Alex Bainbridge, Hobart
Commercial media, politicians and business commentators are describing as a "rail crisis" the September 27 announcement by Pacific National Tasmania that it will cease freight rail services between Hobart and Burnie unless the federal and state governments pledge a $100 million subsidy over 10 years. An October 5 meeting between state and federal ministers projected a two-month study of the issue.
The Tasmanian rail network was privatised by the federal government in 1997 and made profitable for the first time in 100 years after being in private hands for less than six months. At the time, this was trumpeted as proof of the viability of "private enterprise" versus the alleged inefficiencies of public ownership.
However, this capitalist success story has turned out to be only part of the picture. The main reason the publicly owned Tasrail was not profitable was the chronic lack of investment by the federal government.
Despite some initial investment by the private owners, Tasrail has suffered the same lack of investment since privatisation. Not surprisingly, the current owners claim the Tasmanian operation is now unprofitable.
Socialist Alliance spokesperson Kamala Emanuel told Green Left Weekly: "There is one word for threatening to close down freight services if the government doesn't cough up $100 million: blackmail. The owners must have calculated that they had a pretty good chance of success with this scam given the corporate interests involved."
Emanuel pointed out that, even if the government doesn't come to the party, the owners can't lose. "One of the two major owners of Pacific National is Toll Holdings — a road freight company — and it has just launched a takeover bid against the other major owner. Toll would stand to make big gains if the containers now shipped by rail were moved over to road freight instead."
Rail union national secretary Bob Hayden has also accused the owners of profiteering. "They take as much profit out of the place as they can in the short-term", he told ABC Radio National's September 29 The World Today program. "And then they seek either state governments or federal governments to bail them out, knowing full well when they purchase something like this that it was run down from day one and they were going to have to spend money on it anyway."
"There is a solution", Emanuel said. "The government should renationalise the company without compensation.
"An extra 2000 trucks on the road — which is what they reckon an end to freight would mean — would be an environmental nightmare that we shouldn't have to contemplate, without even thinking about the effect on roads, traffic and accidents.
"We should be moving in the opposite direction — expanding freight rail and reopening passenger train services. And the community would get the most out of a publicly owned service — not a private company that is making profits with the help of government subsidies."
From Green Left Weekly, October 12, 2005.
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