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Inefficient local content policies cause $1.85bn wastage in Australian rail procurement over a decade.

Over the past decade, inefficient local content rail procurement policies across Australia have caused a wasteful loss of $1.85 billion, the Australasian Railway Association (ARA) has claimed in a new report which calls for a new national approach. 

The Benefits of a National Local Content Policy released by the ARA urges a national approach to rolling stock procurement in order to address a waste of resources.

In releasing the report, ARA Chair Danny Broad says state-based policies made it difficult for organisations to work across state lines, leading to duplication of facilities, inconsistency between states, and difficulties in bidding for key contracts. 

“State-based policies make it harder for the industry to gain scale, drive innovation and adopt greater efficiency and productivity across their operations,” Broad said. 

“This hampers their competitiveness over time and puts local jobs at risk in the long term.

“Australia has fantastic capability in rollingstock manufacturing, but its effectiveness is hampered by inefficient state-based local content policies that make it difficult for organisations to work across state lines to build economies of scale.”

He said savings could have been used to fund infrastructure projects or create new jobs. The report identified $717 million in savings from increased scale, $811 million in savings from reduced complexity, and $318 million in savings from harmonising major componentry. 

Assistant Minister for Manufacturing and Trade Tim Ayres said the Albanese Government has committed to delivering a National Rail Manufacturing Plan aimed at coordinating a national approach to support and grow the Australian rail manufacturing sector. 

He told ABC, the ARA’s report underscored the need to build local content and highlighted local procurement policies of the Victorian and Queensland Governments. 

The Queensland Government earlier this year announced Downer as the preferred supplier for a $7 billion project to build 65 new passenger trains.

“This report goes one step further and it really underscores what it is that the Albanese Government has committed to. We have said coming into government that we’re going to develop a National Rail Manufacturing Strategy. And I’m busily working away at making sure that the architecture is in place to do that,” Ayres said. “And what that is going to do is coordinate amongst the states, to deliver what this report points out is real significant efficiency opportunities and very significant opportunities to build and design the trains of the future.”

According to the ARA, the rail manufacturing and supply sector generates $2.4 billion in revenue per year and supports more than 4000 jobs.

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