There’s still life in the High Speed Rail dog

By Leith van Onselen

Back in July 2016, Consolidated Land and Rail Australia (CLARA) Pty Ltd – an Australian private group – launched a long-term plan to deliver high speed rail between Sydney and Melbourne. Below are the key extracts from CLARA’s plan:

CLARA proposes to build two inland cities in Victoria and a further six in NSW. These cities will be advanced, sustainable SMART cities…

CLARA conjunctly proposes to build a High Speed Rail (HSR) network between Sydney and Melbourne via Canberra, connecting the proposed inland cities…

Australia is set to grow by more than 14 million citizens by 2050.

As the Australian population grows by a further 14 million people over the coming decades we face a simple choice: either develop new, vibrant and better-connected cities or face the burden of the populations of both Sydney and Melbourne doubling by 2050…

CLARA’s privately-funded plan will address the widely recognised issue of over-crowding that faces Sydney and Melbourne…

CLARA has land under its legal control upon which to build its new regional cities. CLARA can truly capture the value from the land uplift and apply it paying for the high speed rail link.

Because CLARA has the land for new cities development our business model projects a commercially viable project that should not call on taxpayer funding…

Unlike other proposals for high speed rail in the past, CLARA’s infrastructure can be paid for from the city development rather than from government coffers…

Now CLARA is seeking approval from the Turnbull Government to proceed with its HSR plan. From The Australian:

Nick Cleary, chairman of CLARA, said the company was preparing a “detailed bid” for ­government and said the one ­ingredient required for it to progress plans for an environmental ­impact statement was “political will”. “We have had great discussions with government at all ­levels — they all have showed ­initial interest in the project but have all requested a more detailed proposal,” Mr Cleary said.

“We are very excited to now be at a point to deliver this required information within the first half of 2017. This is the Sydney Harbour Bridge, the Snowy Hydro Scheme, of this generation.

“This is the time to show we can still do nation-building projects. The engagement with the private sector will demonstrate the government’s role as an ­enabler for large scale projects.”

Several transport experts have already lined up against CLARA’s proposal arguing that the land deals underpinning the project are likely to be a “financial trainwreck”:

“It appears that this latest fast train proposal is driven by funding opportunities from higher land prices which can be highly speculative and unreliable,” said Garry Bowditch, head of the Better Infrastructure Initiative at Sydney University…

“The airlines will protect their market share aggressively and exercise their ability to price a fair proportion of seats at their marginal costs,” Professor Bowditch said.

“This could make a Melbourne-Sydney fast train look more like a financial train wreck very quickly”…

Transport experts are sceptical of the plan. “You’d have to say it doesn’t look like anything more than a property development idea,” one expert said.

“It’s very hard to see it being at no cost to the government. They [fast rail proposals] have required massive public subsidies and even if they don’t, someone has to buy the property.”

These concerns are similar to the ones raised by me previously (e.g. see here and here), namely:

• The exorbitant cost associated with building and operating the rail line;
• Lack of population density to support the project;
• Lack of competitiveness against air travel unless there are massive ongoing operational subsidies from taxpayers; and
• Equity issues if taxpayer funding is used: why should residents of WA, SA, NT, TAS or anywhere else not located along the route fork-out huge taxpayer subsidies for what will in all likelihood be an infrastructure white elephant?

The obvious solution to these concerns is for the Government to categorically rule-out funding the project with taxpayer dollars. If CLARA and its backers want to build the train line and develop the sites – fine. But it should be under no illusions that the Government would bail them out in the likely scenario that the project becomes a loss-maker financially and an infrastructure white elephant.

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