28 October, 2022
The global market for rail technology is large, estimated by the ARA to be worth around $362 billion and growing. Yet, Australia risks missing out on the next wave of rail transformation if existing rail industry processes don’t adapt. Facilitating opportunities for rail innovation is critical to achieving government policy objectives, such as improved rail mode share, reduced carbon emissions and environmental sustainability.
Synergies’ review of the costs of existing rail Type Approval processes in Australia shows that existing processes are costly, and are hindering competition, innovation and long term rail productivity. Our review identifies a range of options to reduce some of these costs and further unlock rail’s potential. Streamlining, repurposing and targeting Type Approvals to facilitate the introduction of products and technologies that are genuinely productivity enhancing should deliver substantial gains to the rail industry and the broader economy.
Today’s co-regulatory rail safety framework is a risk-based approach whereby the Government sets a performance requirement on railways to operate safely and provides operational flexibility to establish and implement standards, rules and methods of operation necessary to reflect their operations.
While flexibility is a legitimate policy objective that can help to drive innovation, it can also impose unintended costs.
Type Approval is the process by which an organisation satisfies itself that a particular type of product or methodology meets the rail transport operator’s requirements and specifications.
But the prevalence of multiple rail networks and operators has led to a wide range of ‘bespoke’ requirements and Type Approval processes, leading to inconsistencies and duplicated effort.
This can be costly and burdensome for a rail operator that must traverse multiple networks for a single train journey, as Type Approvals with one rail network does not contribute towards an approval with another. This creates a barrier to investment and innovation, as the approval burden for new equipment types is high. It has also led to inconsistencies in the technologies introduced across networks, further exacerbating the broader interoperability challenges that continue to plague Australian rail networks today.
There are calls from the rail industry for a more ‘harmonised’ Type Approval framework to address some of these issues.
In order to continue to advocate for industry change, RISSB and the ARA commissioned Synergies to undertake a cost benefit analysis of improving harmonisation in the Type Approvals process.
Estimating the economic cost of Type Approval processes in the Australia rail industry
This report assesses the costs of the existing TA processes and based on consultation with industry participants (network operators, contractors, suppliers), assesses the extent to which these costs are excessive and the scope for direct and indirect cost savings to be achieved under alternative approaches.Download
Synergies conducted a series of consultations with industry participants (network operators, contractors and suppliers) and prepared an assessment of the costs of existing Type Approval processes. We examined the direct costs imposed on the rail industry from the approval process, as well as the ‘indirect costs’ imposed on the broader economy in terms of lost competition, innovation and long term rail productivity.
Synergies found that:
Synergies’ report futher noted while the scale of direct costs associated with existing processes is substantial, the indirect costs of the current framework are likely to be much larger, in terms of lost competition, innovation and long term productivity.
Synergies identified a number of options for reducing cost and unlocking rail innovation:
Regulation has a critical role to play in promoting a safe and reliable rail industry. However, regulatory measures must not stifle investment and innovation; rather they should align with broader industry goals to harness technological development and promote operating efficiency.
The opportunities for harmonisation in Type Approvals is part of a much larger, live issue in Australian rail about improving network inter-operability and broader freight rail efficiency.
Synergies’ report demonstrated that significant benefits are available from strategies to streamline and improve Type Approval processes.
A webinar showcasing Synergies analysis is available from RISSB’s website: click here
Thank you Synergies for undertaking such important research to quantify the significant cost of the current type approval processes in rail but most importantly recommendations to address the inefficiencies.
Australasian Railway Association
Great work on the project, and I really enjoyed the webinar. Thank you
Rail Industry Safety and Standards Board