The second phase of the federal government’s High Speed Rail (HSR) study, released earlier today, finds that a 1,700km long East Coast HSR line could cost $114bn and will not be completed until the second half of this century. The line will not require any ongoing government subsidy to pay for operational costs or asset maintenance, with fares comparable to the equivalent air fare. The report finds a benefit to cost ratio of 2.3 (indicating that every $1 spent provides $2.30 of economic value), which is much higher than in the report commissioned by the Greens earlier this year that reported total benefits of $48bn, an amount less than the $114bn cost.
If built, the project will be broken up into stages, with the Sydney to Canberra leg being the first. Even then, the earliest that portion will be operational is 2030, with an optimal commencement date of 2035. Brisbane may not be connected to Melbourne until 2058. The 1,700km of track includes 144km of tunnels, with 67km of this in Sydney. All up, tunnelling accounts for about one third of the cost of this project. The line will require a 200m wide corridor.
Federal Infrastructure Minister Anthony Albanese was quick to dismiss the notion that this would eliminate the need for a second Sydney airport, pointing out that it was already congested and that overseas travellers will still require air travel. He also downplayed the possibility of medium speed rail, such as in Britain, arguing that journeys must be under 3 hours or else people will choose to fly instead and that this was why Britain was now upgrading its medium speed rail to HSR. He also accepted that the high construction cost was the most sensitive part of any potential HSR line and ruled out any funding for it in this year’s budget.
The cost, roughly 4 times the cost of the National Broadband Network, is the biggest hurdle to building HSR in Australia. The interest expense of such a capital outlay alone would pay for the Gonski education reforms into perpetuity, and probably deliver far greater social and economic benefits to the nation. The discount rate of 4% also seems low, given that even the federal government’s long term borrowing costs, but a much more conservative 7% still provides a benefit to cost ratio of 1.1. This is above 1.0, but only barely, and suggests that this money could be spent on other more worthy infrastructure projects – such as the backlog of urban commuter rail improvements which Opposition Leader Tony Abbott has ruled out funding.
Ultimately this was certainly a study worth undertaking, if only to confirm that Australia is not yet ready for HSR. However, it has done much of the preparation required for it, thus allows the federal government to revisit the idea again in 10 or 20 years time when some of the assumptions currently used may no longer be valid. But until then, the video below probably best describes HSR in Australia.