New grain freight rates will lower costs for most growers

9/8/94

Transport Minister Eric Charlton said new grain freight rates negotiated for the 1994-95 harvest have brought equity into the system for growers for the first time.

Mr Charlton said Westrail's ability to deliver significant savings to the vast majority of growers demonstrated that the Government's reform of the organisation was working.

Under the agreement announced by the Grain Freight Steering Committee, Western Australian growers would save an average 5.7 per cent on the annual cost of railing their grain over the next five years.

As an added incentive, Westrail would offer a further 2.5 per cent rebate to growers who used rail to move the bulk of their harvest, and the Minister commended the new agreement.

"This is going to result in savings to growers of $6 million on last season's harvest freight rates," Mr Charlton said.

"That is an average saving to the farming industry of $30 million over the next five years.

"The fact Westrail has been able to offer these incentives so soon after the restructuring process has begun is significant.

"The Government set out on the reform path in an endeavour to secure Westrail's future, to enable it to become truly commercial and win back some of the grain freight market share it has lost to a very competitive road transport industry in recent years.

"Productivity improvements which have added to Westrail's overall competitiveness has meant that savings can be passed on to users, and as further improvements are made these savings will also be passed on."

Mr Charlton said the new freight rate structure, calculated on the road distance between Westrail's 157 grain receival points to port, was equal to or cheaper than road train rates.

It dispensed with the previous radially-based distance system which had anomalies and was not fair for all growers.

Mr Charlton said any changes to grain movements on roads that created greater pressure on local government roads would be addressed through the provision of State Government assistance to those shires affected.

He said that while rates had risen at 23 of the 157 receival bins, the system overall was a fairer one.  Even with the increase, those farmers would still find rail rates cheaper than or equal to road transport.

"This system allows farmers to compare Westrail rates directly with those of road transport competitors," Mr Charlton said.

"Bearing in mind that road transport rates are likely to increase this year due to inflation, growers who choose to use rail will be saving even more."

Media contact:   Dean Roberts 321 7333