R1.108 Accelerated Depreciation: Promoting Technological Investment in Rail

Background

Although regulation for emissions, pollution and the like is becoming stricter, rail is still locked in to using existing infrastructure, namely locomotives and rolling stock. As a result, it is currently feasible for operators to dispense with their old technology at regular intervals, even though they will have to pay more to use older technology under emerging emission trading regimes.

Objective

The rail industry has sought to ascertain the viability of promoting an Environmental Benefit Scheme (EBS) advocating accelerated depreciation of newly acquired locomotives, wagons, and handling equipment. This is intended to provide incentives for operators to invest in more efficient and environmentally friendly technology. This project will survey the literature on Australian and international rail reform and the potential for technological investment in cleaner technologies. This will ascertain whether an accelerated depreciation scheme could address the current infrastructure deficiency and translate outcomes into meaningful policy advice.

Outcomes

Project outputs will include:

  • a survey of literature on features of the Australian industry, especially regarding how rolling stock is financed and managed,

  • an economic analysis of investment, environmental and social outcomes of the accelerated depreciation scheme, and

  • a report on the efficacy of accelerated depreciation schedules in promoting technological investment in the Australian rail industry.

Benefits

Under the proposed scheme rail operators can enjoy operational cost savings from the acquisition of modern rolling stock that is more fuel efficient. Furthermore, the rail industry will be provided with improved efficiency and enhanced service through use of new technologies.