The ACT Light Rail Project – the $610 million to $783 million 12-kilometre line connecting Gungahlin in the north and Civic – is dividing the nation’s capital.
Earlier this week, David Hughes – an economist and former manager of major project analysis for ACT Treasury and director of the economics branch from 2002-2005 – labelled the Light Rail Project as “folly”, claiming that the cost-benefit analysis used to support the Project is chock full of erroneous assumptions, spurious benefit inclusions, and double-counting. In another article, Hughes summed-up the Project as follows:
“From the work the government’s done, it appears to be a poor project,” he said. “It’s costly and even the government figures seem to suggest that it won’t make much difference to patronage. They really haven’t established a case for doing it.
“They’ve clouded the issue with a lot of discussion of things like creating jobs which are really irrelevant to this project – the government can spend money on anything and it will create jobs in that activity at the expense of jobs elsewhere in the economy.
“The question is will $80 million [a year] spent on light rail from Gungahlin to Civic create improvements in the transport system enough to justify the costs? And that just hasn’t been established”…
For the project to stack up, the government would need to present a serious argument that trams were dramatically superior to buses. But ultimately they were pretty similar, he said…
“To be able to show a positive result on this they’re going to have to include benefits that are speculative or vague and difficult to measure,” he said.
“For me, it’s just a matter of is it a sensible idea or not? And I just don’t think it is. I don’t think it’s going to work. They’re going to spend an inordinate amount of money for a marginal change of patronage and the city will carry on as much as it has in the past.”
Meanwhile, Western Australian transport planner and consultant, James McIntosh, has backed the project arguing that light rail brings “direct transport and environmental benefits” as well as “higher land values near the line, and allowed high-density living, which made people more productive”:
“The reason why we undertake, in particular, light-rail projects is not solely for transport benefits. We use light rail to shape our cities. The city-shaping benefits that are created from the investment in light rail are not captured within standard transport economics”.
Personally, I agree wholeheartedly with Hughes’ assessment and strongly disagree with McIntosh’s. “Higher land values” and “higher density living” would be achieved by changing the ACT’s planning framework to ensure higher density along the proposed line (at the expense of development in other areas), and could just as easily occur with an expansion of the existing bus network at lower cost than light rail.
It is also important to remind readers that the ACT Light Rail Project only came to fruition because Labor lacked the numbers to form government and needed to gain support from the Greens sole MLA, Shane Rattenbury, who held the balance of power.
Yet, any objective analysis would conclude that Canberra lacks the density to make light rail viable from either an economic or social perspective. The city is highly decentralised, with its small population spread-out around six primary centres: Civic (the tiny CBD), the Parliamentary Triangle, Belconnen, Woden, Tuggeranong, and Gungahlin (where the rail line is proposed to travel to).
If the Government was truly concerned about improving public transport options across the capital, rather than only along this narrow 12 kilometre strip, then it would expand the existing bus service across the entire city. Such an option would also be far more equitable than forcing taxpayers everywhere, other than along the Gungahlin to Civic corridor, to subsidise a dubious project to which they gain little benefit (either directly or indirectly).
The Productivity Commission made similar arguments in its recently released report into the provision of public infrastructure:
The ACT Government’s decision to proceed with a light rail project appears to be an example of where the results of cost–benefit analysis have been ignored without a valid explanation…
In a submission to Infrastructure Australia in 2012, the ACT Government analysed a number of options including bus rapid transit (BRT) and light rail rapid transit (LRT). The analysis estimated that the upfront capital costs for the BRT and LRT would be $276 million and $614 million respectively (on an undiscounted basis) (ACT Government 2012).
In its economic appraisal (which is essentially a cost–benefit analysis), the ACT Government found net present values of $243.3 million for BRT and $10.8 million for LRT. The benefit–cost ratio for BRT was estimated at 1.98, with 1.02 for LRT. In the assessment, the benefits of BRT and LRT were similar ($491.8 million against $534.9 million respectively), but the cost of BRT was less than half that of LRT ($248.5 million against $524.1 million, when discounted by 7 per cent). The cost–benefit analysis took into account a range of factors including journey times, and avoided environmental impacts and accidents (ACT Government 2012)…
In summary, a cost–benefit analysis showed BRT to be a greatly superior option than LRT…
While it won’t admit it publicly, the ACT Government knows that light rail is an uneconomic dud, which is why it is attempting to force people to relocate along the rail corridor in order to boost the Project’s viability, thus putting the cart before the horse:
“Spot rezoning” will be used as the ACT government plans for at least another 45,000 residents along Northbourne Avenue while land and buildings will be sold to increase density and commercialise the corridor, alongside works for the 13-stop tram line.
The Government is also planning to double parking fees across adjacent areas in order to force people to use light rail, representing a transfer from one part of society (those who park) to another part (the government).
When it’s all said and done, ACT Light Rail represents a classic example of what happens when political motivations are placed ahead of the public interest. If the ACT Government had any decency, it would cut its losses and abandon the project before more taxpayer funds are wasted.
