Australian Rail Tram & Bus Industry Union

Australian railways have experienced a radical shift in structure, ownership and safety culture in the last 15 years, an experience shared with the rail industry in many countries.

Overall, the Australian rail industry is characterised by fragmentation in ownership, decision-making, responsibility and reporting, with some sections having a vested interest in not cooperating with other sections. Changes have come in a number of waves:

• Corporatisation, structural change, rationalisation and cost cutting of public rail services.
• Privatisation, open access, vertical separation and contracting out.
• Mergers and consolidations of public and private rail companies.
• Increasing influence of global conglomerates, Australian and overseas based.
• Failure of some privatisations to expand the business and to invest in track infrastructure.
• Global issues with impact on the Australian rail industry.

Public sector hit

The adoption of the NSW Rail Safety Act in 1993, which envisaged multiple train operators on the state rail network, shifted rail safety culture from prescription to a modern risk management framework, with a flawed emphasis on quasi self-regulation with weak regulatory structures.

In March 1993, faced with the prospect of intense change, the three main rail unions – the Australian Railways Union, the Australian Federated Union of Locomotive Enginemen, and the National Union of Railway Workers – merged with the union covering tram and government bus workers – the Australian Tramway and Motor Omnibus Employees Association – to form the Australian Rail Tram & Bus Industry Union.

At the end of 1993, the Australian Government adopted a report on National Competition Policy (NCP), and by mid-1995, this policy was enshrined into a law and a Competition Principles Agreement between all Australian governments, which had a major impact on the rail industry over the next decade and beyond.

The National Rail Corporation (NRC), set up in 1991, was initially envisaged as a vertically integrated, public sector interstate rail freight monopoly. Its main objective was to eliminate the significant financial deficit in interstate rail freight operations, and to provide the Australian economy with a world-class national rail freight system.

In 1995, NRC was redefined as a train operating company, and third party operators were given access to the interstate mainline, creaming off sufficient revenue to stop NRC attaining profit, even though it had largely achieved a break-even result and eliminated the historic deficit in this sector.

From 1995 onwards, privatisation, contracting out, vertical separation and third party access regimes had an increasing impact on the rail industry and on rail safety. Claims for Workers Compensation arising from rail workers showed a marked increase from 1995.

New South Wales rail ‘reform’

The New South Wales (NSW) rail industry, largely in public ownership, was broken up in July 1996 into four separate enterprises, each of which was driven by cost-cutting objectives. It was in NSW that the worst safety outcomes emerged, with a sharp increase in deaths of rail workers in 1998-99, a fatal passenger train crash at Glenbrook, near Sydney, in December 1999, and a fatal passenger train derailment at Waterfall, also near Sydney, in January 2003. These tragic results provoked the most searching review of rail safety undertaken in Australia in many years, important proposals were made to recover a rail safety culture, and important criticisms made of the negative impact of NCP in the rail industry.

As a result of the Glenbrook Inquiry, two of the four public sector rail agencies created in NSW by the 1996 split were re-merged – the Rail Access Corporation and Railway Services Australia (a maintenance corporation) became Rail Infrastructure Corporation. An independent Rail Safety Regulator was created and the government provided A$100 million to implement significant changes to the rail safety legislation.

In 2004, the NSW and Australian governments reached a 60-year lease agreement allowing the Australian Rail Track Corporation to take over the interstate mainline corridor and the Hunter Valley Coal network.

Australian National Railways privatisation

In 1997, Australian National Railways, which by then operated small freight railways in Tasmania and South Australia and the long-distance interstate passenger trains, was privatised. Tasrail went to Wisconsin Central Transportation, South Australian Freight went to Genesee & Wyoming, and the passenger services went to Serco, the UK privatisation conglomerate.

Victoria

In 1999, the Victorian publicly-owned freight company V/Line Freight was privatised with a 50-year lease for the infrastructure to the American regional rail operator Rail America, who operated as Freight Australia (FA). In 2005, FA was taken over by Pacific National (Tolls/Patrick), who threatened to cease rail operations unless they were given financial assistance. As a result, the Victorian government bought back the track for A$133 million in 2006.

Victorian public urban rail and tram systems were split in 1999 into two separate geographic businesses. British operator National Express and French Connex took over the franchises.

Western Australia

At the end of 1999, the Western Australian public freight railway was sold for A$585 million to a joint venture comprising the US regional rail operator Genesee & Wyoming and the Australian conglomerate Westfarmers. The new company, the Australian Railroad Group, was later sold to the Queensland government for A$435 million. ARG is shareholder in the new Alice Springs – Darwin railway, which operates the 1400 km rail corridor.

NSW FreightCorp and NRC

In February 2002, the NSW government-owned rail freight operator, FreightCorp, and the National Rail Corporation (NRC) were sold, as joint privatisation, to the Australian joint venture Pacific National, owned 50-50 by Patrick Stevedoring (the major stevedoring company in Australia) and Toll Holdings (major road freight forwarder). Both have a major interest in freight logistics and Pacific National was an historic development for Australia’s freight railways and logistics industry. However, the fragile partnership broke down some years later.

Privatisation unravels

At the start of 2002, Wisconsin Central was taken over by Canadian Pacific, and part of the sale agreement was that all of Wisconsin Central’s non-North American assets would be put up for sale. Tasrail was on the market through 2002 and 2003. During 2003, Toll Holdings started bidding for the Wisconsin assets in New Zealand, Tranz Rail, and acquired over 90 per cent of its shares. Wisconsin Central failed to invest and adopted anti-union policies including an initial refusal to collectively bargain with the Australian Rail Tram & Bus Industry Union (RTBU).

At the end of December 2002, the National Express Group, operators of V/Line Passenger trains, and M>Train and M>Tram in Melbourne, and Bayside Maintenance were placed in receivership, with a debt of A$200 million, and the Victorian government took control to keep operations going. This is the first major market failure in privatised rail transport in Australia.

Rolling stock

The rolling stock industry has been similarly transformed. New entrants and rationalisation of local suppliers have reduced the privatised/contracted out sector to the domination of two engineering groups – EDI Downer (owned by the Hong Kong Downer Group) and United Goninan. These companies have licensing and alliance arrangements with General Electric Transportation and Mitsubishi Electric.

Bombardier moved into the Australian market and won a number of rolling stock maintenance contracts. China is an emerging supplier for rolling stock. In 2006, the NSW government announced that a consortium including United Goninan and Hitachi had won a A$3.6 billion public-private partnership contract to build and maintain 626 urban passenger carriages. As these contracts have been the source of ongoing controversy, members of RTBU together with members of maintenance unions went on strike in March 2005 to protest against a government decision to allow 80 per cent overseas content in the tender for rail carriages.

Track maintenance and construction

Infrastructure maintenance has also been privatised and/or contracted out in four of the six Australian states, although in the last two years two rail networks have been bought back. Private sector maintenance, upgrades and construction are dominated by Transfield Services, John Holland Construction (a division of the construction giant Leighton’s) and Works Infrastructure (a division of EDI Downer). New projects have encouraged the entrance of global rail companies, such as Laing O’Rourke, Jarvis and Balfour Beatty from the UK and the Italian conglomerate Ansaldo.

In 2004, the Australian government instituted its AusLink land transport funding programme, with A$41.4 billion for upgrading the Melbourne – Brisbane corridor.

Another structural change caused by privatisation and the vertical separation of rail has been the development of small specialist companies e.g. rail welding, rail grinding, bridge repairs, design services, and track protection. Labour-hire companies who provide additional labour at short notice to major companies exert maximum pressure on rail employees. RTBU has devoted specialist researchers to map the changes and to provide additional organisers for the newly formed companies.

Track privatisation has been unsuccessful, due to lack of investment necessary to sustain the long term viability. Some state governments (Tasmania in 2006 and Victoria in 2007) have taken back regional rail networks.

In recent years share market listed infrastructure companies had easy access to funds that enabled them to buy infrastructure assets in railways and to provide above average returns to investors. Babcock and Brown purchased rail assets of the privatised freight railway in Western Australia in 2006.

Effects of rail restructuring

At the end of 2007, only the Queensland rail system remained in full public ownership, operating freight, urban and long distance passenger trains. In 2006, it sent ripples through the industry when it bought the Australian Railroad Group to become the largest freight operator in Australia and a genuine national competitor to Pacific National. It has expanded its operations to the Hunter Valley in NSW and acquired a medium sized freight forwarder. However, it has been recently announced that Queensland railways would be split into six separate companies, although the state government continues to express its opposition to privatisation of railways.

The impact of all structural changes has been dramatic for the RTBU membership, with nearly 40 per cent employed by large Australian companies or foreign multinationals.

The Australian Rail Tram & Bus Industry Union has focused significant resources onto rail safety and gaining collective agreements where the privatisation process had undermined union rights. The RTBU through its collective action has had an impact on safety policy outcomes and on winning positive collective agreements.

Emergence of logistics

The newly created Pacific National (PN) joint rail venture between Tolls and Patrick continued rail acquisitions in 2004 when it bought out Rail America and in 2005, when it acquired Tasrail from Wisconsin Central.

In mid 2006, after the bitterest corporate battle in Australian history, Tolls emerged victorious in its A$6.4 billion takeover of Patrick Corporation. Although the Australian competition regulator ruled that PN had to sell off 50 per cent of its business to prevent an over concentration of market power in the hands of the successful bidder, Tolls split into two separate businesses. Tolls continued to cover the wider transport industry, whilst the newly created Asciano manages the rail and port businesses of the former PN and Patrick’s companies.

Tolls accounts for about 10 per cent of the total freight forwarding market in Australia and has become the largest logistics group in Asia. In May 2006, Tolls took over the Singapore based SembCorp Logistics Company for A$1 billion.

Asciano employs 4,000 staff for its rail division. It carries 38 per cent of rail freight nationally and has 43 per cent of the market share. The Asciano Group restructured its business after it posted a net loss of A$71 million for the six months ended December 2007.

Australian rail safety arrangements pre-1993

Prior to 1993, rail safety was managed by the six public sector rail enterprises through their vertically integrated structures. Management prescribed safety procedures, which applied in an integrated way in train operations, freight yard operations, and infrastructure maintenance and construction.

This system did not prevent all accidents, but it did remove structural barriers to cooperation between different groups within the rail system in case of an accident. The ‘no fault’ reporting system ensured that the maximum information about an incident or accident was obtained.

The union was able to organise and operate Workplace Safety Committees under state Occupational Health and Safety laws, to ensure a check on management safety practices and to independently train employees in safe working practices.

Rail safety in the last 15 years

The RTBU continues to campaign for the highest standards of safety in the rail industry, which has faced intense change in the last ten years.

In 2001 safety was dominated by the findings and recommendations of the Glenbrook Committee of Inquiry into a train crash in the Blue Mountains, which resulted in seven deaths. Tragically another rail disaster, Waterfall, occurred at the end of January 2003, in which seven persons, including the train driver, were killed when an inter-urban passenger train derailed south of Sydney.

There have been several rail accidents in 2007. On 11 June, 11 passengers lost their lives when a V Line train was struck by a loaded truck at a level crossing in regional Victoria. In July, near Sydney, two signal electricians were killed by an empty coal train. In December, two RTBU track maintenance members were killed in Queensland by a track maintenance vehicle.

RTBU is continuing to focus on rail safety for all employees. A key aspect is to ensure adequate staffing levels in stations and on-board, together with a range of safety measures including help points, surveillance cameras, and proper lighting. There are inquiries and investigations at national and state level regarding safety at level crossings, following a number of fatal collisions.

It has been 15 years since the first Rail Safety Act was established in NSW, which has become the template for rail safety legislation across Australia. With significant union input, the act was modified in late 2002 to reflect the Glenbrook Recommendations and included regulations governing hours of work for train crew and a focus on fatigue management.

The various Rail Safety Acts are based on a new set of relationships in the industry. Supervision of rail safety passed from the public sector rail monopoly to the Department of Transport under the authority of the Minister of Transport. Operators and maintainers are accredited to operate and accreditation is supervised by a regulator who is often poorly resourced.

Development of integrated national legislation and regulations on rail safety

The structural changes in the Australian rail industry, the emergence of national rail companies and major differences between state rail safety legislation determined the federal and state transport ministers to agree a review of rail safety legislation across the country. RTBU was appointed in two committees who provided guidance on policy and technical questions. The National Rail Safety Model Bill was endorsed in July 2006 and is currently being implemented. Its major features include:

• Chain of responsibility in the rail industry, by defining the required level of safety and making clear which parties, including rail safety workers, are accountable for rail safety. Rules apply to contractors and sub-contractors, designers, manufacturers and suppliers.
• Complementarities with the national health and safety legislation.
• Participation, consultation and involvement of people and organisations sharing responsibility for rail safety. For the first time in Australia, rail workers, their representatives and their unions have legislated consultation rights on rail safety.
• Accreditation for rail operators in terms of capacity and competence to operate safely.
• A hierarchy of enforcement powers and sanctions for regulators.
• Creation of subordinate regulations and codes of practice to specify more detailed requirements. A fatigue management guideline with significant union input has been developed for the Australian rail industry.

Development of national standards

RTBU is currently involved in the development of the following national standards, although it has yet to decide whether to support their implementation:

• Train driver licences
• Train driver performance monitoring standards
• Rail safety legislation – including training packages
• Mutual recognition of operators to cross state borders
• Rail safety worker medical standards
• Training standards
• Locomotive cabin standards
• Health and safety and workers compensation standards

This is the edited version of the report “Rail restructuring in Australia” by Bob Hayden, National Organiser, Australian Rail, Tram & Bus Industry Union, presented at the ITF Railway Workers’ Section Steering Committee meeting, London, 29-30 May 2008