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Train making off the rails, but plan to get on track

Almost $2 billion could have been used to boost the economy and create more jobs if more train fleets were sourced locally across the states.

A report commissioned by the Australian Railway Association found $1.85 billion went to waste in the last decade due to state-only train manufacturing policies.

The figure comes from the 12 contracts awarded to overseas companies to produce trains for NSW, Victoria, Queensland and Western Australia.

Only five of the contracts were awarded to solely Australian companies.

NSW alone had four train fleets sourced overseas while one was half-sourced locally and half from China.

Federal Assistant Minister for Manufacturing Tim Ayres says the outsourcing of train fleets has "killed" rail production.

"Look at NSW where too many major transport projects have been bungled," Senator Ayres said on Friday.

"Trains that didn't fit through tunnels, ferries that couldn't fit under bridges and projects over budget and behind schedule."

He said regional rail manufacturing had been destroyed.

Imported trains are estimated to have cost $524 million over five years.

If this had instead been directed to the Australian domestic economy, its rolling stock manufacturing would have been boosted by almost $476 million creating 3500 additional jobs, the report said.

State-based policies made operating in different states akin to operating in different countries, railway association chair Danny Broad said.

"Australia has fantastic capability in rolling stock manufacturing, but its effectiveness is hampered by state-based local content policies," Mr Broad said.

The federal government has committed to a national rail manufacturing plan.

A national rail advocate and a rail industry innovation council will be appointed as part of the plan.