Minister outlines strategy for modernisation of Westrail

9/5/95

Transport Minister Eric Charlton today outlined the strategy for the modernisation of Westrail to meet new competition, to make it the most efficient railway in Australia and provide service equal to world best practice.

Westrail's Right Track Program over the next three years will focus on its core business activities - the transport of bulk freight and passengers, while outsourcing non-core processes and divesting all other non-essentials.

"Right Track is the outcome of a nine-month study by senior Westrail executives and private consultants examining the specific needs of its customers," Mr Charlton said.

"Westrail's freight customers are dependent on rail to deliver mining and agricultural products from their places of origin to our ports at freight rates which are competitive with the rest of the world.

"An economically competitive and flexible rail operator helps to relieve the heavy haulage pressures on Western Australian roads which are deteriorating as a direct result of inadequate Commonwealth funding.  Recent efficiency improvements by Westrail have resulted in some short-haul agriculture products returning to rail and the trend is expected to continue.

"As well, local, interstate and international passengers have a right to expect safe, clean and reliable rail transport."

Mr Charlton said Westrail would spend $66 million to acquire 24 new locomotives (15 standard gauge, nine narrow gauge) and would contract out resleepering, signalling, electrical installation, track machine work, major track maintenance and construction. The wagon fleet would be reduced by 1,060 to 2,000.

"Westrail must change its internal cost structure from a high level of fixed costs (represented by capital and labour) to a high level of variable costs (represented by the outsourcing of non-core activities and rationalisation of assets)," he said.

"This means locomotive, track and maintenance work, telecommunications and other services could be performed by outside contractors.  Some of these contractors could be present staff who will set up their own work teams and small businesses in decentralised locations."

Mr Charlton said the commissioning of the new Kwinana locomotive/wagon depot would be completed while the Forrestfield, Albany and Merredin locomotive depots would close and the operations at Kalgoorlie transferred to the private sector.  Initiatives would be taken by Westrail to ensure the decentralisation of these maintenance tasks would occur.

A contingent of nine 'flying gangs' will be established to respond to emergencies and ensure trains in their areas keep to schedule.

Under the Right Track Program, Westrail staff will be reduced by 1,345 (metropolitan 880 country 465) over a three-year period but there will be no sackings.  Work placement and counselling services have been established while more than $60 million has been budgeted to meet severance pay, accrued leave and other entitlements.

Mr Charlton said the outsourcing process would result in the private sector creating an estimated 700 jobs and skilled Westrail workers would be at a decided advantage to fill those positions.

"The main economic benefit of the modernisation program is to customers who will benefit from cheaper freight rates while Westrail will become financially independent and bring an end to taxpayer subsidies," he said.

"Net savings are estimated to reach $47 million a year within three years and $250 million in assets (including land) which are no longer needed will be sold and the proceeds used to retire debt.

"All 3,300 Westrail staff on the payroll are being briefed on the proposed impact of Right Track in their area and a detailed information booklet entitled 'The Modernisation of Westrail' is available."

The implementation of the Right Track reforms will begin immediately, with the first full year of benefits 1998-99.

Mr Charlton said the modernisation of Western Australia's rail network would achieve open and honest accountability throughout Westrail, meeting the 'transparency and accountability' criteria contained in the Hilmer Report.

Media contact:  Ian Hasleby 321 7333/Pager:  480 9999 (94065)

Country Media Contact:  Kaye Verboon (09) 326 2122