ACT Government piles pork onto its fork

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ScreenHunter_06 Jun. 06 09.33

By Leith van Onselen

The ACT Government’s $600 million-plus 12-kilometre light rail project connecting Gungahlin in the north and Civic, which is expected to commence construction in 2016, is fast becoming a farce.

As noted yesterday, it was revealed in a Senate Estimates hearing on Tuesday that the project is facing significant cost blowouts due to the exorbitant costs of relocating underground pipes and wires, as well as trees.

Today, the Canberra Times has revealed that the Government is considering route changes and directing development along the rail line in order to make the project viable:

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The draft rapid business case shows that far from simply being a tram line, the light rail project is about a transformation of the Northbourne corridor, which will suck development and demand from other parts of the city. The document recommends that the government place a higher priority on the corridor, and make decisions “that deliberately favour it over other precincts across the ACT”…

Mr Corbell said patronage to Gungahlin was very strong for peak times, with the 200-capacity trams expected to be full for travel to and from work. The challenge was to increase patronage outside those hours.

To do this, the Capital Metro Agency proposes carving up the corridor into nine development zones.

It must be stressed that the ACT light rail project only came to fruition because Labor lacked the numbers to form government in its own right and needed to gain the support of the Greens sole MLA, Shane Rattenbury, who held the balance of power. The project is politically motivated, pure and simple.

As argued many times before, Canberra is totally unsuited to light rail, as it lacks the population base or density to make such a project viable from either an economic or social perspective. And 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, and save significant taxpayer expense in the process.

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The Government’s plan to channel development away from other areas of the capital and into the rail corridor is unfortunately a common facet of such projects. Instead of being a way of complementing the existing urban structure, the urban structure is forcefully changed via regulation in order to ‘force’ citizens to use the project and improve its viability.

Indeed, much of the drive for urban consolidation around the world is driven by the perception that road transport is evil and rail transport is good, with the public often wearing the costs of escalating housing costs, increased congestion, and high capital and operational subsidies, all in the name of boosting rail’s share.

This is not to say that rail investment is necessarily bad – it certainly isn’t. Rather, government’s should not for ideological reasons favour one mode over the other, and should instead choose whichever projects deliver the biggest benefits at the lowest taxpayer expense, based on rigorous cost-benefit analysis.

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With regards to light rail, the ACT Government has failed in its duty to taxpayers.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.