Another $500 million infrastructure white elephant

ScreenHunter_06 Jun. 06 09.33

By Leith van Onselen

If you want to see another example of poor infrastructure investment, check out this Channel 10 news clip on Gold Coast light rail: a $500 million project funded partly through rate and taxpayers, which involves 13 kilometres of track from Gold Coast University Hospital at Southport down the coast to Broadbeach.

That’s right, the cost of constructing railway is a whopping $40,000 per metre of track, or $33 million for each one of the 16 stops along the way.

Surely, taxpayer money would have been far better spent by extending public bus services across the Gold Coast. Not only would it have saved significant cost, but all of the region’s citizens would have derived benefit, not just those living along the fixed rail route.

Along with the $600 million Canberra light rail project, these are exactly the types of politically motivated vanity infrastructure projects that Australia doesn’t need.

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Unconventional Economist


    • So if Queenslands and ACT light rail system are white elephants, what do people think of light rail from Flinders/Spenser street in Melbourne to the Airport???

    • Phil the engineer

      a) It’s a cruise ship terminal

      b) It’s privately funded

      c) Gold Coast is a tourist strip. Tourist facilities are a no brainer.

      d) Save our spit is protesting against development of a man made island that was built in 1985.

      • If it is fully privately funded, and no assets are ‘gifted’ to developers, and taxes are paid, and all environmental concerns are addressed, and the property used is leased rather than sold, then OK.

      • I was a tourist in Southport late last year, and one of my favourite walks was The Spit, spoke to a few locals who also evidently like it too. I’ll admit I’m biased, I hate mega cruise ships with a passion, even in Circular Quay. I hate all the fat arse people too, lazy mfS can’t get off their arses and walk through places like Venice for chrisakes. I mean have you seen those ships berthed in Venice, you want to blast the b-/:tards out if the frigging water. Don’t get me started in enviro impacts take a look

        Ah but why worry it will be a dead duck anyway.

      • You hate fat tourists, yet think “the Gold Coast is the place for me!”?

        It’s like moving to King Cross then complaining about the hookers.

  1. Who cares? It creates employment. That’s been the ONLY criterion for ALL Govt expenditures and regulations of the past decade or more Nobody cares about efficiency or productivity. Who gives a rats about debt or more particularly the foreign debt this stuff creates? The answer is NOBODY except a couple of the casual commenters on this site and one or two other strange individuals. We can always just sell off a few more farms, food facrtories and mines to cover it.

  2. It’s going to be white elephants as far as the eye can see – enough to fill a mining capex cliff.

    Pick your investment bank of choice, your monopoly construction company and go long 🙂

  3. I’m not aware of all the details on this project so this may not be relevant.

    But similar was said about the development of the rail line extension in Perth, from the city to mandurah under the previous labor government in WA. There was a lot of negative reaction to it claimining it would be a white elephant, even to the point some guy was taking full page adverts in the local paper “railing” against the project and demanding a high frequency bus service instead.

    As it turned out the project was phenomenally successful and patronage on that spur of the line is huge on a daily basis. Fundamental success story of infrastructure in this state.

    Compared to our us tax payers paying for a football stadium with almost no parking to be used by the AFL. Frankly the AFL should build thier own friggen stadium. And lets not forget the WA govt donating prime land to packer to build a hotel near his casino

  4. and the word rail conjures up images of a gentle, bygone era where everything was right with the world. Bus on the other hand conjures up Tony Abbott.

  5. Sports stadiums are the ultimate in waste. Adelaide’s is an emblem of a government thinking building whatever with borrowed money will somehow create … something.

  6. “$40,000 per metre of track…..”

    Surely this must include the cost of the land, not merely the construction cost of the railway, its stations, control systems and rolling stock….

    Was there a cost/benefit study carried out?
    If the costs includes the land too, what were they?
    What is the breakeven internal rate of return?
    Since ratepayers will gain from the railway, how has their contribution been calculated?

    Finally, considering who is in charge at Channel 10, I wouldn’t credit anything they broadcast with a whole lot of validity….

    • rob barrattMEMBER

      You want to talk about net present value calculations? The Gold Coast council probably thinks that’s something to do with fishing. If you’re looking at a project that doesn’t appear to make sense, you need to be asking “Who is getting the contracts?”
      “Who in the QLD government will approve it” and “How are the two related?”
      That’ll provide the answers.

    • I dont think it includes cost of land but don’t quote me on that.

      When it comes to nose bleed quotes NSW is still king of the castle surrounded by dirty rascals.

      • rob barrattMEMBER

        Actually, it’s hard to tell. You drive South along a heavily urbanised strip with the odd high rise concrete jungle. There’s a brief gap at the airport and you progress to a another concrete jungle at Coolangatta. High rise blocks face each other across a few metres. One side is in QLD, the other in NSW but you wouldn’t know it

  7. Phil the engineer

    I think the provision of some badly needed public transport infrastructure is an excellent idea.

    Spitting out dollar per metre numbers adds very little to the debate without any accompanying discussion.

    • “I think the provision of some badly needed public transport infrastructure is an excellent idea.”

      Sure, but at what cost? Busses could have achieved the same outcome (or better) at much lower cost. This ain’t rocket science.

      • Phil the engineer

        The tram route runs along the already congested Gold Coast Highway. The addition of tram tracks should add capacity? More buses would add to the congestion.

        My biggest issue is that it doesn’t connect to the heavy rail train station or Coolongatta airport.

      • Not rocket science, but not a bus man’s holiday either.

        Do buses provide the same outcomes? Surely this depends on likely rates of use, consumer preferences, external amenities (fewer pollution costs), operating costs….among other things. If buses were always better than trains, surely there would be no trains used anywhere….but they are actually very widely used. Why?

        • “If buses were always better than trains, surely there would be no trains used anywhere….but they are actually very widely used. Why?”

          Because most trains were built decades ago in the era before widespread automotive transport. Hardly a fair comparison. Also, trains are very good at mass transport into a central area (e.g. suburbs to a major CBD), but not so good for dispersed, relatively small populations like the GC or the ACT.

          Face facts, the $500 million price tag for just 13 kms of light rail track is ludicrous when it could have funded a ginormous extension to the GC’s entire bus network, which would have benefited the whole region, not just the few.

      • Trains are different to light rail – 1000 in an 8 car at capacity replaces a fleet of trams or buses.

        Light rail is a glorified bus.

        By the way I love trams and trains so I am arguing against my bias.

      • UE, I can’t help wondering how the $500 million is calculated. On the face of it, I just don’t believe the claims. What does it include?

        Apart from that, surely the point is the rail system is being built now (when the population is not dense) in anticipation of many decades of future use. We know that retro-fitting rail systems (or roads) is very expensive, so if there is a time to invest in rail it is early in the cycle.

        I think the claims of Channel 10 are inherently dubious.

      • arescarti42MEMBER

        For someone who generally does an excellent job building an evidence based case, you let yourself down when you make posts like this.

        It may well be the case that 500 billion on a light rail project is a waste of money, but you’re obviously biased against rail based public transport, and dismissing the project without examining the case for or against it is simply conjecture.

        Additionally, asserting that buses achieve the same outcome as rail, or that rail only benefits people along the line, is just plain false.

        Take that as constructive criticism from someone who’s been a fan since the days of, and a macrobusiness subscriber since day one.

      • migtronixMEMBER

        The “it could have been done cheaper with x” is a demonstrably erroneous argument — it is attempting to create an overall minimization by applying minimization at every turn –

        I.e. If you consider a rectangle ABCD with lengths AB/CD = 3; AC/BD=4 then the lengths of AD/BC = 5; so if you start at A and your object is to get to D; AC=4;AB=3;AD=5 so you take AB; well you can now see how any choice now will be longer than 5 in tot…

      • Hunson Abadeer

        +1 arescarti42 above… took the words right out of my mouth. The assertions being thrown around definitely need to be backed up by some examination of the Gold Coast as a specific case, including considering the Commonwealth Games in 2018 that the light rail is clearly aimed at supporting.

      • You shouldn’t be putting this in the same basket as Canberra’s LR.

        GC has a fairly unique geography in Australia – it is a linear city, almost. The densest housing is along the beach, and in the middle (N-S), links across the Nerang River and the canal estates /shark ponds are limited.

        Having a light rail line run through the GC makes a lot more sense than in other places. Many of the larger employment hubs lie just behind the coastline or are otherwise reached by the line (i.e. several big retail and entertainment centres, the GC hospital, Griffith Uni campus).

        Plus there is less a lower peak to tough ration in traffic on the GC, due to the many tourists and retirees in the area, so the line should have good utilisation throughout the day.

        Having buses perform the line-haul operation the main stretch will not provide the required capacity, as traffic along the GC highway is only getting worse. However, improvements to the bus service through the twisty and sparser regions further inland do make sense, as do better bus links to the HR line (although the must have improved since I lived there).

        Moreover, when it is connected to the HR system, the LR line will be used by the huge number of people who commute to work in Brisbane and currently drive to the GC train stations. The HR line to Brisbane has been duplicated in anticipation of this development.

      • Phil let’s face it – a tram is a bus with diminished utility. You can’t change the routes easily to meet demand. If you put it on its own tracks then you’re wasting land space that could be used by road (thus be more fully utilised than a tram which only runs past every 10 minutes), and if you mix it with the road then it’s adding to congestion anyway.

        The only reason a tram may be superior to a bus is in emissions, but that’s only assuming the electricity generation was clean and your transmission losses are relatively small. Otherwise a bus running compressed natural gas is far more efficient per passenger mile kg of carbon dioxide emitted.

      • From the file linked by 3d….not the meat, but possibly some of the sauce….

        “Project history
        The project has been planned since the late 1990s with both the Queensland State Government and Gold Coast City Council recognising the need for a long term solution to growing population demands and traffic congestion increased.
        Why was light rail chosen?
        Two modes of public transport, bus rapid transit and light rail, were investigated in detail. The modes were compared against a number of criteria include capacity, passenger comfort, reliability, safety, sustainability and value for money.
        Light rail proved to be the better option, because it offered advantages in the following areas:
        • its ability to move greater numbers of people quickly and easily between key activity centres
        • the reduced environmental impact
        • the proven benefit light rail provides in terms of stimulating economic benefits through transport-oriented developments.”

      • Hmmm not very tasty sauce

        CBA of 2.3 but no detail nor can I find the CBA of alternatives.

        The Business Case is secret – it seems any degree of redaction of so called ‘sensitive info’ is beyond them. Sounds like an excuse to keep the Wizard concealed behind the curtain.

        Basically it will be impossible to identify, test or kick around the assumptions that the business case is based on.

        Like too many of these projects some dodgy assumptions suddenly become apparent too late when the project goes broke, is not used, requires lots more cash to modify etc and we find that the public purse is being drained pursuant to guarantees designed to protect the ‘private’ partners from the downside of building a white elephant.

        Well it is under way now so lets see if the government allows complete transparency on the ACTUAL costs v benefits in operation in order to assess any divergence between projected CBA, actual CBA and the CBAs of the alternatives that did not make the cut.

        But lets not hold our breath – Commercial in Confidence – is an excellent barrier to an effective autopsy.

  8. It doesn’t even go as far as the airport. I would have thought that would be a no-brainer. Imagine getting off at Coolangatta airport, hopping on the light rail at the door, and going straight into Surfers? Absolute win!

  9. Unbelievable how light rail has become fish of the day.

    If anyone is serious about public transport in existing areas the first steps should be:

    1. Paint a lane on the road red and make it bus only during peak hours

    2. Lease some buses – if volume requires make them the big stretchy or double deckers.

    3. If you are really keen – give the buses preference at intersections with their own green light.

    If the bus lane gets chocked with buses – because the bus route attracted medium or high density housing, a subway can be considered and funded by the land taxes that were introduced when the land was redeveloped to medium and high density housing.

      • You two should start an engineering consultancy! You’ll make a motza!

        2 years of design for a team of several hundred in 2 minutes with a team of 2.

        Too easy. Lol.

        Now back to reality….

        I am curious – how does a circle jerk work with only 2?

      • No need for Nasty evilsync,

        Just because you think the world is super complicated doesn’t mean that it is.

        Back in the day when I had reason to peruse organisation files on large engineering projects I was amazed at how much got done with so little paper padding and gumpf.

        Have a look at the first 10 years of the Commonwealth Law Reports and compare the length of judgements in the era before word processors to the judgements that get churned out now.

        Starting and running a bus service ain’t rocket science.

        People were doing it for centuries before the rise of the technocrat.

      • migtronixMEMBER

        @evilsync: you’re cracking me up today! Thanks for picking up the slack 😉

        EDIT: BTW I believe the answer to your earlier question is Dutch Rudder.

      • evilsync most of the time with these projects the scope is developed in isolation by politicians (or worse yet, their staffers). I think you’ll find that the choice for light-rail was made by a political or bureaucratic hack. By all means, I would love to be corrected and see that a CBA was done with all options by a committee with several economists, accountants and RPEQs but something tells me this would never happen.

        By the time an engineering company becomes involved it’s all about getting the job done. We don’t mention that what the Govt is proposing might be a bad idea – because a) they don’t want to hear that and b) any re-work of the scope might mean the tender given to a competitor.

        – A consulting engineer with several years of recent experience working with Government

    • If anyone is serious about public transport in existing areas the first steps should be:

      Resume properties along the main road
      Demolish structures
      Build extra 2 lanes, one of which is for buses.
      Cars can use bus lane but any car photographed blocking a bus is fined $20.

    • Ronin8317MEMBER

      The bus lane in Sydney breaks down once you get into the city, because the number of bus exceed what can be fit inside the bus lanes. It is pretty ridiculous to have nearly every single bus goes into George street. The problem can only be solved by terminating buses before they reach George Street, and replace it with ‘something else’. The best solution, which requires almost no investment, is 10 minutes of walking.

      • And most (well, a lot) of it has been build with the appropriate gradients and curvatures to eventually upgrade to… light rail.

      • Ronin8317,

        Yep, know what you mean about George Street. It can take a bus 20+ minutes to get from King St round the corner into Druitt.

        The whole length of George from Broadway to Circular Quay should be bus and taxi only during peak hours. That gives a double bus lane in both directions.

        The weird thing is that they are planning to make the whole thing light rail only as part of the south east light rail proposal.

        Why wait?

        While they are about it they could make a couple of streets (the ones they are planning to use for light rail) through Surry Hills bus only during peak as well.

        At the very least it would demonstrate what dedicated bus lanes can achieve before spending hundreds of millions on rail, trams and wiring.

      • Brisbane’s busways are a fantastic example of a mix of exclusive-access public transport zones mixed in with the flexibility of being able to use public roads and change the routes as needed.

      • Alex Heyworth

        Brisbane’s Lord Mayor Clem Jones did the city a great service when he canned the tram network back in 1971 (I think).

        Now the Gold Coast is going to wind back the clock. When we cross the border into Qld we will have to wind our clocks back one hour and 50 years again, just like in the bad old days.

  10. Maybe they can run it under a PPP and let the operator set the price so prohibitively high that no one uses it – Like the Sydney Airport Link, where if there is more than one of you travelling, you’re better off taking a cab.

    • migtronixMEMBER

      No no they’ll get to that slowly, you’re just taking the march on things.

  11. it’s funny to see right wing people always complaining about public transport and almost never about roads that cost

    east-west link in melbourne will cost $500k per meter (12 times more than GC light rail) – but that’s fine for car lovers

    • Very good propboy,

      How does light rail fit within in your political framework of right wing roads and left wing public transport?

      Light rail runs on expensive specially engineered road like surfaces – evilsync will fill you in on the details over a beer.

      Unlike road pavement, light rail is very unpleasant to high heels, bike wheels, wheel chairs and skate boards – that sounds pretty right wing to me!

      The debate is not about public transport (which I use almost exclusively) it is about the most flexible cost efficient public transport possible.

      You can provide a lot of public transport on your ‘right wing’ roads if you don’t spray money on projects because they are ‘mighty fine’ examples of engineering, technocratic report writing and fat margin financing.

    • I think if you took the time to actually read what people were saying you would realise that no one here is proposing elimination of public transport. A little reading comprehension goes a long way.

    • migtronixMEMBER

      absolutely! Well said Claw.

      Having said they are peculiarly well managed bunch…

  12. ceteris paribus

    “vanity Infrastruture”. I just love this phrase. It needs a good workout before our infrastructure PM is let loose. Heaven knows, there are enough buccaneer developers and self-interested unions ready to collude with Tony’s fantasy to drain our money and scar our cityscapes.

    Go MacroBusiness. Give them all full scrutiny to avoid infrastructure stuff-ups and vanities.

  13. One of my mates works on this at the upper end, his view is you should see the locked in, maintenance contracts in place funded by the government long term? That is where the real money is.

    • A bit like the average contract for an office photocopier. Make the margin on the toner and the finance not the chunk of metal and plastic.

  14. My suggestion is that any such infrastructure proposals must guarantee a maximum public subsidy cost per person km of travel, beyond which the system will be shut down. There should be a law at the national level to this effect, making local governments think a lot more seriously before they think they can get a “fait accompli” across on the public. This is really fraud that the public needs to be protected from. We are protected from all sorts of things that private businesses might do to us, why aren’t we protected against our Councils?

    The metric that should be firmly in the public eye with all the debate centring on it, is the subsidy cost per person km of travel.

    I don’t believe for a minute that the public would “support” these things if they knew the cost to public taxpayers/ratepayers per person km of travel was forecast to be close to the full cost of running a car, and several times more highly subsidised than “roads”. Let alone the reality versus the forecasts.

  15. Note that these systems swallow massive subsidy costs per person km of travel on them, in perpetuity, whereas roads are almost all “upfront” and the cost per person km of travel on them falls in perpetuity.

    The subsidy per person km on light rail in Portland is something like $1

    The public are never told this important point. Your whole car ownership and running costs are probably half this, and your “subsidy” is around 1 cent.