gambier to Millicent State makes a large contribution to Gross State rail lines (Stage 2). Product, and is faced with a rapidly growing Cost: $18 million freight task (especially woodchips).

Adelaide Bypass – road and rail Further investigation of preferred routes is Proposal to link Murray Bridge and Pt Wakefield required so as key corridors can be reserved. Cost: $10 million - $100 million, depending on The project will improve the flow of national chosen route freight and remove unnecessary freight trips from the Adelaide urban area.

Princes Highway Duplication Duplication of the existing road will ensure a The Gepps Cross to Port Wakefield section of viable road network is available to the key this road has already been duplicated. Traffic producing regions along and adjacent to the volumes warrant duplication to Port Augusta. corridor, as well as regions further afield. Cost: $600 million

Port Facility Development Proposals are complementary to Outer Harbor Deep water bulk product berths, move livestock channel deepening. Expansion of the motor berth. vehicle terminal may also be necessary. Cost: $24 million

East-West National Route This route principally serves interstate Connection between Peterborough and Pt operators and producers needing to move Wakefield Road near Crystal Brook, via freight between the eastern seaboard and Jamestown and Gladstone, to replace existing Western Australia and the Northern Territory. route via Orroroo and Wilmington. It is a significant rate for freight within the State, Cost: $3 million and the Government should complete the remaining work on this route, so as to ensure a return on the investment it has made to date.

For further information, contact the South Australian Freight Council on (08) 8447 0688 or www.safreightcouncil.com.au

14