Buy-back of the regional intrastate network

This audit examined the state's decision to buy back the non-metropolitan intrastate rail network. This is a significant state asset, especially for the regional communities that rely on it for passenger and freight services. In 1999, the state granted a 45-year lease over the network to a private company as part of its broader rail privatisation reforms. When leased, the network was run down and the maintenance backlog worsened because the lease failed to impose effective maintenance obligations on the lessee. There is little doubt that the buy-back unwound a lease which was ineffective in maintaining the asset. It also improved the state's capacity to carry out major investments in upgrading the network. In negotiating the buy-back the state made other strategic gains of broader significance to Victoria's freight and logistics network, primarily related to freeing up rail access to the Port of Melbourne. However, no assurance can be given that the state paid the lowest reasonable purchase price obtainable in the circumstances. This is largely because at the time the state committed to the buy-back sufficient advice had not been obtained to support its decision about how much to pay, for example there was not an adequate business valuation. Further, it is clear that the cost of the buy-back exceeded the publicly announced cost.

Language

  • English

Media Info

  • Pagination: 73p
  • Serial:
    • Issue Number: 212, session 2006-09

Subject/Index Terms

Filing Info

  • Accession Number: 01384246
  • Record Type: Publication
  • Source Agency: ARRB
  • Files: ATRI
  • Created Date: Aug 22 2012 4:22PM