T2G Inland Rail Economic Analysis

This report was developed to examine and assess the full range of benefits and costs and associated potential economic desirability of investing in a dedicated inland freight rail line between Toowoomba to the Port of Gladstone. Importantly, the extension of Inland Rail to the Port of Gladstone has been compared on a like-for-like basis, as far as data permits, to the extension of Inland Rail to the Port of Brisbane.


Freight Demand
Globally, containerised trade has been growing rapidly and has proven to be a dominant form of transporting cargo in international shipping due to the lower cost of transporting goods. Since 1980, containerised trade volumes have increased by 8.1% on average per annum, while overall seaborne trade has increased by an average of 2.8% per annum (HustonKemp, 2019). The freight task (volume and distance of freight to be transported) is expected to continue to grow rapidly in the medium to longer term on the back of relative strength in Australia’s resources and agriculture sectors, and the Federal Government’s efforts to revive manufacturing and value adding in minerals and food and fibre processing in regional Australia. An increasing component of this freight task is import/export related as Australia’s trade relationships continue to develop. Further, the development of infrastructure for containerised freight can unlock additional resource development. In the Surat Basin in Southern Queensland, there are eight mines currently identified for potential future production, which together can produce up to 60 million tonnes of saleable coal for export. All of these mines require favourable global economic conditions a rail connection to the Port of Gladstone to be realised.

Port Capacity
A growing national import/ export freight task requires matched capacity in Australia’s container ports. Australia’s east coast container ports are expected to reach capacity between 2032 and 2052, with further capital works being required to support continued container growth. Meeting the increased demand, while maintaining international competitiveness in the freight supply chain will invariably be complicated by use conflicts surrounding increased population growth in capital cities, increased traffic congestion and high cost of new infrastructure and land resumption around the existing container ports of Brisbane, Sydney and Melbourne. An alternative to Brisbane, Sydney and Melbourne is Gladstone Port, currently Queensland’s largest multi- commodity port (although traditionally perceived as a wet and dry-bulk port for resources export). Gladstone Port provides an alternative 4th major container port on the east coast of Australia as it has a naturally deep harbour that currently services the largest dry bulk cargo ships in the world (Capesize, with a draft of 18.3m), has room to expand container berths at Port Central and additional berths able to be developed at Fisherman’s Landing. Unlike Australia’s existing container ports, Gladstone Port is adjoined by an additional 27,000ha of medium-high impact
developable land in the Gladstone State Development Area, which can be developed to support wholesale trade and other freight related industry. Gladstone Port also has available capacity in its coal export terminals (both WICET and RG Tanna) to support an
additional 30 mt of coal export per year. Importantly, through the development of the Inland Rail link to Gladstone Port, coal and containerised freight can be redirected away from urban greater Brisbane to Gladstone for export.

Freight Efficiency
Developing Gladstone Port as Australia’s 4th major container port on the east coast of Australia also provides freight efficiency advantages to Australia’s freight task. The ability to develop to accommodate larger container ships than both Brisbane and Melbourne, as well as its relative proximity to Australia’s export markets (namely, East Asia) provides freight efficiency savings for all container freight that is imported to and exported from Australia.

Cost Benefit Analysis
Inland Rail from Toowoomba to the Port of Gladstone is economically desirable. The development when examined at 4% realises a Benefit Cost Ratio (BCR) of 1.58, highlights that the project will return $1.58 for every $1 cost. This provides a more economically desirable outcome than the development of Inland Rail to the Port of Brisbane, which presents a BCR of 1.01 (see Table ES.1 below).

Economic Impact Assessment
Input-Output modelling was undertaken on the development of Inland Rail from Toowoomba to Gladstone Port. The Inland Rail works examined in this study will provide the necessary freight infrastructure that may unlock significant large-scale mine developments in the Surat Basin with the ability to leverage built capacity in the Port of Gladstone. It will also deliver a significant contestable freight task to justify expenditure on container port upgrades in Gladstone, creating significant efficiency improvements for the region’s freight.

The different construction activities associated with Inland Rail will generate considerable economic benefits within the catchment1 area analysed. Direct benefits and total impacts (incorporating direct, production induced and household consumption impacts) are  outlined in Table ES.2 within the report.

Ongoing Activity
The operational phase of the Toowoomba to Gladstone section of Inland Rail is estimated to deliver the following economic activity each year2:
• $6.5 million contribution to Gross Regional Product (GRP) per annum (including $2.0 million directly).
• 45 Full Time Equivalent (FTE) jobs per annum (including 18 FTE jobs directly), paying a total of $4.1 million in wages and salaries per year (including $2.0 million directly).

Once a steady state of operations is reached from 2032, operational activity associated with the development of additional coal mines, at an assumed 20 million tonnes per annum (MTPA) of production, is estimated to support:
• $1,617.0 million contribution to Gross Regional Product (GRP) per annum (including $851.3 million directly).
• 7,166 Full Time Equivalent (FTE) jobs per annum (including 2,600 FTE jobs directly), paying a total of $833.6 million in wages and salaries per year (including $451.3 million directly).

Combined impact on the regional economy
Accounting for different direct and indirect construction and operating activities occurring simultaneously, the development of Inland Rail is expected to generate an additional 18,300 FTE jobs in the region by 2032. This represents a 21.5% increase in FTE jobs in the region.

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