Vertically separated railways: capital investment and access pricing issues

Competition policy in Australia has provided added impetus for the vertical separation of railway businesses. This paper deals with the issues of interdependence of investments in the rail industry; the application of consistent investment appraisal techniques across modes; and the main principles which should guide the development of an access pricing strategy. It is concluded that access pricing needs to be formulated in the context of an overall set of objectives; national transport planning goals; and the implications for the road and rail freight industries in particular. There is a need to move away from homogenous pricing of services, so that full account is taken of the physical characteristics of both track and trains; 'the ability to pay' principle; and track capacity effects. The last mentioned will require that peak and off-peak charges be implemented to discourage the current bunching of train departures from most Australian capital cities. Reform is likely to be implemented in a piecemeal fashion and at an acceptable rate of change. If this means in the transport industry that rail reform progresses whilst the more contentious reform of road pricing stalls, then the long-term success of rail reform is in danger. Ultimately, rail reform depends to a large extent on the implementation of consistent cost recovery policies across the transport sector. Such a subsidy-free approach across all transport modes would result in increased pressure on performance for all facets of the rail and road freight industry.


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  • Accession Number: 01397943
  • Record Type: Publication
  • Source Agency: ARRB
  • Files: ITRD, ATRI
  • Created Date: Aug 23 2012 5:32PM