Australians generally assumed in the 1850s that railways would be built by the private sector. Private companies built railways in the then colonies of Victoria, opened in 1854, and New South Wales, where the company was taken over by the government before completion in 1855, due to bankruptcy. South Australia's railways were government owned from the beginning, including a horse-drawn line opened in 1854 and a steam-powered line opened in 1856. In Victoria, the private railways were soon found not to be financially viable, and existing rail networks and their expansion were taken over by the colony. Government ownership also enabled railways to be built to promote development, even if not apparently viable in strictly financial terms. The railway systems spread from the colonial capitals, except for a few lines that hauled commodities to a rural port.
Railways in Australia date from the 10 December 1831 when the Australian Agricultural Company officially opened Australia's first railway, located at the intersection of Brown and Church Streets, Newcastle, New South Wales. Privately owned and operated to service the A Pit coal mine, it was a cast iron fishbelly rail on an inclined plane as a gravitational railway.
The colonial railways were built to three different gauges, which became a problem once lines of different systems met at Albury in 1881 and Wallangarra in 1888. In the 20th century, the lines between major cities were converted to standard gauge and electrified suburban networks were built in Sydney, Melbourne, Brisbane and Perth. In the second half of the 20th century, many rural branch lines were closed to passenger traffic or altogether in all states. On the other hand, long heavy-haul railways were built to transport iron ore in Western Australia and coal in Queensland to ports. In Western Australia these railways are privately owned.
In the 1990s and the early 21st century, the traditional networks were reorganised and partially privatised. The interstate standard gauge network came largely under the control of the Australian Rail Track Corporation and private companies were allowed to operate on it for the first time. Some non-metropolitan intrastate networks became privately controlled and the operation of private freight and passenger trains commenced. The Melbourne suburban railways became the first urban rail system to be operated by private sector franchisees.
Development of state-based networks
Railways in Australia date from the 10 December 1831 when the Australian Agricultural Company officially opened Australia's first railway, located at the intersection of Brown and Church Streets, Newcastle, New South Wales. Privately owned and operated to service the A Pit coal mine, it was a cast-iron fishbelly rail on an inclined plane as a gravitational railway.
The earliest railway in South Australia consisted of the seven-mile horse-drawn freight line between Goolwa and Port Elliot, which began service on 18 May 1854, allowing steam ships to avoid the treacherous mouth of the Murray River. The first steam locomotive began service soon afterward on the Port Melbourne line between Sandridge (now Port Melbourne), and Flinders Street in Melbourne.
In 1848, the Sydney Railway Company was established to connect Goulburn and Bathurst to Sydney, mainly to convey wool for export to the United Kingdom. The company proposed that standard gauge () be used but had considerable difficulty in raising sufficient funds to commence construction and the first section of the line, between Granville and Sydney was not opened until 1855. This area is now part of Sydney's western suburbs and the railway line became the first section of what is now the Main Suburban line. The Sydney Railway Company went bankrupt building it and as a result the line was taken over by the government, leading to the establishment of the New South Wales Government Railways. Part of the reason for the delay in starting construction and the Company's eventual bankruptcy was the start of the Australian gold rushes in 1851—these created a labour-shortage and forced up prices. In fact the railway did not reach Goulburn until 1869 and Bathurst until 1876, both lines having had to cross difficult topography.