Beginning in 1865, railways in Australia were initially built by the individual state governments, with four different gauges to serve local needs. At the time of construction there was no apparent need for an integrated system. Once the lines reached state borders, the gauge problem became a severe restraint on interstate trade. Australian National Railways, established by the national government in 1975, consolidated the separate state systems and the federal system to form a national network.
Three gauges remain in use, however, causing delays and raising transportation costs. Efforts have been made to introduce standard-gauge tracks on major routes, and standard-gauge lines now link every state capital on the mainland. Transcontinental service between Sydney and Freemantle was opened in 1970. Australian National Railways embarked on a program to modernize and standardize rail transportation, and in 1991 the National Rail Corporation was formed to provide interstate freight services using the tracks of the state systems.
The Australian national government has begun privatization of the national railways.
The Australian railway industry continues to evolve from a number of separate state government departments into privately owned transport organizations. The national government is working on policies that will regulate and set standards for access to the interstate standard-gauge system. Each state, except Queensland, is dividing its track, freight, and passenger sectors into separate operations with the intent to meet the privatization mandate. Queensland intends to retain an integrated rail system. New South Wales had already separated infrastructure, maintenance activities, passenger, and freight services as independent entities by 1996. By 1997 several private passenger operators were in place, and Tasmania's railway had been taken over by the Wisconsin Central Corporation. In addition, Australian National Railways was to be put up for bid.
Australia has several isolated private railways for iron ore transport that are among the most efficient heavy-haul operations in the world. All are located in the northwest coastal area. The BHP Iron Ore Railroad, the Hamersley Iron Ore Railway, and Robe River Iron Associates conduct efficient mine-to-port operations
New Zealand's rail network covers its two main islands and is operated under the name of Tranz Rail. The government-owned New Zealand Railways, a government department for over 100 years, was restructured during the 1980s in preparation for a sale. The sale was completed to a consortium of local banking interests in 1993. Railway operating expertise comes from the Wisconsin Central Corporation. The nationwide network has seen large gains in productivity, increases in traffic, and substantial profits as a private entity.
Tranz Rail operates urban commuter services in Wellington and Auckland under the name Tranz Metro. It also operates a fleet of three roll-on/roll-off train ferries across Cook Strait between North Island and South Island. Another division, Tranz Link, offers coordinated road, rail, and sea transport.