Sale of freight business of Westrail approved

30/7/98

Transport Minister Murray Criddle today announced that State Cabinet had approved the sale of the freight business of Westrail.

Mr Criddle said there would be no job losses as a result of the sale of the freight business and that Westrail's urban and country passenger services would remain with Government.

"A sale taskforce will be established and report to Cabinet to ensure a number of conditions and safeguards are met, including guarantees of service to regional and rural users," he said.

"All existing contracts with Westrail will be honoured, including the organisation's commitment to the WA Grain Logistics Strategic Plan.

"Future options for the grain industry to establish its own handling and marketing structure will not be detrimentally affected by the proposed sale.

"The timing and final structure of the sale is yet to be determined but I expect a deal could be finalised within 12 months.

"We will be talking to industry and user groups to shape the sale package which will result in even more competitive freight rates.

"There will be extensive State-wide consultation to accommodate in the sale plan, the views of the grain industry, the mining industry and other user groups.

"Today's sale announcement follows a Government investigation which set out in November 1997 to identify all the options for Westrail, which will for the first time in its 117-year-history face open competition from the private sector in all aspects of its freight business."

The Minister said new national competition laws were about to create an open access arrangement which would see private sector rail operators given the right to use Westrail's 5,400km of track network.

"Westrail's freight operation has been modernised and fine-tuned over the past five years but by attempting to stand alone in what is a national revolution in rail, Westrail faces the prospect of having its business eroded by competitors and its profitability jeopardised," he said.

"The time is right to sell Westrail and there is a unique opportunity for a private sector buyer to create a viable national rail freight company based in WA."

Mr Criddle said the Government would insist the new operators be headquartered in WA with a locally-based board of directors.

A new private sector owner would have the opportunity and capacity to expand the freight operations by attracting additional commodities to rail.

Mr Criddle said the constraints of Government ownership did not allow Westrail the commercial flexibility to grow local and interstate business or successfully combat outside competition.

"The reality is that Westrail will be vulnerable and the loss of even one of its major freight customers would impact severely on revenue and quickly erode the marketplace value of the organisation," he said.

"Westrail's seven major customers make up 75 per cent of its business and there would be a growing threat of 'cherry picking' by national private sector operators trying to win business in the west."

The Minister said Westrail's freight business would be disposed of as a vertically-integrated operation, meaning inclusion of rolling stock and the track network.

"The Government will retain ownership of the existing right-of-way land under the tracks but may sell plots of land on which operational buildings were housed or needed to be built," he said.

Media contact: Doug Cunningham 9321 7333