Coalition abandons high speed pie-in-the-sky

ScreenHunter_06 Jun. 06 09.33

By Leith van Onselen

While we chastised the Federal Government’s decision to sack one-quarter of scientists, researchers and workers at the CSIRO, it has made a wise decision in axing the High Speed Rail Advisory Group: the body tasked with overseeing the eventual building of a high speed rail line connecting Melbourne, Canberra, Sydney and Brisbane.

The Stage 2 feasibility study, which was completed by the Group in April 2013, found a high-speed rail link along the East Coast would cost taxpayers $114 billion (in 2012 dollars) and take 45 years to complete. The project won support from the Greens and Labor, who promised to move the project forward at the recent Federal Election.

Leaving aside the fact that the project was planned decades into the future, and could therefore be considered “pie in the sky”, it also represented a massive waste of taxpayer funds.

Let’s look at some of the issues.

First, the $114 billion price tag (in 2012 dollars) represented a cost of nearly $5,000 per person or nearly $9,800 per employed person – a huge burden on the public. While Australia’s population will continue to grow over time, it will unlikely be anywhere near big enough to make such a huge investment viable.

Second, for that kind of price tag, Australia could probably fix-up most of the infrastructure in Australia’s cities and major towns, and/or build world class freight infrastructure, providing a much bigger productivity pay-off in the process, whilst also improving living standards for a wider share of the population.

Third, an investment of this magnitude that services only a small portion of the country is highly inequitable. Why should residents in Adelaide, Northern Queensland, Darwin, Alice Springs, Hobart, Perth, or a range of other regional towns be called upon to fund (via their taxes) a project that provides no benefit to them and minimal (if any) productivity benefit to the nation?

While detailed modelling might show different, the whole project smelt like one of those dubious big ticket pet projects that politicians and greenies love, but leaves taxpayers and the economy significantly worse-off.

In my view, there was only one possible outcome for the High Speed Advisory Group: hundreds of billions in taxpayers funds to build and ongoing operating subsidies as far as the eye can see. We should be thankful the Coalition saw fit to axe the project before it got legs and wasted more taxpayer dollars.

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Unconventional Economist

Comments

  1. Just for the record:

    The high speed rail link will eventually be initiated by the Abbott government as a funny-money public-private “partnership” that “doesn’t cost the government anything”.

    But it will only ever run between Sydney and Canberra.

    There will be promises of extending it to Melbourne and Brisbane but these will be abandoned (on the grounds of cost) once the Sydney-Canberra link is in place.

    Mr Abbott has made no secret of his intention to fulfil Henry Parkes’ dream of creating a unitary Australian state with Sydney as its glittering imperial capital.

    Constitutionally, it would be difficult to move the seat of Parliament from Canberra to Sydney. The next bext alternative is to turn Canberra into a suburb of Sydney with a high speed rail link.

    • I guess there’ll have to be scrutiny of politician travellers on those trains. One disaffected individual could obliterate the Australian Government otherwise….

    • I would beg to differ. The ‘conservatives’ hates trains and sees public transport as a communist plot to take away freedom!!

      On a more serious note, at 300km/hr, the fast train from Canberra to Sydney doesn’t make any sense. That would change if the ‘train in a vacuum pipe’ technology gets off the ground. At over 900km/hr, it will completely alter the landscape and bankrupt many airlines.

      • I struggle to see any Australian politicians taking the train between Canberra and Sydney even if it was like a TGV.

  2. Probably a good idea. Elon Musk’s ‘HyperLoop'(google it) high speed rail system would probably outperform whatever high speed rail system was proposed anyway.

  3. You may aswell have titled the post “In my view”

    “minimal (if any) productivity benefit to the nation” ???

    Where have you presented the facts to back up this position?

    High Speed rail systems are being built all across Asia at an accelerated rate. Why would this be so if there was no benefit? It’s all just pork-barrelling is it?

    It’s common knowledge that the Syd-Melb routinely ranks in the top 5 busiest air routes on the planet which is all the more astounding considering we have less population than Taiwan and a population density equal to Iceland!

    Australia already has new “world class freight infrastructure” where the demand is…. in the Pilbara!

    Seriously, this sort of post lowers the credibility of this entire site to the level of the fact-less ‘opinion’ publishing MSM.

    • “High Speed rail systems are being built all across Asia at an accelerated rate”

      So what? Asia’s geography is nowhere near as vast as Australia, and it’s population is way more dense. Comparing the two is moronic.

      Seriously, this sort of post lowers the credibility of this entire site to the level of the fact-less ‘opinion’ publishing MSM.

      I seem to have hit a raw nerve. Judging by your avatar, do you have a vested interest in the project?

      My arguments were well-reasoned and spelt-out clearly. By contrast, your comment lowers the bar for common sense.

    • Build more airports then.

      HSR will be popular with those property owners at the immediate location of the terminuses. The ongoing subsidies of operating the system will represent a dead loss wealth transfer to these people.

      Airports do confer a similar advantage but do not swallow massive public subsidies in the process. Furthermore, airports provide access to a system that is “any airport to any airport” without any need to lay infrastructure on the ground to enable this sort of flexibility.

      Systems analysis experts like Cesare Marchetti and Jesse Ausubel have been saying for decades that rails are a dead technology whose Kondratieff cycle peaked in about 1930. It is only ideology and false “analysis” that has resulted in so much misdirected “investment” in them in recent decades. See my comment further down about the subsidy realities versus highways.

      • Phil,

        You clearly haven’t met the Australian NIMBY, airport noise affects house values don’t you know?

        Brisbane is the latest airport where the pollies (ie Rudd) is now lobbying for a curfew.

        This will be very interesting, where will aircraft that have are delayed but been in the air for 10-12 hours go if all Australian airports are closed due to curfew. New Zealand? Maybe they are expected to crash land in the outback.

      • Build more airports?

        How long have they been fart-arsing about a second airport for Sydney, or even a new runway ffs at Brisbane?

        Talking about getting any serious infrastructure up in this country is a joke.

        As for a train line in 45 years? LOL. ROTFLPIMP. Even if we could afford it, most people reading this will probably be dead before it is complete.

        Next!

    • It’s common knowledge that the Syd-Melb routinely ranks in the top 5 busiest air routes on the planet which is all the more astounding considering we have less population than Taiwan and a population density equal to Iceland!

      And yet, you can still fly Syd-Melb-Brisbane for a pittance ($150-200 return?). At $5000 per head every single member of the Australian public at current population levels would have do the trip on the train 25 times return in order to even break even (vs. airplane transport) on the project. And thats assuming no ticket prices charged on the trains.

      Try reading the article again, UE clearly sources his facts from the Stage 2 review of the plan by the High Speed Rail Advisory Group. What facts are you putting forward?

      It doesn’t make sense from a financial point of view – case closed.

      • +1. Part of the reason for that is that it is so costly to build anything here. The Airports were built long ago and the airplanes are imported …

        Would be interested to know what t would cost if it was completely contracted out to say a Chinese firm, parts and labour…

  4. in 45y Australia would have around 80M (1.2% growth rate, pretty conservative), could be quite useful, airports will never be able to cope the traffic

    • Still won’t be anywhere enough population to make the huge cost viable.

      “Airports will never be able to cope the traffic”.

      Yeah, cos they struggle elsewhere in nations with much bigger populations.

      • we use planes quite a lot here per capita, even in US they should not use it as much as we do.

        by the way, you have to love Australia’s infrastructure cost, $65M per Km is almost 6-8 times the cost anywhere else.

        $118b is not much compared to the productivity increase over the life of the project.When I was working at Paris I had colleagues who were commuting every day from Rennes, 300km and 45min of commuting in great comfort where they can work with their laptop. They had a great quality of life, cheap housing, while still working at paris.Fast train make lot of thing possible, make the country much smaller and are not that expensive when you look at the overall benefits.

        if you dont like CO2, do you imagine the amount of plane pollution/cost saved over 100 year by this type of infrastructure.

      • France’s HSR system still requires massive operating subsidies.

        The reality for highways versus public transport, is that the highway is pretty much a one-off public capital expenditure. Public transport systems, however, require continual operating cost subsidies and periodic rolling stock replacement capital expenditure.

        The fact that car drivers happily pay for their own vehicle, petrol, repairs, insurance etc and are only “subsidised” in terms of the roads – around 2 cents per km traveled – shows that there is massive economic value in driving. In contrast, the fact that public transport riders of all kinds will not pay anything like the 90% plus of their own costs as car drivers do, indicates there is no economic value there to be tapped into.

        Yes, I know there are negative externalities to car driving, but these are only a few cents per km of travel, nowhere near justifying the level of subsidies to public transport. Also, there is a good match between those imposing the external costs and those bearing them. Nobody is so upset about the negative externalities of driving, that they want to give up their own car.

      • What about the cost of NIMBY airport curfews?

        I think a high speed line could be interesting if you planned to also run 160km/h (high speed freight) between say 12 and 6am. Lets face it the existing lines are indirect and slow.

        Although I’m not an expert on the feasabiltiy of such a feat, but provided the 320k/h passenger service finished (or reaching their destinations by 12), you wouldn’t be trying to mix 160k/320k trains. If you had additional HS lines near the main centres you could run more freight trains.

      • Phil,

        Highways and rail transport are funded differently, so it is really hard to compare. Most rail traffic is on a pay for use basis with public top up in many cases.

        Roads are mostly paid for by government grants with very little direct pay for use. Things like registration, licences etc are put in general revenue because the States don’t have enough money for all their activities because of vertical fiscal imbalance.

        The point is, that there is a great deal of difficulty in saying which sector is more or less subsidised, and by whom because the funding models are so different.

      • Where’s the source for these numbers relevant to Australia ?

        Everything I’ve ever seen has said that the road system is massively subsidised, and the revenue collected “directly” for them (fuel taxes, registration, etc) don’t come within a bull’s road of funding their creation or maintenance.

    • dumb_non_economist

      No dam, most of the aircraft flying up and down the east coast are typically 180 seaters (B737s/A320s), increasing traffic will just result in larger a/c.

      Back in the 90s Japan Airlines was flying 747s domestically on 1-2 hr flts.

  5. I’d love a fast train but sadly the economics of a full track from Melb-syd-Bris are pretty bad. Funnily enough though the cost is less than the Coalition’s paid parental leave scheme on a $pa basis. the PPl scheme will have 0 impact on fertility, participation or productivity – or close to 0 whereas the fast train would at least be awesome to watch flash by!

  6. What about creating a decent overnight sleeper carriage service?
    Running at 130kph you will cover 1000km while sleeping for 8hrs.
    Is this technically possible?

    • If you are going to that you may as well build HSR.

      The problem with spending oodles trying to upgrade existing routes, is you’ll probably spend as much on earthworks trying to get them up to 130k speed as it would just to plough a new dedicated 320-360k corridor. The existing routes were decided on yonks ago as the cheapest, but generally slow route around terrain features. Cost of TBMs have declined significantly in cost, so these days you’d just tunnel through it.