Inland Rail

Inland Rail Equity Funding

Following the successful completion of market testing, the Australian Government announced as part of the 2017-18 Budget that it is committed to funding the 1,700 km Melbourne to Brisbane Inland Rail project through an additional $8.4 billion equity injection to the Australian Rail Track Corporation (ARTC). 

This follows the Australian Government announced on 3 May 2016, that it would deliver Inland Rail through ARTC in partnership with the private sector, and that there would be a market testing process to identify opportunities for private sector involvement.

Market Testing

Stage One Market Testing process

Market Testing was carried out in two stages. In September 2016, the Government sought views of a broad range of market testing participants on the design, construction, delivery and financing of the Inland Rail project as part of Stage One Market Testing. Industry feedback was sought via a range of questions relating to the Market Testing Terms of Reference, which were developed and announced by the Australian Government. 

Stage One Market Testing received strong responses from a range of relevant parties, including above and below rail operators and managers, investors, debt financiers, construction contractors and other relevant stakeholders.

Stage Two Market Testing process

Following completion of Stage One, the Department of Finance invited interested parties to nominate for participation in Stage Two Market Testing which was undertaken during January and February 2017. The market testing process was led by Finance and jointly overseen by Finance and the Department of Infrastructure and Regional Development.

As a result of feedback received from Stage One, and consideration of that feedback against the Australian Government's objectives, the Stage Two Market Testing Parameters were agreed and four shortlisted options identified.

The four shortlisted options involved the delivery of Inland Rail through ARTC, in partnership with the private sector, with the following opportunities for private sector involvement:

  1. ARTC delivery of the entire Inland Rail corridor through a combination of Government financing and ARTC debt-raising in partnership with the private sector
  2. ARTC delivery of Inland Rail with a Design, Build, Finance and Maintain contract for all or part of the 126km Toowoomba to Brisbane section, including tunnels
  3. ARTC delivery of Inland Rail, using a combination of Government financing and ARTC debt raising, with a take or pay arrangement for coal producers from Toowoomba to Brisbane (Gowrie to Kagaru, 126 km)
  4. A BOOT (Build, Own, Operate, Transfer) contract for the Parkes to Brisbane section (975 km), with Government and/or user support, and ARTC delivery of the remainder of the Inland Rail alignment 

Stage Two Market Testing sought market participants’ views on:

  • preferred delivery model of the four shortlisted options;
  • willingness and capacity to participate in the shortlisted options;
  • understanding of the various risks associated with the delivery of Inland Rail;
  • capacity to enhance the performance and value of Inland Rail, including design and operation; and
  • potential project level procurement models for the design and construction of Inland Rail.

Outcome of Market Testing 

Following the completion of Stage Two Market Testing, the Australian Government announced as part of the 2017-18 Budget that it is committed to funding the 1,700 km Melbourne to Brisbane Inland Rail project through an additional $8.4 billion equity injection to ARTC.

ARTC will deliver the project and will enter into a Public Private Partnership (PPP) to fund and construct the Toowoomba to Kagaru (Brisbane) section. This will enable the Government to manage risk, drive value and leverage private sector expertise in the design, finance, build and maintenance of the most technically complex section – Toowoomba to Kagaru (Brisbane) – which includes construction of 8.9 km of tunnels through the Toowoomba range. 

Last updated: 10 May 2017