PM Transcripts

Transcripts from the Prime Ministers of Australia

Transcript 377


Photo of Menzies, Robert

Menzies, Robert

Period of Service: 19/12/1949 to 26/01/1966

More information about Menzies, Robert on The National Archive website.

Release Date: 10/10/1961

Release Type: Statement in Parliament

Transcript ID: 377

EMARGO: Not for publication or broadcast before 8 p. m. EST 10TH OCTOBER. 1961
This Bill seeks the approval of the Parliament to an Agreement botween
the Commorwealth and the Western Australian Governments relating to reconstruction
of the Kalgoorlie/ Fremantle/ Kwinana line of the Western Australian railways,
In the course of a statement I made last February about the
Government's economic measures, I indicated our interest in certain major
projects in the States as projects which could make a significant contribution
to national growth and development, particularly in the promotion of increased
export earnings. I said then that the Government had several large undertakings
under consideration; that we were prepared to assist in their detailed planning;
and that we would, at an appropriate time, consider the provision of financial
assistance to facilitate their execution. One of the undertakings I mentioned
was a railway project in WJestern Australia which would aid the establishment of
an iron and steel industry in that State and in respect of which the Government
of Western Australia had sought Commonwealth financial assistance.
We subseauently embarked on a close examination of this railway
project in consultation with both the Government of Western Australia and the
Broken Hill Pty. Co. Ltd. We satisfied ourselves that construction of the
railway had a vital place in that Company's plans for a major expansion of the
steel industry. Indeed, we ascertained that, if the railway were not built,
the prospects of an expansion of steel production which would substantially
assist in bringing about a major contribution to our export earnings would be
adversely affected. It was against that background that we entered into
discussions with the Government of Western kustralia, the outcome of which is
reflected in the Agreement of which the approval of Parliament is now sought.
Conditional upon the construction of a standard gauge railway for the
carriage of iron ore, an agreement was concluded late last year between the
Western Australian Government and the Broken Hill Pty. Co. Ltd, for the
establishment of an integrated iron and steel industry allied with the
development of the iron ore deposits at Koolyanobbing.
In that Agreement the Broken Hill Pty. Co. Ltd. undertook, by the end
of 1968, to set up at Kwinana a blast furnace with a capacity of 450,000 tons
per annum of pig iron, and to establish within the following ten years a steel
making plant and additional rolling mill facilities to produce 330,000 tons per
annum. of finished steel products. Part of the scheme for establishing the steel
industry was and is the development of the rich and extensive ore deposits at
Koolyanobbing and Bungalbin, situated about 33 miles north-east of Southern
Cross. The ore requirements for the steel works at kSwinana, and for shipment
from Western Australia to other steel works, will be in the region of two
million tons per annum.
The existing narrow gauge railway would be quite incapable of carrying
economically tonnages of this magnitude, and, to be able to cope with the likely
traffic, would need to be substantially reconstructed. Because of the capacity
of a standard gauge line to carry the heavier loads and cope with the speeds of
modern trains, and because of the fact that, for the tonnages which would beinvolved,
the standard gauge line would make the enterprise economically sound
and attractive, it became essential to reconstruct the track on standard gauge
rather than on the existing 31611 gauge.
The Government of Western Australia therefore proposed reconstruction
to standard gauge of the railway between Southern Cross, on the main east-west
railway, and Kwinana, south of Fremantle, plus construction of a spur line from
Southern Cross to Koolyanobbing, for the purpose of carriage of ore from the
Koolyanobbing deposit to the site of the steel works. Such reconstruction, if
done by itself, would have left the section of the main line between Kalgoorlie.

and Southern Cross on narrow gauge. In order to avoid yet another break of gaU&
on the east-. wast railway system, therefore, the State Government proposed that
the section between Kalgoorlie and Southern Cross should also be reconstr'Ucted
to standard gauge as a part of the overall project.
The proposals of the Western Australian Government were closely
examined by the Commonwealth in all their aspects. Very substantial funds are
involved, the cost of the railway works at current cost levels being estimated
at œ 41,200, 000. The analysis which has been made of the estimted expenditure
and operating results of the line shows that, based on the carrying of 2
million tons per annum. of iron ore and on general traffic at exidsting levels,
the new line should be a thoroughly sound economic proposition. Indeed, it is
to be expected that the new line will attract additional general traffic, and to
the extent that it does so the economics of the railway should be correspondingly
still further improved.
The construction of the line is in itself a project of the first
imnortance, but oven more important is the part which the project as a whole
will play in the development of Australia's resources, the increasing of export;
and/ or the saving of imports. It will bring to Western Australia a major heavy
industry, certainlr 1te most important industrial undertaking in the history of
that State, and indeed among the most significant projects of this kind
undertaken in the Commonwealth in recent years. The ijestern Australian proposal
is an essential part of a general expansion in steel making capacity planned by
the Broken Hill Pty. Co. Ltd. for the purpose of producing a substantial quantity
of steel for export, and thus will make a most valuable contribution to the
export potential of this country.
Moreover, the establishment of a basic steel industry in Western
Australia will inevitably bring in its train a number of ancilIlarj industries.
These will contribute further to the general economic expansion of th. State and
will do a greait deal to promote the industrial balance which is so important to
this part of Australia. It is not en exaggeration to say that the undertaking
will represent just about the most remarkable new advance in the development of
Western Australia since the discovery of gold.
Having all these important considerations in mind, the Government
concluded that the proposed railway undertaking merited the assistance of the
Commonwealth in financing it. It was obvious that, because of the very large
cost of the project, the State Government would be unable to go ahead with it
without financial assistance. We. therefore, commenced negotiations with the
*-estern Australian Government and were nuickly successful in reaching agreement
with that Government on the work to be done, the manner in which it wou~ ld be
performed, and terms undor which it would be financed.
I come now to a brief description of the contents of the Agreement
itself. With regard first to the method of financing, the undertaking has, as
1 have indicated, olements related both to development and to rail
standardisation. In its industrial developmental aspects it has in it features
veñ' y similar to the proposal for the reconstruction of the Queensland railway
from Collinsville to Mt. Isa. Insofar as it is a standardisation project, it
resembles the Victorian and South Australian Rail tandardisation projects in
whiich the Commonwealth has participated. It was difficult to differentiate
precisely between the proportions of the costs which should be attributed to
each of these elements. e discussed the matter at some length and reached
agreement with the State Government that as a matter of broad judgment the cost
might be divided into two equal parts one half of which could be regarded as
representing the developmental element and the other the rail standardisation
element in the project.
This is not to say that particular components of the overall project
are to be treated as developmental components and others as standardization
oomponents. The arrangement is rather that all expenditure on the project as a
whole, irrespective of the particular nature of that experditure, will be
treated as comprising equal parts of developmental and standardization

For the dE. l'eJopwral portion the Commonwealth will provide 70% of the
funds initially required and the State The money provided by the
Commonwealth will be repaid by the State from its Consolidated Revenue over a
period of 20~ years commencing from the completion of the project, with interest
at the long term bond rate ruling at the time the advances are made. Interest
accruing during the construction period may be capitalised if the State desires.
These provisions follow closely the now accepted arrangements in the case of the
Mt. Isa Railway. For the standardisation portion the Commonwealth wil-l provide the iwhice
of the finance initially required, and the -State will repay friom its Consolidated
Revenue, over a period of 50 years, 30% of the amount provided during each
financial year together with interest at the long term bond rate ruling at the
end of each such yeaar on the outstanding amount from time to time These terms
follow those in the Victorian and South Australian Rail btandardisation
Agreements except that some special sinking fund provisions in the South
Australian Agreement ( but not the Victorian) will not apply in this case.
The overall effect of these arrangements is that the Commorwealth
will provide 85% of the total initial finance ( 70% of the developmental part and
100% of the standardisation part) and that the State will provide 15% of the
total initial finance ( 30% of the developmental part). On the basis of an
estimated cost of E4J, 200, O0fl the estimated amounts to be found by the
Commorwealth and by the State in the first instance are œ 35million and
œ 6,200,000 respectively.
The effect of the provisions relating to repayment by the State is
that the State will eventually meet 65% of the total cost ( 100% of the
1evelopmental element and 30% of the standardisation element). The proportion
of the overall cost to be finally met by the Commonwealth will be 35% ( 70% of
the standardisation element), On the basis of an estimated overall cos: t of
œ. 41,200, mOO, the respective figures are State E26,800,000, Commonwealth
Provision is made in the Agreement for the furnishing of estimates of
funds required each year and for annual statements showing the expenditure
incurred on the project from time to time, together with a revised estimate of
the amount required to complete the work.
The usual provisions are made for the keeping of accounts and records
and for the audit of accounts by the Auditor-General for the State.
The work to be done under the A~ greement is set out in some detail in
schedules annexed to the Agreement. Briefly, what is proposed is a new
standard gauge line parallel to the existing track from Kalgoorlie to East
Northam, with a new line from Southern Cross to the site of the ircn ore leases
at Koolyanobbing. The existing 31611 gauge track between Kalgoorlie and
Coolgardie will be retained, as a third rail, in addition to the W811 guge
to permit the working of the existing 3t' 6" line between Kalgoorlie and Esperance.
From East Northam the line willI take a new route vin Toodyay and the Avon River
Valley to Midland. This deviation from the existing route is necessary to
provide the required grades for the heavy trains which will be operating and
which could not be operated over the present route.
The line will then follow the existing track to Perth and Fremantle
and on to Kwinana. There are associated works necessary in and a-round the
metropolitan area and sowe narrow gauge works, especially between East Northam
and Midland, which are needed for the maintenance of services on the State's
narrow gauge system. There are also some ancillary works made necessary by
the provision of the new standard gauge line, including new station buildings,
workshop facilities, marshalling yards and the like. Standards for the
construction are also set out in a schedule to the Agreement. There is
provision for variation of the schedules if the Commorwealth and the State
agree that variations are necessary for the more effective fulfilment of the
objectives of the Agreement.

Rolling stock to be provided is also set out in a schedule. it
consists of the rolling stock necessary to lift twu million bono por annum of
iron ore, together with rolling stock needed to carry general traffic at the
present level. The estimates for rolling stock include a component representing
the minimum requirements for general traffic which generally constitutes the
extent of the intention of the Agreement for that particular type of rolling
stock. The Agreement provides, however, that -the objectives in regard to the
general traffic rolling stock may be varied by agreement following a review to
be carried out about the end of the year 1966. It is intended that this review
shall take into account the quantity of rolling stock which tlh,-State : T'ly have
available for conversion to standard gauge at -uhat date and any other fa-ct -2' s
which may be relevant at that particuL' time.
The work entailed is to be carried out by th5 Western Australian
Government, the intention being that it will be completed by 31st December, 1968..-,
In the interest of the more efficient and expeditious completion of the project,
it is provided that, except where special circumstances may dictate otherwise,
thu work will be carried out by the letting of contracts after public tenders
have been called.
The A~ greement provides for close collaboration and agreemeaft between
the State and the Commonwealth for the programming, planning and carrying out of
the work. Expenditure on work done under the Agreement is subject to
authority of the Minister for Shipping and Transport. There are several
miscellaneous provisions. In the unlikely event of any dispute arising, it is
provided that the matter in dispute shall be determined by the Commonwealth
Treasurer. Another clause provides that the parties affirm the principle that
their respective railway authorities shall collaborate with each other in the
matter of standards of design and construction of rolling stock and also its
operation to the end that an efficient co-ordinated service over the Commonwealth
and estern Australian railways will be achieved and intersystem traffic be
facilitated. This provision is an important one. The Commonwealth and
' estern Australian Governments are making a substantial investment in this
railway and both Governments are anxious to ensure that the maximum possible
benefits are obtained from the new line when it comes into operation. The
Commonwealth and Western Australian Railways will both benefit from the
interstate general traffic operating over their respective systems, and it is
obviously desirable that they should make such arrangements as will ensure that
this traffic moves with the minimum of delay, and that the travelling public and
shippers of goods will receive the best and most efficient service that can be
provided. I am sure that this great railway project will have the whole-hearted
support of Honourable Members on both sides of the House. It will have farreaching
effects of the most beneficial kind on the development of Australia
and of Western Australia,( which is an important part of Australia) in particular.
Indeed, it can truly be said to mark an important milestone in our advance as an
industrial nation. I have great pleasure in commerding the Bill. to the House.

Transcript 377