ACT light rail: an expensive vanity project

ScreenHunter_06 Jun. 06 09.33

By Leith van Onselen

Little by little, the stupidity of the 12-kilometre ACT light rail project, connecting Gungahlin in the north and Civic, is coming to light.

As noted previously, this 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. And the 12 kilometre rail link from Gungahlin to Civic was the price paid.

Now a study has been released by Bob Nairn, a retired traffic and transport planning consultant and transport economics specialist, confirming what we already know – that the ACT light rail project is likely to be an epic waste of taxpayer dollars. From the Canberra Times:


…Mr Nairn calculates it would need to borrow $915 million for construction and a fleet of trams, costing $4.81 million each…

He comes up with a benefit to cost ratio of 0.43, indicating the project has significantly more costs than benefits…

He finds the line would have a considerable effect on ACTION bus services, causing falls in passenger numbers, fewer viable bus routes and job losses…

At least the realities of the project are starting to dawn on the ACT Labor Government, with Chief Minister, Katy Gallagher, drawing a line in the sand and stating that it would not spend more than $614 million on light rail:

Asked whether the team was working on a figure of $800 million to $900 million, Ms Gallagher said she hadn’t seen that estimate, but $614 million was the figure put on the project in 2011, and “cabinet’s tolerance is in that order, updated for 2014 dollars”.

“People are very keen to make sure we can build it within a reasonable cost estimate, no one wants to be pursuing something that is getting to costs that you’re indicating,” she said. “The tolerance is that we want it to be done as efficiently and cheaply as possible for the stage one outlined.”


Last month it was revealed that the light rail project faced significant cost blowouts due to the exorbitant costs of relocating underground pipes and wires, as well as trees, calling into question the initial $614 million estimate.

The key problem with the project, as noted in the Canberra Times earlier this week, is that Canberra lacks the density to make light rail viable:

“Passenger intensity” is a key measure of the viability of light rail, and in its rapid business case the Capital Metro agency found only the short, three-kilometre route from the city to Exhibition Park reached the minimum passenger intensity numbers.

As soon as you add in the extra nine kilometres to Gungahlin the passenger intensity number falls off – because it is calculated as the number of kilometres travelled as a proportion of the line length. This is a problem that will follow light rail around Canberra, with long distances between town centres…

Asked about the problem of passenger intensity, Ms Gallagher said it was one of the issues being “actively examined” by Capital Metro at the moment.


Indeed, in a desperate bid to make the project more viable, the Government has flagged route changes and directing development along the rail line. So instead of being a way of complementing the existing urban structure, the Government plans to forcefully change the urban structure via regulation in order to ‘force’ citizens to use the project and improve its viability.

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, and save significant taxpayer expense in the process. 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).

No amount of spin can polish this infrastructure turd, and the ACT Government should immediately cut its losses and abandon the project before more taxpayer funds are wasted.


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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.