ERNST & Young Perth has won a $1.7 million contract to advise the West Australian government on its plan to take back control of the state’s freight rail system.
EY will provide due diligence on financial, tax, accounting and related services due for completion by February 2027 as the state government investigates the feasibility of buying back the network.
The due diligence is the initial phase of the state government’s plan to bring the freight rail network back into government hands after 25 years of private control.
The freight rail network was privatised by the Liberal National Government in 2000 in a $585 million deal, but with key Western Australian industries growing significantly in recent years, particularly record grain harvests, the government says the demands on the network are at record highs.
The network is currently operated by Arc Infrastructure, owned by Brookfield Infrastructure Partners. The government has written to Arc to begin negotiations to bring the rail network back into public ownership.
“Under the existing lease agreement, which has another 24 years to run, the Western Australian Government has little capacity to directly support key industries that make use of the state's freight rail network or deliver important policy objectives,” the government says.
It believes increasing the use of the rail network to meet the demand being driven by new resource projects and growth in output from the agriculture sector will support future WA jobs
Reducing the number of trucks on the roads will improve safety and there will be cost savings for industry through the more efficient movement of grain and commodities to and from the state's ports.
Bringing the network back into government hands would enable it to improve the frequency and journey times for regional rail services, like the Australind, with the government being able to upgrade tracks, and build passing loops.
It would also provide greater flexibility for regional communities, which have been prohibited and limited in relation to what activities they can undertake in close proximity to rail corridors and provide greater involvement and potential partnerships with local WA businesses.
The government also believes it would provide more opportunities for tourism investment, particularly on tracks that are underutilised or under care and maintenance.