Rail lines primarily used to transport wheat around the South West are degraded and need substantial State Government funding to remain in service beyond October, according to Auditor-General Colin Murphy.
In his assessment of the first 12 years of the 49-year lease of the State's rail freight network, Mr Murphy said the so-called Tier 3 lines were considered safe only when trains operated with speed restrictions or - "in the case of some marginal lines" - at night when the tracks were cooler and more stable.
Two Tier 3 lines have already been placed in care and maintenance and it had been the State Government's intention to close the rest in October last year. But the decision was reversed and the lines will stay open at least until October 31.
Mr Murphy said that without further government funding, the remaining eight lines were likely to be taken out of service after this year.
The rail freight network consists of 5600km of track in the southern half of WA. It is made up of standard, narrow and dual-gauge tracks. The narrow-gauge lines are found in agricultural regions and are classified into three tiers of importance. The Government leased the entire network in December 2000 for 49 years - initially to Australian Railroad Group Pty Ltd, which eventually became Brookfield Rail.
Mr Murphy said the lease had delivered many of its original objectives, but more needed to be done to protect the State's interests.
He said the risks related to keeping track performance standards up to date and monitoring maintenance.
"A risk-based contract management plan, which the Public Transport Authority is currently developing, should strengthen its capacity to manage these issues," he said.
Transport Minister Troy Buswell said the decision to keep the Tier 3 lines open would allow Brookfield Rail and Co-operative Bulk Handling to assess the efficiency and viability of continued operations.
But WAFarmers president Dale Park said the Tier 3 lines needed to be funded. "Imagine if the tracks were actually up to standard, the savings that could be achieved on current rates," he said.
Shadow transport minister Ken Travers said the report highlighted the problems created by the original privatisation of the rail network.