2nd High Speed Rail report shows cost still major hurdle

Posted: April 11, 2013 in Transport
Tags: , , , , ,

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.

Cost and completion dates for HSR broken down by stage, based on the optimal timetable. Click on image for higher resolution. (Source: High speed rail study phase 2 report - Executive Summary, Department of Infrastructure and Transport, page 20)

Cost and completion dates for HSR broken down by stage, based on the optimal timetable. Click on image for higher resolution. (Source: High speed rail study phase 2 report – Executive Summary, Department of Infrastructure and Transport, page 20)

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.

Cost benefit analysis shows that benefits would outweigh costs using both a 4% and 7% discount rate. Click on image for higher resolution. (Source: High speed rail study phase 2 report - Executive Summary, Department of Infrastructure and Transport, page 21)

Cost benefit analysis shows that benefits would outweigh costs using both a 4% and 7% discount rate. Click on image for higher resolution. (Source: High speed rail study phase 2 report – Executive Summary, Department of Infrastructure and Transport, page 31)

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.

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Comments
  1. mandonov says:

    Being able to got to Sydney in 15 mins from Newcastle would be amazing. But apparently that won’t happen until I’m 49 y/o… Damn you Hawkesbury River.

  2. mandonov says:

    Just a thought. Seeing as it would be pretty hard to get HSR into the city, would the station be in Parramatta? That seems like a logical place to have it run under.

  3. Newcastle to Sydney would take 39 minutes, shorter to/from the Hornsby stop, but not 15 minutes. Stations at Parramatta, Olympic Park, and Eveleigh were considered in phase one and rejected as not feasible.

  4. mandonov says:

    I was exaggerating But it’s still way better than the nearly 3 hrs it takes now.

  5. Martin says:

    As per this Government, there is the rolls royce option or nothing.

    I cannot help but wonder what half the HSR cost spent on the existing interstate rail network would do. Throw in some tilt train technology, and 200km/hr trains should be more than possible, not to mention construction of the inland freight network.

    At the very least, it would negate the need for a second sydney airport and deliver many of the benefits of true HSR.

  6. Not even a full blown HSR network would negate the need for a second Sydney airport. HSR does not serve Western Sydney passenger market, it does not serve the Western Sydney freight market, it does not serve the overseas travel market.

    Work needs to start on a second airport now so that it is ready by 2030. We can’t wait for a HSR network to maybe be built by 2053 or later.

    A medium speed rail solution would only work for shorter distances, such as Sydney to Canberra. Keep in mind that this particular section would run at a loss with HSR, even without having to pay back the capital cost, let alone at sub-HSR speeds. So it would need ongoing government subsidy. Anthony Albanese dismissed this proposal today for that reason.

  7. moonetau says:

    Overseas experience has shown that HSR does not cater to suburban markets. The majority of pax travel from CBD to CBD and have their intended destinations as the CBD or close to it.
    Any HSR wont service Western Sydney as vast majority of pax will come from centre, east and north.
    Same as most air travel: majority of passengers to/from Sydney have origin/ destination to CBD or east and north of it.

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