3.2 Diversity of Commonwealth infrastructure holdings

The Commonwealth owns a diverse range of infrastructure. Examples of the diversity of these holdings are outlined below.

The Australian Rail Track Corporation (ARTC)

The ARTC was established in 1997, following an agreement between the Commonwealth and State Governments, as a ‘one stop shop’ for rail operators seeking access to the interstate rail network. ARTC’s policy objective is to encourage modal shift of freight from road to rail.

ARTC manages over 8,500 route kilometres of standard gauge interstate track in South Australia, Victoria, Western Australia, Queensland and New South Wales. ARTC also manages the Hunter Valley coal rail network and other regional rail links in New South Wales, as shown in Figure 3.2 and Table 3.2 below. Train operators using ARTC tracks pay an access charge, which is governed by undertakings that the Australian Competition and Consumer Commission regulates.

Figure 3.2: Australian Rail Track Corporation owned and leased track

This figure shows a map of the rail track owned and leased by the Australian Rail Track Corporation.

Source: Australian Rail Track Corporation.

Table 3.2: The National Interstate Rail Network
ARTC owned corridors Victorian leased corridors Queensland leased corridors
National interstate rail network Mainline interstate network Interstate rail network
Adelaide to Wolseley Melbourne to Wolseley NSW/Queensland border to Acacia Ridge
Adelaide - Port Augusta - Kalgoorlie Melbourne to Albury  
Port Augusta to Whyalla Maroona to Portland  
Tarcoola to Alice Springs (long-term lease to Genesee and Wyoming Australia) Benalla to Oaklands  
Broken Hill to Crystal Brook    

New South Wales leased corridors

Mainline interstate network Hunter Valley coal rail network Regional rail network
Albury to Macarthur Newcastle Ports to Werris Creek Parkes to Werris Creek
Newcastle to Queensland border Muswellbrook to Ulan Merrygoen to Ulan
Cootamundra to Broken Hill Werris Creek to Narrabri Narrabri to Boggabilla
Sydney Metropolitan Freight Network    

Source: Australian Rail Track Corporation, 2014a.

ARTC has spent $3 billion on upgrading railway infrastructure over the past five years, most of which came from Commonwealth equity injections (ARTC, 2014). This new investment was intended to redress the previous 50 years of under-investment in the rail network. While this new investment has improved track conditions, maintaining the network is still an ongoing issue.

The ambitions of ARTC to facilitate a major shift from road to rail depend significantly on rail being able to offer reliable and cost-effective alternatives to road.

NBN Co

NBN Co was established in 2009 to design, build and operate the national broadband network (NBN). The NBN will be built as a wholesale-only open-access network with the aim of fostering competition in retail telecommunications and deliver high speed broadband connectivity to all Australians.

The NBN is being built using a mix of technologies, including fibre-to-the-premises, fibre-to-the-node and upgrades of existing hybrid fibre-coaxial infrastructure (Turnbull, 2013).

Rollout of the NBN is at an early stage and has experienced significant delays. By June 2014, it is expected to pass 357,000 existing premises. Under its business plan, the NBN is intended to reach approximately 12 million Australian households and businesses (NBN Co, 2013).

There are a number of reviews of the NBN undertaken or in progress, including:

  • an NBN Co strategic review (which has separately identified the need for a separate review of NBN Co’s Fixed Wireless and Satellite services);
  • an independent cost benefit analysis and review of regulation;
  • a broadband availability and quality project undertaken by the Department of Communications;
  • an independent audit into NBN policy process; and
  • an independent review of governance within NBN Co.

Australia Post

Australia Post traces its origins to 1809, with the establishment of an office to handle mail arriving in the colony of New South Wales, and is Australia’s oldest continually operating organisation (Australia Post, 2009).

Australia Post operates a postal network comprising 4,429 retail outlets, 409 mail and parcel processing facilities, 71 parcel lockers, 44 business hubs and four gateway facilities, as shown in Table 3.3.

Table 3.3: Australia Post’s network
Infrastructure

Number

Street posting boxes 15,927
Metropolitan retail outlets 1,868
Outlets servicing regional and remote Australia 2,561
Business hubs 44
Parcel lockers 71
Trucks, vans and motorbikes/ebikes 10,540+
Mail and parcel processing facilities 409
Gateway facilities 4

Source: Australia Post, 2013.

Since their peak in 2008, Australia Post’s mail volumes have been declining, while parcel volumes have been rising.

In response to these changes, in 2012 Australia Post announced a $2 billion programme to upgrade its national logistics network including: the expansion of major parcel facilities in Sydney and Melbourne; the rollout of parcel lockers and business hubs; and creation of a universal digital platform – the Australia Post Digital Mailbox – as an alternative to physical mail (Australia Post, 2013).

Airservices Australia

Airservices Australia was established in 1995 under the Airservices Act 1995 when it was split from the Civil Aviation Safety Authority (CASA). Airservices Australia has responsibility for airspace management, aeronautical information, aviation communications, radio navigation aids and aviation rescue fire fighting services in the Australian flight information region. These services are delivered according to Civil Aviation Safety Regulations 171 and 172, with oversight by CASA and the Australian Transport Safety Bureau (Airservices Australia, 2012).

It also provides traffic management and related services in the upper airspaces of the Honiara and Nauru flight information regions, under contract with the Solomon Islands and Nauru governments.

Airservices Australia owns air traffic control and landing infrastructure including 1,079 buildings at 684 sites around Australia, two major air traffic service centres in Melbourne and Brisbane, four terminal control units, 29 towers at international and regional airports (as shown in Figure 3.3) and aviation rescue and fire fighting stations at 22 airports. Airservices Australia also maintains a range of aviation navigation and surveillance equipment around the country (Airservices Australia, 2014).

Airservices Australia plans to invest $1.1 billion over the period 2013-18. This includes ongoing investment in tower infrastructure and technology, the replacement of back-up terrestrial based navigation aids and surveillance equipment upgrades and replacement and upgrade of the core air traffic management system (Airservices Australia 2013).

Airservices Australia retains an essential role in air traffic control and aeronautical safety. In its Phase One Report the Commission noted the potential to outsource some of its activities. Further to this, the Commission considers that an independent review be undertaken of the organisation with a particular focus on the scope of its activities as well as its planned capital expenditure programme.

Figure 3.3: Airservices Australia tower locations

As described in the text, this chart compares projections of the current rate of Parenting Payment Single with the proposed rate, and shows that the proposed rate would be projected to reach 25 per cent of AWE by around 2027-28.

Source: Airservices Australia, 2014.

Department of Defence

The Defence estate comprises 3 million hectares with some 400 owned properties (including 72 significant bases and several world heritage areas), 25,000 buildings and 6,000 other structure assets (ABS, 2012).

Defence has conducted many reviews of Defence bases over the last 15 years, mostly seeking to ensure forces are located where they are able to most effectively contribute to their strategic roles and to improve efficiency through consolidation. Recent reviews in which future Defence estate options were considered include the Force Structure Review 2013, the Australian Defence Force Posture Review (2012), the United States Force Posture Review, the 2013 Defence White Paper and the Estate Consolidation Project.

Since 1997, Defence has disposed of more than 280 properties – nearly 25 per cent of the Defence estate. Defence has concluded that these properties were no longer making a substantial contribution to ADF capability, were in a condition beyond cost-effective repair, or were easily identified as being surplus to Defence’s needs given their limited utility (Department of Defence, 2009).

Commonwealth Scientific and Industrial Research Organisation (CSIRO)

The CSIRO’s property portfolio is valued at approximately $1.6 billion, located on 55 sites geographically disbursed across each State and Territory capital city and in regional areas. The portfolio is made up of approximately: 1,100 buildings; 12,000 hectares of land; and 347,000 hectares of pastoral lease. CSIRO also owns and operates three national facilities: the Australian Animal Health Laboratory, the Marine National Facility and the Australian Telescope National Facility.

The majority of CSIRO buildings are past their mid-life refit and over one quarter are 40 years old or more, meaning the portfolio is increasingly expensive to maintain and uneconomical for use. CSIRO has developed a strategy to address the overall deterioration of its property portfolio over the last 10 years, including: replacing facilities that are no longer fit-for-purpose; consolidating key sites and buildings to control escalating growth in operating, repair and maintenance costs; and supporting the delivery of the CSIRO precinct strategy.

Defence Housing Australia (DHA)

DHA provides housing and related services to Defence members and families in order to support the operational, recruitment and retention goals of the Department of Defence.

DHA constructs, purchases and leases houses for Defence personnel, manages dwelling allocation and tenancies and acquires and develops land to build mixed military and private communities. Most of its funding comes from Defence, or Defence employees. It finances additional capital investment by selling and leasing back dwellings, the sale of land and dwellings from developments and the disposal of surplus properties.

As at 30 June 2013, DHA had 18,300 houses under management, including over 3,800 it directly owned and around 12,500 leased from investors (DHA, 2013).

In 2012-13, DHA spent $305 million on a capital programme to acquire 590 new houses by construction or purchase, and $14.4 million on the acquisition of 38 apartments. It also has a $360 million programme to upgrade and replace Defence-owned houses.

DHA has 12 major developments in progress, including in Sydney, Darwin, Townsville, Canberra and Brisbane.

Is its Phase One Report, the Commission recommended the privatisation of DHA.

Australian Nuclear Science and Technology Organisation (ANSTO)

ANSTO is responsible for providing specialised nuclear advice, scientific services and products to government, industry, academia and other research organisations.

ANSTO owns and operates a number of significant science facilities. These include the Open Pool Australian Lightwater Reactor at Lucas Heights, which uses low-enriched uranium in nuclear medicine, research and scientific and industrial applications. The Lucas Heights facility also hosts seven operational neutron beam instruments, a further six in the process of commissioning or development, three x-ray instruments, computing infrastructure and other facilities (ANSTO, 2014a).

ANTSO also owns the Cyclotron, which is used in biomedical and neurological research, and is responsible for operating the Australian Synchrotron, which generates images and provides elemental, structural and chemical information from diverse samples relating to medicine, agriculture, bioscience, engineering, forensics and environmental science by accelerating electrons to create light beams a million times brighter than the sun (ANSTO, 2014b).

Snowy Hydro Ltd

Snowy Hydro Ltd was established in its current form in 2002 and is jointly owned by the Commonwealth, New South Wales and Victorian Governments.

It operates the Snowy Mountains Scheme, an integrated hydro electric power project constructed between 1949 and 1974 that includes 16 major dams, seven major power stations (as shown in Table 3.4 and Figure 3.4), a pumping station, 145 kilometres of interconnected tunnels and 80 kilometres of aqueducts (Snowy Hydro Ltd, 2014).

Table 3.4: Snowy Mountains Scheme major power stations

Power station

Installed capacity
(mw)

Number of
generating units

Year of
completion

Tumut 3 1,500 6 1973
Murray 1 950 10 1967
Murray 2 550 4 1969
Tumut 1 330 4 1959
Tumut 2 286 4 1962
Blowering 80 1 1969
Guthega 60 2 1955
Total 3,756 31  

Source: Snowy Hydro Ltd, 2014.

Figure 3.4: Snowy Mountains Scheme major power stations

This map shows the major features of the Snowy Mountains Scheme.

Source: Snowy Hydro.

Snowy Hydro also owns the Valley Power and Laverton North gas-fired power stations in Victoria.

Snowy Hydro is undertaking a $400 million scheme modernisation project through to 2017. The project will increase turbine capacity and efficiency, improve the efficiency of water utilisation and replace ageing and high maintenance plant components to maintain reliable long-term operational capability.

The Commission has recommended in its Phase One Report that the Commonwealth sell its interest in Snowy Hydro.

Contamination Case Study – Malabar Headland

Malabar Headland is a former Defence site of about 160 hectares on a coastal headland in south-east Sydney, managed by the Department of Finance.

It contains significant environmental, cultural and heritage values, including remnant patches of endangered Eastern Suburbs Banksia Scrub and Second World War fortifications including gun emplacements, underground facilities and a sunken munitions railway. The site adjoins intensive urban development in Maroubra.

Over the past 100 years the Malabar Headland has been used variously for: shooting (military, police and recreational); sand mining; waste disposal; horse riding; and recreational activities. From 1960 to 1988 the Commonwealth allowed sand mining, and later extensive landfill work, on an area which covers roughly 70 hectares at depths up to 25 metres. Before 2011, the Department of Finance authorised different licence holders to occupy and use the site.

Malabar Headland now contains significant levels of asbestos in the soils and in buildings, and contamination from continued settlement of decomposing waste. Some attempt to manage the site contamination has been made: a new leachate collection system was installed on the northern boundary in 2013 and another leachate system will be installed on the southern boundary. Other hazards arise from shooting activities and trip and fall hazards.

The continued authorised and unauthorised use of the site presents an ongoing risk to the Commonwealth. Effective management of that risk requires the site to be vacated and access restricted until comprehensive remediation works have been funded and undertaken. Complete remediation of the site is estimated to cost between $95 million and $150 million (Department of Finance, 2014a).

Reporting of deferred maintenance in the United States

In the United States, agencies report maintenance backlog estimates in required supplementary information accompanying their financial statements in annual financial reports.

The United States Federal Accounting Standards Advisory Board (2013) gives as its rationale for this that:

Deferred Maintenance and Repairs (DM&R) reporting enables the government to be accountable to citizens for the proper administration and stewardship of its assets. Specifically, DM&R reporting assists users by providing an entity’s realistic estimate of DM&R amounts and the effectiveness of asset maintenance practices the entities employ in fulfilling their missions.

Under these arrangements, maintenance and repairs that were not performed when they should have been or were scheduled to be and which are put off or delayed for a future period are required to be reported. For reporting purposes, maintenance and repairs includes activities directed towards keeping fixed assets in an acceptable condition. Activities include preventive maintenance; replacement of parts, systems, or components; and other activities needed to preserve or maintain the asset.