Victoria’s auditor-general last month said the economic analysis surrounding Melbourne’s proposed $8 billion to $13 billion airport rail link lacked “transparency” and that the methodology used created risks that the project’s economic value had been overstated.
Now it has been revealed that the project will only be viable if “premium” fares are paid and the popular SkyBus service into the CBD does not directly compete with the new trains:
It is understood the state government will not ban SkyBus from providing transport to and from the airport but that future contract arrangements will involve bus services to locations not directly on the rail route…
“SkyBus will be faster, more direct and more affordable than the train,” [Adam Begg, co-chief executive of SkyBus’ owner, the privately run Kinetic Group said]…
The business case estimates the rail project has a benefit-cost ratio of 1.8–2.1 excluding potential future rail connections and using a 4 per cent discount rate (an annual rate that discounts future value back to a present value) which is below the 7 per cent recommended by the state’s treasury.
But the ratio drops to 1.1–1.3 if future rail connections are included, and to just 0.48 if a 7 per cent discount rate is used and purported wider economic benefits are excluded.
The business case also did not tackle the potential “funding gap” if the project spends more than the $10 billion allocated, the auditor-general said.
The fact that this project was approved before a business case was completed is a giant red flag.
This $8 billion to $13 billion project should have been subjected to a rigorous business case and cost-benefit analysis before funding was committed, not after the fact. That the reverse is true shows just how busted Australia’s infrastructure system is.
Since the project would stop at existing stations, airport trains would compete with the existing congested commuter network, making them both slow and crowded.
Meanwhile, the existing SkyBus service – which costs taxpayers nothing – already achieves similar travel times at a similar projected ticket cost.
Other than tourists and those living in the CBD, I cannot envisage many locals actually using an airport rail link. Why? Because they would still need to get to the CBD, where the cost of parking is equally exorbitant as the airport. This means passengers would either have to carry luggage on the public transport network, or catch a cab. In which case, why not just go directly to the airport and avoid the changeover hassles?
