It seems you can’t keep a dumb idea down. Today, former Trade Minister, Andrew Robb, has thrown his support behind a high speed rail (HSR) line linking the major East Coast capitals. From The Canberra Times:
[Robb] said high speed trains were in operation “everywhere I go”.
“There are 200,000 kilometres of very fast train in China – there’s not many developed countries in the world that haven’t got the advantage of this and we have to do it,” he said.
“It’s even more important with the distances [in Australia].
“The thing is, we should do it now whilst the world is awash with cheap money – in six or seven years it may not be – but it is at the moment.
“It’s awash with nervous investors but they’re keen to put their money into long term sustainable projects in safe havens and Australia is seen as a safe haven”…
One wonders whether Robb has actually considered the business case for a HSR link? If he had, he would most likely find that it makes little sense on either economic or social grounds.
Let’s first consider the project’s cost.
In Europe and Asia, which have high density populations, HSR can work well. But in a large, sparsely-populated country like Australia, it would likely be prohibitively expensive.
It is around 960 kilometres between Melbourne and Sydney. Even if we assume that the population doubles by 2050, then we are still only looking at a catchment of around 18 million people along the route, versus hundreds of millions in Europe or Asia. Put simply, finances will never work on this project
The estimated cost of building HSR is around $110 billion. That equates to a whopping price tag of around $6,000 per man women or child along this route.
Further, to be competitive with air travel, ticket prices would need to be at least comparable with a discount plane ticket – say $100 between Melbourne and Sydney (in today’s money). This means it would be highly unlikely that HSR would ever be able to pay back, or even significantly offset, its cost of construction, with ongoing operational subsidies also likely as far as the eye can see.
Then there is the convenience factor.
Again, the route between Melbourne and Sydney is roughly 960 kilometres, which would require an average travel speed of more than 300 kilometres per hour to make it within three hours.
Proponents of HSR have argued that it would be a ‘game changer’ for regional communities along the route, suggesting that the train would need to stop at these locations. But the more stops that are included along the route, the slower the trip, obviously extending the duration of the trip.
For example, if the HSR train stopped just six times between Melbourne and Sydney, it could add up to one hour to the trip, assuming 10 minutes per station (including slow down, boarding, and acceleration times). If this was the case, then HSR would be even less competitive against air travel.
Further, some of the time savings and convenience noted by proponents of HSR. They often mention airport travel and waiting times as costs disadvantaging air travel, but conveniently ignore the time and cost associated with traveling to/from the CBD to board HSR (most of us don’t live near the CBD, after all).
Then there are the equity considerations that come with HSR.
HSR is not mass transit. It is corridor transit. At best, it is a niche market serving predominantly a highly specialised, relatively wealthy, and narrow customer base (i.e. high-income business travelers and tourists). It will do little to relieve urban traffic congestion and its contribution to improving air quality (or reducing carbon emissions) will be negligible because it is unlikely to carry enough riders to make much of a difference. These factors undermine HSR justifications based on public good arguments (not that the Liberals believe in climate change, anyway!).
For the tens-of-billions cost, Australia could probably fix-up a lot of the infrastructure in Australia’s cities and major towns, and/or build world class freight infrastructure, providing a much bigger productivity pay-off in the process, whilst also improving living standards for a wider share of the population.
Moreover, assuming the project would be funded, in part, by the Federal Government, why should residents in Adelaide, Northern Queensland, Darwin, Alice Springs, Hobart, Perth, or a range of other regional towns not located near the line be called upon to fund (via their taxes) a massively expensive project that provides no benefit to them and minimal (if any) productivity benefit to the nation?
Sound infrastructure investment is all about weighing-up alternatives and choosing projects that deliver the biggest social/productivity pay-offs per dollar spent. HSR likely fails this most basic test, and smells like another one of those dubious big ticket pet projects that politicians and greenies usually love, but leaves taxpayers and the economy significantly worse-off.
It is exactly the opposite of what Australia needs if it is to rebuild its competitiveness.
