Victorian Premier Daniel Andrews is expected to tell a meeting of the Victorian Chamber of Commerce today that construction of a rail link to Melbourne Airport will begin by 2026. The announcement of the rail link follows yesterday’s meeting between transport ministers from the Victorian and federal governments, whereby the two governments agreed to commit $30 million towards funding a study to determine how best to construct the link. From The Canberra Times:
Construction will begin on a rail link between Southern Cross Station and Tullamarine airport within less than a decade…
In his speech, the premier will rule out building a rail link that is simply an urban connection between the city and the airport.
“It can’t just be an expensive funnel for tourists and businesspeople between the CBD and airport,” Mr Andrews’ speech states.
“Instead, it can transform the way people live, work and travel across Victoria. In our view, the airport rail link has the potential to unlock western and northern Victoria”…
Federal Transport Minister Darren Chester said the business case for the Melbourne Airport rail link was already in development.
“Our expectation is we need to work with the Victorian government, that they need to get on board and be fair dinkum about this process – and we think we can get this done in 12 months – and get the Victorian public a design they can work with, and get on with the job of working out how we fund it,” Mr Chester said.
Paul Fletcher, the federal Minister for Urban Infrastructure, said Sydney and Brisbane have airport rail links, and Perth is building one.
“A city of the scale and importance of Melbourne deserves such a connection, that is why the Turnbull government has committed $30 million for a business case process,” Mr Fletcher said.
One potential roadblock facing this plan is that Melbourne Airport’s private operators may impose significant rental charges on any railway station that is built on their land. The rent imposed on the Sydney Airport rail stop at at Mascot Station (owned and operated by a private company separate from Sydney Airport) is such that it costs $7.96 just to travel 90 seconds from the last station outside of its control to the station at its domestic terminal. What’s to stop the owners of Melbourne Airport, which include the Future Fund, from imposing similarly high rents?
Back in March, the ACCC released its annual Airport Monitoring Report, which revealed that Australian major airports have over the past decade collected $1.57 billion more in revenue from airlines and passengers than they would have if average prices charged for access to airports had held constant in real terms. The ACCC report also claimed that Australia’s airports have become less efficient.
Privatising natural monopolies almost inevitably results in bad outcomes for consumers. The householder has little choice but to continue as a consumer of the monopoly service. And the new private (often foreign) owners almost always uses their market power to force-up user costs or taxpayer subsidies to boost their profits.
Australia’s airports represent a textbook example of Australia’s privatisation failures. Instead of driving greater efficiencies and lower costs for consumers, we have experienced the opposite. Instead, the private airport owners have used their market power to lazily force-up user costs and boost their profits. And now they could potentially sabotage a Melbourne Airport rail link via extortionate rental charges, thus lessening the chance that the line will ever be built or greatly lessening its take-up (in the event that it is built).
