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Rail services in Tasmania will not shut down overnight if government funding cannot be found, operator Pacific National has told a public forum of stakeholders in Hobart.
PN Tasmania head Neil McKinnon said that container services would not be wound back until the State and Federal Governments finished a two-month audit of the network.
Pacific National has asked the governments to contribute $100 million over a decade to get the tracks up to scratch or it will have to cut North to South container services.
In return it has agreed to invest $38 million over 10 years to upgrade rolling stocks, many which are near or at the end of their lives.
The company has estimated 2000 extra truck trips will be needed to cart freight between Hobart and Bell Bay should the service cease.
More than 150 jobs could also be at risk.
"It won't all close down tomorrow, Mr McKinnon said.
"Pacific National has and never would say that we are just going to walk off.
"We have always said at worst, if we can't get Government help, then we'll have a phased run down in intermodal services on the main line.
"The track is serviceable at the moment.
But there are going to have to be major replacements of sleepers, and of rail, and of bridges and regular ongoing costs of fencing, of pest control, fire prevention, threatened species management, and level crossing maintenance.
"We are flagging at the earliest opportunity that this is unsustainable liability for an operator such as ourselves and seeking Government help to get it done so that it does not become a major crisis.
"We are happy to continue with bulk traffic. It is the intermodel traffic, which is basically containers, logs and coal that are our problem."
Mr McKinnon said that the West Coast to Burnie and the Railton to Devonport lines were both profitable and safe.
But intermodal services between Hobart and the Northern ports were at risk as they were not profitable, he said.
"It's an equation that is based on the length of the track, the volume and the amount of freight that is travelling on it," Mr McKinnon said.
Mr McKinnon said that if money was not found to upgrade the tracks, intermodal traffic would be phased out.
"We have to negotiate with all of our customers to make sure that we minimise the impact on them, and on our staff and on Tasmania generally," he said.
"We are in close discussions with them to make sure that they are considering the contingency plans.
"We can't guarantee a favourable outcome at the end of November."
He also rebutted speculation the sudden crisis was a result of the recent bad blood between the PN's parent companies Toll Holdings and Patrick Corp.
"Rest assured that this issue has way predated any disputes at the shareholder level," he said.
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