1. Developing a National Interstate standard gauge network Presentation by David Marchant, CEO 10 November 2004 Presentation to AusRAIL 2004, Melbourne

2. Slide 2 Presentation to AusRAIL 2004, Melbourne Key areas to be covered …. ARTC objectives and growth strategy in east-west markets ARTC’s Lease in NSW Investment in interstate network Road/Rail Infrastructure Pricing

3. Slide 3 Presentation to AusRAIL 2004, Melbourne ARTC’s role and objectives …. ARTC Objectives  provide efficient and seamless access to the interstate rail network  improve interstate rail infrastructure through better asset management  pursue a growth strategy for interstate rail through improved efficiency and competitiveness  promote operational efficiency and uniformity of operating, technical and safety standards and practices on the interstate rail network  operate the business on commercially sound principles WERRIS CREEK

4. Slide 4 Presentation to AusRAIL 2004, Melbourne ARTC’s approach …. Growth Strategy Encourage above rail competition Vertical Separation Open and equitable pricing designed to encourage above rail productivity improvement Open and equitable network management Cost structure aimed to reflect industry best practice Investment designed to improve operator yield and rail service quality Improve rail competitiveness and network utilisation Asset Sustainability Due to intermodal competition, ARTC pricing is constrained to such a level that, at existing levels of network utilisation, ARTC is unable to recover the full economic cost of its network ARTC is taking long term market risk, which it seeks to mitigate by growing rail freight volumes, and increasing network utilisation to sustainable levels

5. Slide 5 Presentation to AusRAIL 2004, Melbourne On East-West corridors…. Operators have improved path utilisation by increasing train lengths and weights towards increased operational limits made available to them Melbourne – Perth transit times have reduced by around 2 ½ hours Average speeds have increased resulting in improved fuel efficiency, reduced labour and improved asset turnaround As a result of improved path utilisation, the real cost of access (c/NTK) has reduced by 22% over the past 5 years. (12% nominal) ARTC has promoted improved operational efficiency and rail competitiveness on the interstate network ARTC’s growth strategy ….

6. Slide 6 Presentation to AusRAIL 2004, Melbourne ARTC’s growth strategy …. ARTC has promoted improved operational efficiency and rail competitiveness on the interstate network …. which has contributed to increased rail market share

7. Slide 7 Presentation to AusRAIL 2004, Melbourne AliceSprings Brisbane Melbourne Adelaide Broken Hill Whyalla Perth PtKembla Kwinana Sydney Kalgoorlie Albury Wolseley Darwin Rail market share of interstate intermodal markets Fremantle 21% 81% 21% 19% 11%

8. Slide 8 Presentation to AusRAIL 2004, Melbourne ARTC’s lease in NSW …. The Lease Network  TERM: Lease the nominated rail track and corridor for sixty years.  INVESTMENT: Undertake an Initial Infrastructure Investment Program at a cost of more than $800million during the first five years of the Lease (including construction of a new Southern Access Corridor from Macarthur to Chullora). An ongoing program of network development investment to cater for growth and changing market requirements.  ACCESS : Lodge a Voluntary Access Undertaking with the ACCC that will incorporate passenger priority, open access and access pricing.

9. Slide 9 Presentation to AusRAIL 2004, Melbourne ARTC’s Lease in NSW …. ARTC’s transition plan (1 st 3 years) is designed to ensure key outcomes: Improved safety outcomes Improved service and responsiveness to customer requirements Implementation of a new culture in the areas of safety, customer service and efficiency Progress towards delivery of the reliability, transit time and yield outcomes of ARTC’s five year investment and maintenance program ARTC’s longer term objectives & plans in NSW (beyond transition) and for the national network: Focus will be on sustainability and enhancing rail flexibility Complete investment program to deliver performance and capacity outcomes, and efficiency Preserve performance gains in the light of increasing asset utilisation Promote opportunities for rail to grow modal share Promote and maximise the benefits of a single framework for access, safety and operational standards Work with customers and industry to improve rail and logistical flexibility Reduce impediments to efficient intermodal interfaces (ports, intermodal terminals, information exchange)

10. Slide 10 Presentation to AusRAIL 2004, Melbourne Investment in the interstate rail network …. ‘GETTING THE INVESTMENT RIGHT’ Around $1.7bn over the next 5 years ARTC’s Initial Investment Program in NSW/Victoria Around $870m Predicated on the National Audit Objectives, and marketplace expectations for transit time, axle load, service reliability, etc. $450m Australian Government grant – ARTC proposes to invest in the important Sydney – Brisbane corridor $550m AusLink commitment – improve rail market share and urban efficiency Further investment to improve the Hunter Valley coal chain capacity.

11. Slide 11 Presentation to AusRAIL 2004, Melbourne Investment in the interstate rail network …. KEY OBJECTIVES ON THE NORTH SOUTH CORRIDOR Improve Transit Times To meet market windows and improve asset productivity Improve Reliability To meet market expectations Improve Capacity To deliver the above at higher levels of utilisation Improve Yield – above and below rail To improve asset returns and rail competitiveness

12. Slide 12 Presentation to AusRAIL 2004, Melbourne Investment in the interstate rail network …. ‘GETTING THE INVESTMENT RIGHT’ Corridor & Project evaluation to gain optimum outcomes for the investment Remodelling of North-South Corridor to ensure investments maximise rail infrastructure improvements to maximise market growth ‘Biggest Bang for the Buck’ Consultation with customers and stakeholders on the options for the optimum investment To enable a coherent program and timetable for works for expeditious rollout

13. Slide 13 Presentation to AusRAIL 2004, Melbourne Investment in the interstate rail network …. ‘GETTING THE INVESTMENT RIGHT’ Investment in Track Infrastructure is important BUT this will not bring about a successful outcome by itself. Complementary investment in system capacity and improved practices are also needed Operating codes and standards need to be aligned. Access Regulatory arrangements need to be streamlined and made consistent Road/Rail pricing neutrality needs to be addressed … Rollingstock is needed to service the market When is it needed? What is needed? Where is it needed? Terminal Capacity to provide adequate throughput When is it needed? Where is it needed? (Land availability in metropolitan areas) How much throughput is needed?

14. Slide 14 Presentation to AusRAIL 2004, Melbourne Road/Rail Infrastructure Pricing …. Road/Rail Infrastructure Pricing needs to be addressed Long distance, heavy haul road vehicles need to pay for the maintenance, capital and social costs associated with infrastructure usage on a fair basis. 25-30% of road expenditure is not allocated to road users Expenditure allocated to road types and vehicle types based on assumed methodologies. Attribution to vehicle type based on choice of usage parameter (mainly kilometre based) Pricing instruments are blunt Registration charges Fuel Excise (is not sensitive to different fuel efficiency characteristics) Inflexible (no incremental pricing for ‘outside of norm’ activities) Mass distance charging is an option and vehicle tracking offers other benefits Technological solutions already used overseas (Singapore, UK, Europe) Externality costs need to be incorporated Congestion, Pollution, Accidents (non-internalised)