Friday, July 5, 2024

24/25 Fee Reg – Overview

Establishing the annual fee regulation is normally a fairly run of the mill process but this year there are some realities and challenges to deal with.

For the first time since the COVID-19 pandemic, the annual fee payable to ONRSR will be increasing for some rail transport operators – this fee is to cover the cost of regulating rail safety around Australia. Annual fees have been held flat in recent years to aid the Australian rail industry’s ongoing recovery from the COVID-19 pandemic and throughout this period, ONRSR passed on cost savings (due to reduced travel and operating costs) to industry worth in excess of $5 million.

• 2018-19 – Cost of Regulation permanently reduced by $1M
• 2020-21 – Cost of Regulation reduced by $635K as CPI not applied
• 2021-22 – $2.3M once-off fee rebate passed on to industry from ONRSR identified Covid-related operational savings
• 2022-23 – $1.4M once-off fee rebate passed on to industry from ONRSR identified Covid-related operational savings
• 2023-24 – CPI not applied and 2022/23 $1.4M Covid rebate was applied again

Application of the 2022-23 fees for the 2023-24 financial year resulted in a $2.7 million loss for ONRSR and quite simply, a further freeze on fees would severely restrict ONRSR’s ability to regulate the safety of the Australian rail network. The reality is that while annual fees have remained constant, there has been an increase in train and track kilometres around Australia with expanded operations and new major rail projects coming online – changing the regulatory profile.

In looking to 24-25, significant effort has gone into keeping fees as low as possible while ensuring the ongoing effectiveness of ONRSR via:

• A reduced 2022-23 CPI rate of 5% (instead of 6.6%) – ONRSR to deliver ongoing efficiency savings of $700,000.
• Reducing government contributions by 5% instead of 10%
• Decreasing the overall cost of regulation by increasing the major projects fee off set provision from $1.3m to $1.98m

In real terms, the 2024-25 annual fees will see 63% of all operators’ fees either fixed or slightly reduced.

For the remaining 37% of operators the increased rail footprint, combined with CPI and a reduction in Government contributions, will result in an average fee increase of around 20%. Where fee increases are highest, this generally reflects a significant expansion of operations.

ONRSR understands fee increases create financial pressures, but like all sectors, ONRSR’s fees must reflect the cost of doing business – which in its case is keeping Australians safe on railways.

ONRSR has been engaging with operators in the lead up to introduction of the new fee regulation and is encouraging anyone with questions to please get in touch with their local ONRSR office to discuss how this impacts your operation.