Caroline Wilkie

procurement

National approach needed for rail procurement

The dichotomy between building trains in Australia or overseas ignores the opportunities for procurement reform that would keep Australia competitive, writes Australasian Railway Association CEO Caroline Wilkie.

In recent months we have seen two very different approaches to rail procurement in Australia.

In New South Wales, the state government welcomed new rollingstock onto the network, after importing trains from overseas.

Meanwhile, in Victoria, the state government confirmed the order of the next tranche of V/Line trains, to be manufactured at Bombardier’s Dandenong facility.

As one state looked to promote local jobs in its own backyard, the other claimed doing so wasn’t really an option.

The truth is, both procurement processes highlight some of the challenges the industry is facing.

The NSW government’s erroneous claims that is wasn’t realistic to build trains in Australia were understandably met with disappointment from the industry.

We have – and always have had – a strong rail manufacturing industry in Australia.

We can be proud of our $2.4 billion rollingstock manufacturing and repair industry with capability and experience across the country.

Companies like Alstom, Bombardier, Downer, and UGL are leading the way in Australia, with over 900 businesses involved in rail manufacturing and supply nationally.

The industry can design, manufacture, maintain, and repair rollingstock to the highest standards, with capability in Cardiff and Broadmeadow in NSW; Dandenong, Ballarat and Newport in Victoria; Maryborough in Queensland; and East Perth in WA.

Metropolitan Sydney and Melbourne are the largest centres of rollingstock maintenance and repairs in Australia, and two of the three largest non-capital city employment bases for the industry nationally are in Newcastle and Lake Macquarie.

But the sector lacks the scale of its international counterparts and is hamstrung by the procurement processes that exist across the country.

While contract awards like those in Victoria do create jobs and support local businesses, more needs to be done to support the long- term health of the sector.

Victoria, like most state governments, applies local content requirements at the state level.

It is not hard to see why governments are prone to favouring a state-first procurement policy when awarding these contracts.

Research conducted by the ARA this year found that while the average business spends about twice their wages cost on intermediary inputs, the rollingstock manufacturing
and repair industry spends five times their wages cost.

It is understandable that governments believe keeping manufacturing in their state will realise these flow-on benefits and maximise the jobs and economic benefits generated from their investment.

But in practice, it really means there are fewer and fewer chances for the industry to win work, create jobs and support innovation and growth.

It means the team working on rollingstock in Victoria might not meet the local content requirements set by NSW, Queensland, or WA.

If the same team wanted to bid for a very similar contract outside of Victoria, they might need to have facilities and people located in the state where they are bidding.

For many companies, that kind of duplication – often for a single contract – is impractical, expensive, and difficult to manage.

Even if they do choose to establish a local presence, the costs can be prohibitive not just because of the need to be local, but because different states may favour different specifications to achieve the same outcome in their tender process.

In the end, this creates layer upon layer of complexity that drives up costs, makes it hard for rail manufacturers to work across jurisdictions and erodes the size of the project pipeline Australian businesses can work towards.

A national approach to rail procurement is the only solution.

We need an approach that recognises our manufacturing industry can only grow and scale up if we treat the whole of Australia as one single market.

We need to ask industry to deliver an outcome or solve a problem, rather than specify the individual components that must be used, even if they are not the best choice available.

We must consider the whole of life costs of an asset, and the additional economic and sustainability benefits our industry can deliver, rather than choose options that are cheap to produce but could cost much more to maintain.

If we take these simple steps, the industry will have greater certainty, increase its investment and training, and have access to a bigger project pipeline.

They will achieve new efficiencies and forge innovation that will make a difference for the industry and the people that rely upon it.

Ultimately, rail manufacturing will grow and increase its competitiveness, providing more jobs and opportunity than is possible right now.

We were heartened to hear NSW Minister for Transport and Roads, Andrew Constance confirm that he is willing to work on the issue with other state governments.

With more rail contractors and manufacturers looking to increase their use of Australian suppliers in the wake of COVID-19, there is no better time to act than now.

We look forward to working with Constance and his counterparts across the country to deliver better outcomes for the industry and the economy.

freight

Get the freight basics right and benefits will follow

To make the most of infrastructure investments, the playing field for rail freight needs to be evened out, writes Caroline Wilkie, CEO of the ARA.

The confirmation of funding for the Port of Melbourne direct rail line to South Dandenong in August was welcome news for business, industry, and residents in the region.

The direct rail connection to the port forms part of the wider Port Rail Shuttle Network and will make it easier and more cost effective for businesses to access port facilities.

The Federal and Victorian government funding will deliver tangible benefits to businesses in Dandenong’s manufacturing sector and improve the efficiency of port operations.

Ultimately, the project will also take 100,000 trucks off the road, helping give local residents their city back in the process.

In the same month, the NSW government fast tracked approvals for the Botany Rail Duplication and the Cabramatta Rail Loop, putting its support behind greater use of rail within its freight network.

The projects will not only deliver this critical new infrastructure to meet the state’s freight needs but will take 54 trucks off busy city roads with every additional freight train travelling on the Botany line.

That will make a crucial difference as the Port of Botany’s freight task increases by 77 per cent in the 20 years to 2036.

As Minister for Regional Transport and Roads Paul Toole observed when announcing the approvals, these new connections are so important because the more freight is moved on rail, the less congestion there is with fewer trucks on the roads.

These projects are great examples of the difference rail freight can make, and why continued investment is essential to the continued liveability of our cities and towns.

But while the benefits of projects like these are obvious, more needs to be done to ensure the rail sector can meet our increasing freight needs.

While Australia’s freight task is growing – and will continue to grow – the role rail freight plays in meeting this demand has actually declined.

Recent years have seen the rail industry’s share of the freight task eroded by policy settings that favour other modes of transport and frustrate investment in the sector.

As a result, less than one per cent of freight travelling between Sydney and Melbourne is moved by rail – a far cry from the 40 per cent share the rail network maintained in the 1970s.

While the vast expanses of the country have seen east- west connections hold up better, rail freight’s modal share has started to slip there too, with rail now carrying just 54 per cent of the freight task across the Nullarbor.

It is hard to reconcile the declining role of rail freight at a time where the sector needs more capacity than ever before.

Part of the problem is how we price rail freight when compared to road.

While getting trucks off the roads remains a focus in these busy and often congested urban areas, heavy vehicle road reform has simply not progressed.

So, while rail freight access charges are based on maintaining and operating the infrastructure it requires, the road freight industry is not expected to fully cover the cost of maintaining and operating the roads it uses.

As we hear more about the importance of easing congestion, the sustainability benefits of using more rail services and the value of creating city precincts that make it easier for residents to get around, favourable pricing models for road freight is increasingly difficult to reconcile.

We must have a level playing field for all to ensure rail freight can grow to support the increasing demand for freight across the country.

This, together with harmonisation of standards across the country, could enliven the rail freight sector again and ensure it is ready to support the growth of our economy over time.

After all, the industry has shown how much can be achieved under the right settings.

Australia was the first country to move to fully autonomous freight trains when the mining sector adopted the technology to service iron ore mines in the Pilbara.

This capability has become a hallmark of mining in the region and the significant benefits the industry delivers to the broader economy.

Use of rail for bulk commodities has increased, bucking the trend of the broader sector.

With a level playing field and certainty of standards across the country, there is no telling what additional benefits further innovation in the sector could deliver.

But first, we need to get the basics right so that rail freight can compete equally and fairly.

After all, we cannot allow new investment in rail infrastructure that busts road congestion in our cities to be eroded by a policy environment that only encourages business and industry back to the roads in the end.

innovation

Find the fast track for innovation in the Australasian rail industry

When the Rail Manufacturing CRC closed its doors earlier this year, it spelled an end to dedicated rail innovation and technology funding in Australia.

While the loss has been felt deeply by the industry, the fact is the CRC’s significant gains were achieved against all odds.

A new report commissioned by the ARA has found rail innovation is in decline in Australia, and urgent changes are needed if the $155 billion in rail investment to come over the next 15 years is to deliver a truly modern, responsive and innovative rail network.

The report found rail patents are falling in a market where a lack of national focus and certainty, and wrongfooted procurement processes, have created a culture where innovation is simply not encouraged – and at times impossible to progress.

It has called for urgent action to establish rail innovation as a national priority and clearly articulated the need for a single Australian rail market that replaces state specific approaches with national local content policies.

As the federal government highlights the importance of manufacturing to help create Australia’s path out of recession, there is a real opportunity for Australian rail to embrace innovation and play a greater role in the $362 billion global rail technology market.

To do that, we need a national approach that provides certainty and longevity for the industry.

For all the benefits the Rail Manufacturing CRC delivered, the lack of continued funding beyond its term and relatively low level of public investment compared to international models saw the opportunity under-utilised.

Only 63 cents of private investment on national projects were secured for every $1 of CRC funding.

By contrast, the UK Rail Research and Innovation Network attracts $2 for every dollar of public funding, and Japan brings in 20 times its public funding from the private sector.

They achieve those results because the policy settings are right, the long term commitment is there and the focus on rail innovation recognises the invaluable role of both the public and private sectors working together.

A national approach, tied to clear commitments to invest in research, would help achieve that here in Australia.

The ARA has long advocated for a single Australian rail market to give the industry the scale it needs to invest, grow and innovate.

The report makes it clear that is more important than ever as we look to the future.

Current state procurement processes not only create inconsistent local content policies – making it hard to create true centres for innovation – but they focus on the up front capital costs in making their purchasing decisions.

That means innovations that requires investment up front in order to save time, money and boost efficiency over the life of a project or asset often don’t get to see the light of day.

Public procurement processes also err on the side of caution, calling for like-for-like replacement in many cases.

The private sector may have better, faster, or cheaper ways of delivering on requirements, but these conditions prevent them from being put forward.

Overall, these conditions create a risk averse culture that dampens the willingness of the sector to try new things.

And that is ultimately to our detriment.

Australia has great capability in the rail sector and could lead the world on rail innovation if the conditions were right.

The world-first use of autonomous heavy haul trains by the resources sector in the Pilbara is evidence of that.

Australia’s manufacturing sector features some of the industry’s brightest minds. But their big ideas are more likely to be sent overseas than developed here.

With only one per cent of rail patent submissions coming from Australia in 2019, the only way is up.

This next phase of rail investment is a chance to modernise and innovate like never before.

It is a chance to build new skills and capability in Australia to create jobs and opportunity for the next generation of rail workers.

All we need to do is take action and make rail innovation a priority for all of us.

Finding the fast track for innovation in the Australasian rail industry is available here.

generation

Preparing for the growth ahead: Finding a new generation of rail workers

CEO of the ARA Caroline Wilkie writes that a generation of young people looking for opportunities have the talents to fill rail’s skills gap.

In a year that has been more about preserving jobs than creating them, the concept of skills shortages can be a difficult one to reconcile.

However, the impact of this year’s events has not changed the fact that a very real and significant skills gap looms in the rail industry.

The Australasian Railway Association’s (ARA) 2018 skills capability study found the rail industry was staring down the barrel of a 24 per cent skills gap on current employment levels by 2024.

The gap existed across the spectrum, from technicians, trades and operators to managers and rail professionals.

Clearly, this is an area where action is needed if we are to make the most of the significant investment pipeline of the coming decades.

The National Rail Action Plan skills and labour working group, which I co-chair, is currently looking at how the industry can address this issue.

The group is bringing together key people from across the industry to inform this work and I look forward to reporting on our progress as time goes on.

In the meantime, the ARA is continuing to advance its skills agenda.

As more rail projects come online, there will obviously be a need for the development of skill sets that are specific to the rail industry.

We will need a stronger focus on skills and education to achieve this. The ARA is advocating for the development of a dedicated skills academy that offers targeted solutions to meet the industry’s future needs.

This will not only ensure the focus is firmly on the technical requirements of the industry but will also ensure a strong culture of safety and excellence can be embedded in training programs before people even enter the rail workforce.

And the time to create this capability is now. Because a generation of young people in particular are looking for new and rewarding career opportunities more than ever.

Even before the impact of COVID-19, conditions were not good for those just starting their careers.

In July, the Productivity Commission released a working paper that found the weak labour market that had emerged after the 2008 Global Financial Crisis had been bad news for young people for a generation.

In the decade that followed, there were full time jobs became harder to come by as part time employment began to rise.

Young people started on lower wages and found it harder to find their chosen roles, despite having a good education behind them.

For those who took a job that was less than what they hoped for just to get their start, their career trajectory did not always recover, and better jobs did not always come along.

Those challenges have only been compounded this year, with another generation of young people hit harder than most by job losses and employment insecurity in the wake of the pandemic.

In this toughest of climates, there will be exceptional young people looking for career options that will last a lifetime, take them all over the world if they choose, and allow them to work in diverse roles on exciting projects.

What better time than now for the rail industry to step forward?

As an industry, a key part of attracting the best young people to work in rail over the coming years will be highlighting the benefits we have to offer – both to individuals and the broader community.

The ARA’s Young Leaders Advisory Board has identified sustainability as one of its focus areas to do just that.

Speaking to the industry’s young leaders, we have heard time and again how the sustainability credentials of the industry, and the essential community service it provides, has been a driving force in determining their future in rail.

They tell us that seeing the industry’s role in helping people and businesses in their daily life is part of what makes them enjoy working in rail so much.

They also see the value of sustainable, long term infrastructure development in rail that can take more congestion off our roads and better connect our cities and towns than ever before.

The fact that the projects they work on are exciting, dynamic, innovative and ever- changing is icing on the cake.

It is these benefits that has led to many of our young leaders staking their claim for a long-term career in rail.

And it is these benefits, together with the opportunity to gain the skills needed to succeed in the industry, that will help us attract the next cohort of rail workers.

So, while we deal with the challenges 2020 has given us, we must also prepare for the growth that will follow in the years ahead.

Having the right people with the right skills in place will be key to our success.

Preparing for the growth ahead

CEO of the ARA Caroline Wilkie writes that a cohort of young people looking for opportunities have the talents to fill rail’s skills gap.

In a year that has been more about preserving jobs than creating them, the concept of skills shortages can be a difficult one to reconcile.

However, the impact of this year’s events has not changed the fact that a very real and significant skills gap looms in the rail industry.

The Australasian Railway Association’s (ARA) 2018 skills capability study found the rail industry was staring down the barrel of a 24 per cent skills gap on current employment levels by 2024.

The gap existed across the spectrum, from technicians, trades and operators to managers and rail professionals.

Clearly, this is an area where action is needed if we are to make the most of the significant investment pipeline of the coming decades.

The National Rail Action Plan skills and labour working group, which I co-chair, is currently looking at how the industry can address this issue.

The group is bringing together key people from across the industry to inform this
work and I look forward to reporting on our progress as time goes on.

In the meantime, the ARA is continuing to advance its skills agenda.

As more rail projects come online, there will obviously be a need for the development of skill sets that are specific to the rail industry.

We will need a stronger focus on skills and education to achieve this.

The ARA is advocating for the development of a dedicated skills academy that offers targeted solutions to meet the industry’s future needs.

This will not only ensure the focus is firmly on the technical requirements of the industry but will also ensure a strong culture of safety and excellence can be embedded in training programs before people even enter the rail workforce.

And the time to create this capability is now. Because young people in particular are looking for new and rewarding career opportunities more than ever.

Even before the impact of COVID-19, conditions were not good for those just starting their careers.

In July, the Productivity Commission released a working paper that found the weak labour market that had emerged after the 2008 Global Financial Crisis had been bad news for young people.

In the decade that followed, there were full time jobs became harder to come by as part time employment began to rise.

Young people started on lower wages and found it harder to find their chosen roles, despite having a good education behind them.

For those who took a job that was less than what they hoped for just to get their start, their career trajectory did not always recover, and better jobs did not always come along.

Those challenges have only been compounded this year, with young people hit harder than most by job losses and employment insecurity in the wake
of the pandemic.

In this toughest of climates, there will be exceptional young people looking for career options that will last a lifetime, take them all over the world if they choose, and allow them to work in diverse roles on exciting projects.

What better time than now for the rail industry to step forward?

As an industry, a key part of attracting the best young people to work in
rail over the coming years will be highlighting the benefits we have to offer – both to individuals and the broader community.

The ARA’s Young Leaders Advisory Board has identified sustainability as one of its focus areas to do just that.

Speaking to the industry’s young leaders, we have heard time and again how the sustainability credentials of the industry, and the essential community service it provides, has been a driving force in determining their future in rail.

They tell us that seeing the industry’s role in helping people and businesses in their daily life is part of what makes them enjoy working in rail so much.

They also see the value of sustainable, long term infrastructure development in rail that can take more congestion off our roads and better connect our cities and towns than ever before.

The fact that the projects they work on are exciting, dynamic, innovative and ever- changing is icing on the cake.

It is these benefits that has led to many of our young leaders staking their claim for a long-term career in rail.

And it is these benefits, together with the opportunity to gain the skills needed to succeed in the industry, that will help us attract the next cohort of rail workers.

So, while we deal with the challenges 2020 has given us, we must also prepare for the growth that will follow in the years ahead.

Having the right people with the right skills in place will be key to our success.

freight

Rail key to meet freight demand

Caroline Wilkie, CEO of the ARA, sets out the association’s advocacy agenda when it comes to rail freight.

The doubling of Australia’s population over the next 30 years will make connecting the supply of goods and services between our far-flung cities more important than ever.

Resilient freight networks will be an essential part of our national connectivity and will be key to supporting the productivity of businesses across the country.

And rail must play a growing role to meet that challenge.

The Australasian Railway Association (ARA) recently released its rail freight and ports strategic plan to set its advocacy agenda on this crucial issue over the next three years.

Informed by extensive industry consultation, the plan identifies the need for rail to increase its share of our national freight task to ensure the growing demand expected in the next 20 years can be met.

While COVID-19 has highlighted the importance of resilient supply chains, that need has always been there and is only becoming more important.

The country’s freight task is expected to grow by 35 per cent by 2040, and by then our network will traverse more than 1,000 billion tonne kilometres every year.

That new demand can simply not be sustainably supported by more trucks on the roads or planes in the air alone.

A multi-modal freight sector that makes the best use of all modes of transport is a fundamental part of ensuring Australia’s supply chains can deal with the needs of the nation in the future.

Maintaining the status quo will not be enough.

There is enormous potential for rail to play a greater role in meeting our freight task, but regulatory reform is required to make that a reality.

A level playing field for all will be needed for this to be realised to make sure every mode of transport can be used efficiently and effectively to support our economic growth and development.

Common safety, environmental, and economic regulation across the country would streamline operations and put the focus firmly on delivering on the nation’s freight needs.

So too would the achievement of a truly interoperable rail network, and the ARA’s rail freight and ports strategic plan supports the ARTC’s efforts to implement its Advanced Train Management System on the interstate network.

These are big ambitions that require national focus and strong collaboration between government and industry to be realised.

We are pleased to see these conversations progressing through the National Rail Action Plan working groups and other industry forums.

As we continue to advocate for changes to support the growth of the industry, a clear understanding of the current state of play and the obstacles that the industry may face is essential.

That is why the ARA has launched three research programs to be completed over the next 12 months.

Firstly, we will be working to better understand the impediments to rail freight modal shift.

Just one freight train alone can take 110 trucks off the roads a year, busting congestion and improving the safety outcomes of the sector.

Rail freight remains a sustainable and efficient option that has proven its reliability time and again.

In urban centres, rail freight frees up the road network to create more liveable communities for people in our cities.

Given these benefits, rail should be playing a significant role as part of a multi- modal network – and this research will inform how we achieve that outcome.

Secondly, we will be looking at rail freight productivity in Australia.

It will be essential to establish a clear view of the industry’s current performance and the conditions required to make rail freight even more competitive in the future.

The 2017 Value of Rail study found a one per cent improvement in rail freight productivity could generate $8-20 billion in savings to the national economy over 20 years.

Small improvements could make a big difference and our research will seek to identify actionable outcomes to drive greater productivity in the sector.

Finally, we will research rail freight infrastructure investment.

Continued investment in the freight network will be essential to meet growing demand, but projects must be planned effectively and implemented efficiently.

Getting infrastructure investment right for the beginning will ensure the benefits of that investment are realised faster and reach further into our communities.

Combined, these projects will inform our advocacy agenda to make the case for regulatory reform.

Because we will need more than one approach to make a real difference for the benefit of Australian businesses and communities.

rail industry

Get policy settings right and rail will help lead recovery

In the aftermath of COVID-19, there is a huge opportunity for the rail industry to support Australasia’s rebound, writes Caroline Wilkie, CEO of the ARA.

As COVID-19 struck, many industries wound down as travel restrictions and social distancing measures started to bite.

The much-discussed hibernation was a necessary reality for many, but for the rail industry the essential work of keeping our communities connected and economy moving ploughed on.

Public transport operators kept the trains running on time, and in many cases maintained their normal schedules to ensure those who needed to travel could maintain social distancing requirements.

The added work of additional cleaning and maintenance to keep their customers COVID safe was quickly implemented and continues as we return to a more normal way of life.

Throughout all the changes we’ve seen since this crisis began, dedicated teams that support the safe operation of our train network have been a saving grace for those that still needed to get to work, to care for family or simply buy essential supplies.

The rail freight industry also became an important part of keeping supply chains open as international borders closed.

The big swings in demand for household basics like toilet paper called for fast and reliable delivery to replenish supermarket shelves, and Australia’s freight operators helped meet that challenge throughout the worst of the pandemic.

Meanwhile, the suppliers that maintain and operate the industry’s rollingstock, track and technology kept the network operating smoothly by continuing their essential work.

The outstanding efforts of the rail industry in difficult times has been of great benefit to the community and we thank the many people who have gone above and beyond in their roles to meet the challenges of this time.

But as the industry kept on moving, rail suppliers, contractors and freight operators were still feeling the impact of COVID-19.

A recent Australasian Railway Association (ARA) survey of 58 of its members found constraints on international shipments and falling customer spending were the biggest challenges they were experiencing in the face of the pandemic.

Concerned about the financial impact on their business, they worried the pipeline of government projects would slow – and some had already seen evidence of just that.

About half had deferred investments, putting workplace expansions and capital expenditure on hold as they repositioned their businesses to get through these unprecedented times.

But the industry showed its commitment to the long term, with only a relatively small number of respondents taking the tough decision to stand down staff or roll out redundancies.

Despite the challenges, the survey respondents were already planning for recovery and preparing their businesses for the growth that will eventually come.

Our members told us maintaining the current project pipeline was the single most important thing governments could do, followed by funding stimulus projects.

The ARA has acted on this feedback and has been engaging with federal and state governments on potential stimulus projects to support the rail industry.

ARA members also called for improved local content policies and procurement processes as more and more businesses considered a shift to using more local suppliers.

In fact, a staggering three quarters of those looking to make changes to their supply chain said they would seek more suppliers in Australia or their home state.

This is a huge opportunity for the rail industry and for Australian jobs.

The ARA’s tendering framework, released in May, supports the need for a nationally consistent procurement approach.

Making such a change was already considered vitally important before COVID-19, but now, taking that step could help the industry realise its ambition to support even more local content.

Strong local content policies and more uniform national standards would give suppliers the economies of scale they need to build sustainable businesses here in Australia and help the industry boost the resilience of its supply chains.

The success of the National Cabinet has shown that collaboration between the states can work to achieve consistent approaches.

That is exactly what we need right now.

The good news is the industry is ready for that recovery and expect it will come quickly when the time is right.

About a third of survey respondents told us they could be back to normal operations within a month once the impact of COVID-19 was over.

Most others said it would take them less than a year.

So as the many essential workers in the rail industry keep working through this most unusual year, there are signs of optimism for recovery on the other side of this event.

Getting the policy settings right to speed that process will be key to supporting a strong rebound for the benefit of all Australians.

Procurement reform a vital step for economic recovery

ARA CEO Caroline Wilkie makes the case for procurement reform in rollingstock and signalling to assist infrastructure spending to stimulate the economy.

Governments in Australia have indicated that they will continue to fund committed infrastructure projects and have begun to bring projects forward to further stimulate the economy to support job growth and investment due to the impacts of COVID-19.

The Australasian Railway Association (ARA) commends this sensible approach. Infrastructure spending is in the long-term national interest, stimulating multiple parts of the economy, not just construction. Stimulating rail manufacturers and suppliers would be of immense benefit, particularly in regional Australia, where many are located.

However, there are other areas where governments could go further to identify and act on measures that could be introduced to support further cost savings and improve the delivery of new rail projects.

Reforms in the area of tendering and procurement would deliver better, faster, and cheaper projects in the rail sector. While this debate is not new within the infrastructure portfolio, the economic impact of COVID-19 has highlighted the importance of pursuing efficiencies to ensure the rail infrastructure construction sector and rollingstock supply chain remain in a position to support the government’s infrastructure agenda and further stimulate the economy during
these difficult economic times.

Australia’s tendering practices are significantly costlier and more time consuming compared to international benchmarks. The tendering costs in Australia are estimated to be around 1-2 per cent of a project’s total cost, which are double the world benchmark of 0.5 per cent. Increased tender costs are immediately reflected in the project pricing, so reducing the costs of tendering should be important to all parties. High tender costs also increase the risk profile for tenderers and thereby tend to discourage participation.

The ARA proposes that significant benefits could be realised if improvements were made to current Australian industry procurement practices. Substantial improvements can be achieved through more streamlined and consistent tender processes that improve efficiencies for both suppliers and purchasers, from pre- qualification right through to contract award.

These changes would minimise the consumption of resources on redundant and non-productive outcomes, reduce procurement cycle times, further reducing costs and releasing industry capacity for delivery. Further, tendering on the basis of appropriate and more standardised contracting models and risk allocation frameworks for delivery will also reduce tender development and negotiation costs. Creating a consistent and well understood delivery environment will also lead to more successful project delivery outcomes.

The ARA commends the recent procurement-related initiative in NSW, embodied in the NSW government’s Action Plan: A 10-point commitment to the construction sector. The plan reduces the red tape for firms with a proven track record and supports streamlined prequalification schemes for contractors, tiered according to their size and capacity. It reviews existing pre-qualification schemes to ensure they focus on capacity and capability and do not impose unnecessary costs and administrative burdens on suppliers; and minimise the number of project-specific bidders that are required to generate and submit prior to the selection of a preferred tenderer.

The ARA believes that all states should adopt similar principles.

The benefits arising from any process optimisation and standardisation are multiplied when adopted across Australia’s procurement agencies. The ARA supports the convergence and the maximum practical standardisation of procurement practices on a national basis as an urgent and worthwhile objective.

Under the auspices of its Rail Industry Group, the ARA has convened an expert committee of suppliers, consultants, and other interested parties to make specific recommendations for improvement.

The Best Practice Guide to Rolling Stock and Signalling Tendering in the Australian Rail Industry analyses present deficiencies in current tendering frameworks that add unnecessary cost and complexity to already complex tender processes. It makes recommendations for improved practice by procuring agencies in eleven thematic areas.

The ARA has written to Transport and Infrastructure Council ministers with the Guide and is meeting officials to advocate for its implementation.

Procurement – similar to standards, specifications, and training – particularly in regard to rail systems, are areas where Australia has suffered due to its colonial legacy, with differing policy and arrangements in place throughout the six states acting as a deadweight against a national industry.

States, territories, and the federal government have demonstrated their ability to work collaboratively on issues of national significance where there is clear benefit to doing so during this pandemic. This cooperative model should be utilised for other key matters where federation has imposed challenges for industries, where significant savings can be achieved through harmonisation such as rail industry procurement.

A resilient freight network is key in times of uncertainty

In her column, CEO of the Australasian Railway Association Caroline Wilkie highlights that Australia’s rail freight network is facing challenges during the COVID-19 pandemic but its importance now is greater than ever.

Australia’s population is forecast to double by 2070, reaching almost 45 million people. This growing population requires an increased allocation of goods, adding pressure on our existing freight networks to deliver. According to the National Freight and Supply Chain Strategy, Australia’s freight task is expected to grow by over 35 per cent between 2018 and 2040, an increase of 270 billion tonnes, bringing the total volume moved to just over 1,000 billion tonne-kilometres.

The role of rail freight is critical in meeting this future demand and maintaining our international competitiveness. The Value of Rail study commissioned by ARA in 2017 highlights that a one per cent improvement in freight productivity could generate $8-20 billion in savings to the national economy over 20 years. Rail freight provides a cost-effective, safe and environmentally sound solution for reducing congestion from heavy vehicles on urban, regional, and interstate roads. Just one freight train alone can take 110 trucks off our already congested roads and rail is up to nine times safer than road freight. In light of these significant benefits, the ARA is working with governments and industry on behalf of our members to get more freight on to rail, and to improve the efficiency and productivity of Australia’s rail freight supply chains. Achieving modal shift to rail is critical to increasing economic growth, improving the liveability of our cities and supporting regional communities.

Delivery of the Inland Rail project is an important step in achieving this. This nation building project will see a 1,700km freight rail line directly connecting Melbourne and Brisbane, via Toowoomba, Parkes, and Albury. The route will utilise approximately 1,100 km of upgraded existing track and 600 km of new track in Queensland, New South Wales, and Victoria. Most importantly though, it will bypass the heavily congested Sydney network and bring rail freight travel times between Melbourne and Brisbane down from 33 hours to less than 24 hours. This is a game changer and will make rail freight much more competitive over long haulage routes.

In a period of economic uncertainty, the Inland Rail project is bringing a much needed boost to the economy. Construction is already underway on the Parkes to Narromine project and planning is well advanced on a number of other sections. Approximately $747m has already been spent, with much of this spend being injected into rural communities.

Inland Rail has been in the public domain for over fifteen years. It is also one of the most heavily studied projects in recent Australian history, having been through an extensive consultation, planning, route analysis, engineering and costing process.

We are aware of issues that have been raised in relation to flooding of the Condamine crossing in Queensland.

Without a doubt, the project is receiving the best possible expert advice and can manage these issues using tested and proven mitigation measures. These issues need to be worked through carefully and collaboratively, but they should not delay the delivery of the project.

The delivery of Inland Rail is a start, but more must be done. Investment in rail freight delivers enormous benefits in the long term. Improved supply chain connectivity and productivity benefits the economy and the environment and helps provide resilience in the face of emergencies like to COVID-19 pandemic.

The current crisis has just reinforced the importance of a highly productive and efficient supply chain. This unprecedented event has challenged our supply chain like never before, but our rail freight members continue to ensure that essential goods such as canned food, toilet paper, and cleaning products are moving across the country and to customers.

When state border crossing restrictions came into force in later March, the ARA wrote to state and the Commonwealth transport minsters to ensure rail freight was considered an essential service and exempt from border restrictions.

However, the stark difference between road and rail freight regulation is never more apparent than it is during times like these. Regulation by the National Heavy Vehicle Regulator (NHVR) has a focus on both safety and productivity, whereas the Office of the National Rail Safety Regulator (ONRSR’s) remit is purely safety-related.

The ARA have long held the view that we must take a national approach with all modes working together to deliver an integrated freight market. However, this approach can only work if all modes operate from a level playing field with equal treatment in terms of access pricing, government policies, and the role of productivity in regulation.

At the beginning of the COVID-19 pandemic, trucks were able to have curfews lifted to extend delivery windows in NSW and Queensland. However, due to the nature of our infrastructure and the shared tracks of passenger and rail networks, our industry does not have the same flexibility. As a result, we must look for other solutions to improve the productivity of rail freight.

Rail freight operators are committed to the highest levels of safety compliance but are routinely challenged by Rail Safety National Law (RSNL) derogations that exist, most notably the differing fatigue management requirements in NSW and Queensland, and the different drug and alcohol management requirements in NSW.

As I outlined in my March 2020 article, these inconsistent, state-based regulatory requirements go against the objective of national regulation and add costs to rail freight without any proven safety benefit. The ARA believes that multiple layers of often conflicting regulation impacts rail freight productivity.

A modern, risk-based approach to rail safety that focuses on productivity will improve our supply chain resilience and unlock significant economic and environmental benefits for the whole country.

ARA receives latest industry gender diversity figures

CEO of the Australasian Railway Association (ARA) Caroline Wilkie talks about how far gender diversity has come in the rail industry.

The ARA has just received the results of the 2018-19 Gender Diversity survey of the rail industry. The results are encouraging in that they show an improvement in gender diversity since the last survey, but that there is still more to do to meet national workforce averages.

The ARA last conducted this survey two years ago for the 2016-17 year. Survey data was collected at the organisational level to report on employees throughout rail and its supply chains. All information was de- identified with only high-level aggregated data made available.

The results show:

  • Women make up 27 per cent of the rail workforce, a 6 per cent improvement from 21 per cent reported in 2016-17;
  • Women hold 22 percent of managerial positions, up from 19 per cent in 2016-17 but substantially lower than the national workforce average of 39 per cent;
  • Women make up 21 percent of the full-time workforce – up from 18 per cent in 2016-17, but well below the national full-time workforce average of 38 per cent;
  • Women make up 60 per cent of the part- time workforce – up from 56 per cent in 2016-17 and substantially higher than the national average of 25 per cent;
  • Women make up 25 per cent of the casual workforce – well below the national average of 56 per cent;
  • Women made up 31 per cent of new appointments around the same level as in 2016-17; 28 per cent of all promotions, up from 20 per cent in 2016-17; and 25 per cent of resignations, down from 29 per cent in 2016-17.

From these figures we can conclude that improvements have been made in women’s level of participation in rail overall, in management and full-time work since the last survey, but still lags well below national averages on women’s employment in these categories.

The survey also asked about women’s representation on governing bodies.
Women made up on average 16 per cent respondents of governing bodies. Ten per cent of respondents indicated that they have set targets to increase women’s representation on their governing bodies.

A key issue then is what has caused these improvements.

Eight-six per cent of respondents have formal policies or strategies in place that specifically support gender diversity. Over half of all respondents have specific recruitment policies or strategies to improve the gender balance in their organisation.

Seventy-four per cent of respondents have formal policies for flexible working arrangements, and the availability of flexible workplace arrangements increased considerably for respondents in rail from 2016-17 to 2018-19.

Improving gender diversity in the rail workforce has been an increasing focus of rail companies in recent years. The reasons are varied. For some it is about recognising that it is the right thing to do, and that a workforce should represent the society in engages with, whilst to others is about improving organisational performance.

For many rail operators it is necessary to address the impacts of an ageing and male-dominated workforce in an era of skills shortages and for others it is about being perceived as an “employer of choice”, recruiting and retaining talented employees.

The significant growth that the Australian rail industry is now undergoing provides the perfect opportunity to advance this change, and companies are taking advantage.

In 2017, the ARA developed a Women in Rail Strategy in collaboration with member companies to support gender diversity in the industry. The strategy has four focus areas.

The first is related to the attraction and promotion of women in rail. Under the premise that “You can’t be what you can’t see,” during 2019 ARA gathered and publicised on our social media channels a number of empowering stories of how women and men working in our industry promote gender diversity in their spheres of influence.

The second is improved networks. The ARA has been hosting a number of Women in Rail lunches to member companies and their employees, offering opportunities to hear from experts and industry leaders while offering networking opportunities. These have been well attended and offered women new networks.

The third focus area is retention. The link between the mentoring programs and staff retention has been well established. In 2019, ARA piloted a Women in Rail Mentoring Program, offering mentoring and leadership support to over 40 women working throughout the industry and around the country. The program review received extremely positive feedback, and the program is being held again this year.

The final area was National Benchmarking. The ARA conducted a gender diversity survey in 2016-17 to collate diversity data to provide a greater understanding of the nature of gender diversity in rail.

A full report and summary Report Card is available at ara.net.au

Many rail organisations are at different stages along the diversity and inclusion journey, and while much of the responsibility and initiatives are at an employer level, the ARA is seeking to support its members where it can provide value at a whole of industry level.

The ARA will take the results of the survey and engage with member companies to inform the next iteration of its strategy.