A key Victorian agricultural freight rail manager says she was surprised by the state government's decision to end the Mode Shift Incentive Scheme in 12 months time.
Seaway Intermodal, Merbein, is one of four Victorian and southern NSW rail freight operators who will share $3.5 million, provided under the MSIS, next financial year.
The amount is the same as last financial year.
The MSIS is an incentive program providing support for rail freight companies to make the cost of transporting goods on rail more competitive.
The four providers are Linx Portlink, Tocumwal, Wimmera Container Line, Dooen, Westvic Container Export, Dennington and Seaway.
Seaway National Advocacy and Strategic Delivery manager Ros Milverton said she was surprised at the decision; at the end of last financial year, carriers were assured the MSIS would run for a further three years.
"It's disappointing it's only being renewed for one year," Ms Milverton said.
"Personally, I was looking forward to that opportunity over two years for us to get our group together [rail freight operators] to get our heads down and come up with a different plan for equalisation for regional export rail," Ms Milverton said.
"It's not the best time to walk away from supporting regional [freight] rail."
READ MORE: Government flags end of MSIS
Ms Milverton said the government still appeared keen to find solutions to shifting more freight to rail, but MSIS was not seen as part of the solution.
Budget papers show in 2023-24 the MSIS was estimated to fund 42,508 containers to be carried by rail, the same as this financial year.
But the number expected to be carried in 2022-23 was estimated to be only 36,200 containers.
The reason why the target had not been met was due to the "significant" amount of rail upgrades, Ms Milverton said.
"The cost to industry, when they have been doing the Big Build and Murray Basin stage two, has been significant," she said.
"That has had an impact on rail, because when the track is unavailable, you have no other choice but to go on road - using the current statistics is quite misleading," she said.
A further falling away in the number of containers going on rail, once the MSIS ended, would be detrimental to the infrastructure upgrades that had been carried out.
"I think we are now at a pivotal point with carbon emissions targets and damage to roads, the relevance and importance of rail to long term sustainability is starting to come to the fore," she said.
"Before now, we were seen as a kind of poor cousin - over the years every time rail has got close to price parity, they have changed the mass available to road and we are back behind the eight ball."
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MSIS was of value to Seaway in assisting with the "last mile" cost when competing against road transport.
"My comment to government is that while it [MSIS] hasn't increased, it's kept us viable," Ms Milverton said.
She said she would continue talking to government about what else could be done to promote efficiency gains for rail and enable it to be competitive with road.
"The recent investments in rail have been welcomed and reliability has certainly been improved, over the last five years, which has certainly given us more confidence to go out into the market," she said.
SCT is paid under the scheme for its Wimmera Container Line operations.
SCT Ports and Government Relations general manager Matt Eryurek said the original MSIS had failed to achieve its aims.
"If we look at the data, 10 years ago rail mode share was 13.4 per cent but last year was 5.5pc," Mr Eryurek said.
"It has probably kept us in the game, but has not been adequate to shift [freight] mode."
He said the government still needed to look at how to equalise the cost of rail, when compared to road.
"Coming to its end, in its current format based on the statistics, we can understand the decision," he said.
"But road has definitely improved its efficiency, on our estimates, by up to 48 per cent since 2013.
"It's not that surprising to see rail is not competitive, under this current scheme."
He said SCT would like the government to examine other ways of decarbonisation such as reducing the number of old trucks on the road and looking at transport network costs.
"They should probably be looking at how users, like rail, pay for those networks - rail pays its way, whereas road doesn't.
"If there isn't an alternative, and the market forces are left, we are a logistics company and our position would be that we would find a way of getting containers to the port in the most competitive manner.
"And we would explore all options.
"Come June 2024, if we don't have a feeling there is equalisation, or support, in creating that efficiency for rail versus road, those statistics of 5.5pc could spiral down further."
Rail Futures Institute president John Hearsch said the demise of the MSIS would risk the ending of some rail freight services.
"MSIS is purely to support trains conveying exports from our regions," Mr Hearsch said.
Andrew Miller
I'm a general reporter with Stock & Land, with a special interest in irrigation issues. I completed my cadetship, with the Age, in 1980. Over my career, I've worked for ABC radio news (Mt Isa, Qld) and at provincial and suburban newspapers.
I'm a general reporter with Stock & Land, with a special interest in irrigation issues. I completed my cadetship, with the Age, in 1980. Over my career, I've worked for ABC radio news (Mt Isa, Qld) and at provincial and suburban newspapers.
