Aims and benefits of transport connectivity
2.1
Transport connectivity is essential to the economic development of the nation. In its 2015 Australian Infrastructure Audit, Infrastructure Australia observed that ‘when our transport and logistics networks work effectively, they raise productivity levels and strengthen the economy’. Associate Professor Matthew Burke, Deputy Director, Urban Research Program, Griffith University, stated:
A large body of research in economics, geography and sociology has shown that transport accessibility is fundamental to the labour catchment for firms, the retail catchments of stores, the health and well-being of the labour force and community, the education opportunities provided to our children and young people, and many of the social opportunities for many Australians.
2.2
The Government of South Australia noted that ‘areas rich in transport connectivity, accessibility and mode choice correlate strongly with areas rich in jobs, services and community infrastructure’, and that improved transport connectivity provided:
access to jobs and services for individuals
access to markets, suppliers and workers for business
reducing the costs to do business—through travel time savings and reduced vehicle operating costs; and
influencing the development of land toward higher value uses, due to improved access to local, intrastate, interstate and international customers and suppliers.
2.3
The Government of South Australia believed that transport connectivity was also essential to international competitiveness, stating:
Modern and emerging smart industries favour being located in cities and regions which are highly liveable and connected. Australian cities are competing with each other and other cities, particularly from North America and Europe, to attract these industries and the highly skilled workforce associated with them.
2.4
The need to invest in greater transport connectivity was highlighted in the evidence presented to the Committee. In its submission, Engineers Australia referred to research by the Grattan Institute which concluded that:
…in significant parts of Australia’s four biggest cities, shallow labour markets and increasingly congested transport systems are holding back productivity by making it harder to get the best match between the skills of a worker and the demands of a job.
2.5
The Planning Institute of Australia (PIA), citing the projected cost of congestion in Australia’s major cities, argued that:
Without significant reform, the compounded cost of every extra person on Australia’s often at-capacity transport networks will impact on the employment opportunities, productivity and social wellbeing of the next generation.
2.6
The PIA believed that transport connectivity—the joining together of places—was vital, ‘so as to create communities with a human dimension whilst ensuring the efficient operation of regional and national economies’.
2.7
Transport expert, Mr Peter Knight, believed that the lack of transport infrastructure was ‘hampering domestic competition and holding back Australian international competitiveness’, with the combined threats of ‘the very high cost of transport in Australia, the threat to liveability of Australian cities from congestion and the means of financing the large amounts required for infrastructure’ affecting outcomes.
2.8
However, transport connectivity is not simply about reducing travel times or traffic congestion—it is about shaping the environment we live in. According to Dr James McIntosh of LUTI Consulting, ‘transportation infrastructure investments need to be seen as city-shaping projects’ and that ‘what they actually do is unlock development capacity in areas’. Well-targeted investments unlock opportunities for urban regeneration allowing us to ‘change the land uses to their highest and best use and get the most out of our urban fabric’. Dr McIntosh believed that while infrastructure investments ‘often solve a transport task…they should really be focused around how we want to change our cities’.
2.9
This view was echoed by Transportation Associates, who noted that ‘transport is not an end in itself but means to an end’:
In this regard Government must have a view about the spatial form of economic development it is seeking to support and make efficient. Put simply, there must be a view and plan about how we are to live in this nation.
2.10
Transportation Associates believed that ‘we need to have an overall plan for development, connectivity and mobility and then determine those transport systems that deliver the degree of those attributes we require’.
2.11
Engineers Australia emphasised the fact that the ‘meaning of connectivity is highly dependent on the situation’, the common link being accessibility:
In urban areas it is often associated with the density of connections and the directness of links in local road systems. It also refers to the connections between local road systems and the CBD. In regional areas connectivity is mainly concerned with access to transport services between regional centres and between these centres and domestic markets located in large cities or ports for export to international markets.
2.12
Professor Burke stated that ‘mobility for mobility’s sake is one thing; it is accessibility that matters’:
It is people’s time based accessibility to get to the goods and services and opportunities, including employment, they need in daily life. That is, really, most important.
2.13
This view was echoed by infrastructure builder and operator, Transurban, which envisaged ‘the transport sector operating as a co-operative, interconnected eco-system, with services reflecting the needs of customers’. Transurban proposed a ‘multi-modal approach to pricing’, that would ‘give users the option to make their choice of transport for each trip based on time, cost and environmental considerations’. This approach would also ensure ‘the most efficient investment in and use of all modes of transport and associated infrastructure’.
Urban Connectivity
2.14
International consultancy firm, Arup, urged a holistic approach to planning transport infrastructure, noting that ‘well-connected corridors encourage seamless movement to both city, urban and suburban locations through providing customers with an alternate method of travel’. Arup stated that:
If cities and towns are well connected, they allow people to leave cars at home and use public transport to go to and between destinations. This in turn encourages walking and therefore can stimulate activity in urban areas, along corridors and around major nodes. There is a whole range of opportunities that well connected transport has on developments, from making cities more vibrant and bustling to encouraging exercise and community interaction.
2.15
Construction firm Goodman urged city planners ‘to embrace a less homogenous and prescriptive planning framework which create “activity silos” which in turn creates reliance on cars to move between regions for work, play or leisure’. It noted that ‘by creating well planned, mixed-use precincts and intensifying the use of existing infrastructure and new infrastructure a more effective and ambitious planning outcome can be achieved’. Goodman identified a range of ‘smart growth principles’ for cities, including:
Stemming the spread of urban areas by concentrating growth in existing urban environments. This reduces commuting times and congestion, while promoting the numerous associated environmental benefits of preserving open spaces.
Concentrating growth in already urbanised areas augment and utilise the existing infrastructure provided in these neighbourhoods, providing a stronger tax base for these communities, increasing the number of jobs and services in the area while catering for a shifting demographic that desires urban living.
Making better use of existing infrastructure will reduce the associated infrastructure costs of development and growth, while improving the existing services in urban areas.
Encouraging transit facilities through higher density land use. Increasing the densities of mixed land use zoning surrounding transit stations provides the ridership capacity to support mass transit systems.
Mixed use planning precincts, creating affordable, walkable and bike-able neighbourhoods by providing a mix of housing, commercial and retail options and public services. This produces communities that have lower transportation costs, greater social integration, improved personal and environmental health and expanded consumer choice.
2.16
Mr Ian Bell, Director of Financial-Architects.Asia Pty Ltd, emphasised Australia’s ‘need for speed’, stating that ‘transport connectivity is important, but fast transport connectivity is most important’:
Transport should be efficiently run, enable easy intermodal connections—car to rail, rail to light rail, rail to airports et cetera—plus be rationally priced and funded and, overall, be time economical. But I say our current main challenge is: Australia has a need for speed.
2.17
Mr Bell highlighted the importance of fast rail in improving travel time across modes, stating:
… speeding up rail has a beneficial effect, ultimately, on road travel speeds where they compete for origin-destination transit intervals. Speeding up rail, even more so than other forms of transport, also impacts property values because time is value for most people and permanency of embarkation-disembarkation points helps value uplift.
2.18
Mr Bell noted that ‘increased transport speeds, especially with arterial rail, help level the land price curve between inner and outer city, making housing more affordable’. Similar outcomes were potentially achievable ‘with the regions via intercity rail lines, and this improves land equity and keeps pressure off city prices’.
2.19
Engineers Australia highlighted the concept of the ‘“Marchetti constant”—that the average city travel time budget should be no more than about one hour per person per day’. This principle underpinned the concept of Transit Oriented Development (TOD), ‘an alternative approach that planners can use to develop “Transit Cities”, incorporating various ways of getting about from walking, cycling, local buses and light rail, as antidotes to “Auto Cities”’.
2.20
Professor John Stanley, representing the Bus Industry Confederation of Australia, introduced the concept of 20-minutes cities, ‘where most of the things that you need to do on a daily basis are accessible within 20 minutes by walking, cycling or public transport’. He noted that the notion of ‘getting densities up a bit in the outer suburbs, focusing growth more into transit corridors and concentrating on building our cities as polycentric cities is the way we can generate the most value from our cities’. He suggested that the ‘transport initiatives that sit behind that are the sorts of things that are going to generate the value that you are seeking to capture and that you have been looking at in the inquiry’.
2.21
In its submission, Consult Australia emphasised that:
… increased infrastructure investment that improves economic capacity and productivity must be the first policy response to the challenges arising from increasing congestion and declining quality of life in Australian cities.
Importance of public transport
2.22
The importance of public transport to improved transport connectivity, particularly in urban areas, was highlighted in the evidence presented to the Committee. Associate Professor Matthew Burke told the Committee:
Australia is going through a transition, and the old Australian road based model of urban development is really no longer suited to our post-industrial economy. The rise of knowledge work in the cities is seeing shifts in the geography of labour and demand growing for non-car transportation options, including public transport.
2.23
Professor Burke noted that Australia had ‘moved to a primarily road-based transport planning model, both for intra- and inter-urban travel, in the 1960s’, and that there had been ‘over fifty years of under-investment in public transport systems as compared to road networks’. He argued that:
Australia’s suburbia was founded on relatively cheap land on the outskirts of the cities being plugged in to transport networks, with factories and residential subdivisions lining key routes. But this came at a cost of increasing car-dependence, growth in travel times and in congestion.
2.24
Professor Burke observed that ‘the need for increased public transport supply in the inner and middle city areas is becoming acute’, and argued that:
Servicing additional residential and commercial development in these locations, which are at the heart of the knowledge economy, only appears possible through increased investment in public transport and, to a lesser degree, cycling.
2.25
Mr Brendan Nelson, President of PIA, believed that ‘public transport needs to be a viable option, and it certainly needs to underpin any decisions in relation to land use planning’. He observed that ‘changes in globalisation, the globalised economy, and the way people work should be considered’, stating:
We will see a change in the way people work: their patterns of working in offices will change; people will work from home more often. We will see that particularly where our technology supports that existing capacity.
2.26
The Australasian Railway Association (ARA) argued that ‘continued investment and expansion of public transport is crucial to the success and productivity of the nation’. It noted that ‘investment in and use of public transport ensures less vehicles and therefore congestion on roads, decreased transport-related emissions, fewer road accident costs and healthier and more active lifestyles for Australians’.The ARA believed that ‘our cities and regions will only continue to prosper with continued improvements to existing public transport systems and expansion into alternative modes of public transport’.
2.27
The Government of South Australia drew an explicit link between public transport, active transport modes and urban development when considering improved transport connectivity. It stated:
Moving large numbers of people across cities on a daily basis means that Australia needs the public transport system to provide reliable, fast, safe and affordable travel choices—and to deliver these choices with a minimum impact on the environment, in a way that is sustainable into the future and makes the best use of assets already available.
Active transport modes (including walking, cycling, and/or in combination with mass transit) have a well-documented net public health benefit when compared to passive travel modes in the prevention of obesity and other health problems associated with sedentary lifestyles.
It is therefore prudent from a strategic land use planning perspective to actively encourage the development of communities dense enough to support a diversity of transport options and a high level of connectivity both spatially and between modes.
2.28
Mr Richard Smithers, Transport Coordinator for the City of Melbourne, observed that ‘the demand for public transport continues to increase significantly in Melbourne, driven by strong growth in the centre of the city’, and that, ‘as a result, many of the public transport services we have today are over capacity’. This meant that Melbourne had ‘a combination of an undersupply of public transport to meet the current demand and continued growth of the city’. The City’s policy and strategy was to seek ‘a significant expansion of services. We need new lines, we need new stock, and we need great stations and the other supporting infrastructure.’ He noted that ‘the changing nature of work and the growth of the knowledge economy are driving the demand for space-efficient public transport linked to walking’. Mr Smithers stated that:
The City of Melbourne strongly supports the investigation into funding methods that will help us address the shortfall in public transport that we have today and to create the cities that we want to work and live in tomorrow.
2.29
The ACT Government described its planned light rail as ‘city building infrastructure’. It observed that ‘improved public transport and arterial connections will increase capacity in the transport network, encouraging further growth in the region’. Light rail would be ‘a catalyst for urban intensification and economic investment’. The intensification around light rail would ‘not only provide much needed public transport continuity but also stimulate urban renewal of under-utilised sites, further increasing economic productivity in the city’.The ACT Government expected ‘land values surrounding light rail will increase, with related changes to revenues from stamp duty, rates and land tax’. It noted that:
These higher values will reflect the relative attractiveness of businesses locating to, and residents choosing to live in, locations with access to high capacity public transport. International studies have shown increases in land values as a result of proximity to durable public transport.
2.30
Further benefits were ‘expected to flow from agglomeration that occurs as businesses begin to cluster together at key nodes along transport links’. The ACT Governments Urban Renewal Strategy discussion paper highlighted the ‘urban village’ concept of urban renewal and densification around public transport nodes:
Urban villages are medium to high density hubs of activity located at transport stations where mixed-use development, people-friendly streets and inviting public places combine. They are places where the needs of everyday living are within a convenient walking distance, with homes, shops, cafes, parks, jobs, facilities and meeting places close by. The urban renewal strategy proposes a series of urban villages around light rail stations along the corridor. The villages will be connected to existing communities by enhanced east-west connections to and from Northbourne Avenue.
2.31
In Melbourne, the City of Port Phillip was looking at light rail as a means of catalysing urban renewal, noting that to ‘unlock investment and prevent congestion Fishermans Bend Urban Renewal Area must have a world class public transport network to meet the needs of residents, employees and visitors’. Trams were expected to provide a ‘catalyst for development’, with the direct tram option having a positive impact on land values. Tram capacity was expected to ‘impact the density of development’. On the other hand:
Lack of public transport is likely to have a detrimental impact on the experience of people living and working in the precincts (particularly with the challenges around the amount of car parking and existing congestion on surrounding arterial roads and the tram network).
2.32
The City of Port Phillip emphasised that without investment in public transport it would not be ‘physically possible for the existing road network to accommodate the additional trips that will be generated through the existing mode share of 50% of trips by car’.
2.33
Light rail was also being employed as the catalyst for urban renewal in Parramatta, where the options analysis resulted in the outcome with the ‘greatest urban regeneration benefit’.Dr McIntosh believed that ‘urban renewal must be a primary driver for most large scale investments in transit, as they create significant development capacity increases’ and that ‘these are best exploited through an integrated urban regeneration program’. This had been the focus of his work on the Parramatta light rail project.
2.34
In its issues paper, Are we there yet? Value capture and the future of public transport in Sydney, the Committee for Sydney gave a detailed account of where it believed improvements in public transport needed to be made in order to improve transport connectivity in Sydney. The issues paper stated that:
… our public transport network, while improving after decades of under investment, is a long way behind the global competition and far from being able to serve the economic and social needs of the city as it is.
2.35
The Committee for Sydney argued that ‘we must recognise the massively upgraded and extended public transport network required to not just meet current demand but to plan for that “next Sydney”, the Sydney of 8 million not 4’. It urged a modal shift, for ‘a liveable and productive city in the 21st century with heavy and light rail usage targeted to take more and more patronage from road use’. The issues paper identified the trend towards agglomeration and the problem of increasing congestion on roads—especially those linking the city with the western suburbs. It stated:
The global evidence is in. The increasing flow of knowledge workers driving from suburbia towards the favoured city-centric locations simply cannot be managed by roads alone—and their cars simply cannot be parked in those locations on arrival. We have to have modal shift—as part of an integrated package—if Sydney is to work properly.
2.36
The Committee for Sydney sought, for example, heavy rail links which reduce ‘the travel time between Parramatta and Sydney CBD from more than 30 minutes to under 15 or between Liverpool and Central Sydney from almost an hour to less than 30 minutes’. Only by such means could we ‘extend the benefits of “compact Sydney” to more Sydneysiders and reduce the problems of “sprawl Sydney”’.
Road v. Rail
2.37
However, the Committee for Sydney also identified the problems around public transport funding and its inability to compete with roads for funding investment. It noted that ‘public transport in Sydney is a long term operational burden with no adequate funding stream in place—the fare box only supplies about 25% of total operating costs’. This meant that ‘every new public transport link is a perpetual cost to the NSW Government’s budget’. According to the Committee for Sydney, this had ‘the potential to distort funding decisions—from the project that’s right to the project that has a business case’. The Committee for Sydney proposed two solutions:
One is to have a mature conversation in our cities about the true costs and benefits of transport and how the gap needs to be filled between what we as a community currently pay for public transport and what we need to pay to get the best outcomes. The second is we need to be innovative to find new solutions if we are to fill the funding gap and have the public transport network we need.
2.38
The Committee for Sydney believed that if the community wanted ‘liveable, productive and equitable city’, it was going to have to pay for it. The Committee for Sydney saw value capture as ‘an increasingly important item in the funding toolbox along with other “beneficiaries pay” approaches’. On this score, the Committee for Sydney believed that ‘we simply have no choice’. It also noted, however, that public transport fares had not kept up with costs, stating that ‘if we are going to see any meaningful expansion in our transport network, the fare box will have to work harder’.
2.39
The Committee for Sydney highlighted the success of Hong Kong in being ‘able to build and finance the most comprehensive public transport system in the world’, noting that ‘a staggering 90% of all trips in the city are by public transport. It is also operating at a profit’. The Committee for Sydney saw ‘no reason Sydney can’t do the same’.
2.40
Action for Public Transport (NSW) (APT) believed that:
… a quantum leap in the availability, frequency and speed of public transport services is the key to accommodating increased population without damaging the quality of life of Australians, reducing social and economic inclusion, and degrading our environment.
2.41
APT noted that ‘there is strong empirical evidence that public transport connectivity, especially rail connectivity’, stimulates ‘development and economic activity, both in urban areas and regional areas’. It further noted that ‘fast, frequent public transport services reduce the effective distance between locations’ and could ‘shape land use patterns to make better use of valuable urban space’.
2.42
APT was concerned that ‘current methods of appraisal fail to account properly for the benefits of public transport, including its positive effect on development and economic activity’. This created ‘a systematic bias against public transport investment’. APT argued that ‘correcting this inbuilt bias is essential to getting better transport selection and funding decisions’.
2.43
APT strongly criticised approaches to urban transport connectivity based on roads, stating:
Urban motorways produce an urban environment that is hostile to walking, cycling and public transport. They consequently undermine public transport usage, which depends on (and fosters) good pedestrian connectivity. They promote sprawl, not the co-location of high-order knowledge jobs in highly accessible centres (agglomeration).
2.44
According to APT ‘investment in public transport can help take traffic off the roads—but dramatic increases in road capacity induce more traffic and sabotage the potential gains’. It called for a reordering of priorities, ‘to make our cities fit for the future’.
2.45
Engineers Australia observed that ‘engineering construction on roads has increased substantially over the last twenty five years, both absolutely and as shares of overall infrastructure development’. Nonetheless, road congestion had worsened rather than eased, suggesting that ‘the provision of road infrastructure is leading to less than efficient outcomes for the overall economy—particularly where roads are complementary or a substitute for another type of infrastructure’.Engineers Australia was concerned that when it came to transport connectivity:
… decision makers still focus on the narrow objective of how to contain government expenditure on transport rather than the broader objective of containing the transport costs for government and users combined, including costs of the land occupied by roads and parking facilities.
2.46
Engineers Australia strongly supported the view ‘that a new paradigm for transport planning in cities is necessary to substantially reduce dependence on cars for transport in favour of a mix of time table free, rapid and frequent public transport options’.
2.47
Dr David Adams attributed the dominance of road over rail to ‘the invisible worm’, the provision in the ‘national guidelines used for evaluating transport projects [which] instruct the person doing the evaluation to ignore land value impacts’. The guidelines assume that ‘increases in land value that may result from urban public transport initiatives are generally a capitalisation of other benefits’. Such increases are, therefore, excluded from ‘economic appraisal of initiatives because this would double-count benefits’.Dr Adams noted that ‘a road project tends not to change the equilibrium in the land market, and that makes the guidelines perfectly fine for assessing road projects’, but that ‘a large urban rail project changes the equilibrium in the land market. It changes where people live.’ He concluded, therefore, that ‘if you are assessing a large urban rail project, you need to look at the land value impacts; it is not just enough to look at the travel-time savings’. His suggestion was that any ‘appraisal give equal weight to both land value impacts and travel-time savings and that you check, empirically, whether the two are equal’.
2.48
This apparent bias towards road funding over public transport was also identified by Financial-Architects.Asia, which identified road pricing schemes as a ‘serious hurdle to making fast rail transport work in Australia’. This was because Australia had found itself ‘having subsidised road provision and having created a bias in capital project evaluation in favour of roads as against heavy rail in particular’.
2.49
Dr Tim Williams, Chief Executive Officer of the Committee for Sydney, agreed, noting that ‘we do not really explain to people the true costs of roads and we do not really pay for them in our road tax’. He saw a need for transparent discussion of the ‘true costs of transport options—and not just public transport’.
2.50
On the other hand, road infrastructure specialists, Transurban, highlighted the importance of roads to the national economy, stating:
An efficient transport network is critical to sustaining economic success in Australia. Roads in particular are critical to the movement of people and goods, carrying almost 70 per cent of all passenger trips and one-third of all intra and inter state freight.
2.51
Transurban saw limited value in value capture as a mechanism for financing road infrastructure, preferring instead ‘a broad-based users pays model (also called road pricing)’, which it believed was ‘the most appropriate, sustainable and fair mechanism to fund transport infrastructure’.
2.52
Likewise, the Hennik Group, which is investigating the development of low carbon emission technology in road vehicles, highlighted the ongoing importance of road transport to Australia and the need to develop new technologies to make road transport more efficient. Hennik noted that ‘road transport remains the most critical transportation infrastructure requirement, and a complete national road transportation infrastructure, including access to fuel and power, has the potential to benefit the largest population’.
Regional Connectivity
2.53
Transport connectivity was also crucial to the development of regional centres. In its submission, the Department of Infrastructure and Regional Development (DIRD) stated:
Transport infrastructure in regional cities and towns also plays a key role for regional centres as service access hubs and nodes in the national transport network. Transport connectivity raises competition in markets to both stimulate and shift economic activity. In the past, improving transport allows regional communities to access new markets providing them with both an opportunity and the challenge of operating in a more competitive environment.
2.54
Ms Kirsten Kilpatrick, representing the Committee for Geelong, observed that transport connectivity was vital to the development of regional cities, such as Geelong, allowing them to accommodate growth in the major cities and surrounding regions. She noted that ‘investment in transport infrastructure in particular is imperative not just from an economic perspective but also in terms of moving people between the capital cities and around Victoria’. She also emphasised the need to maintain housing affordability in these areas, stating:
One of our key things, though, is to make sure, particularly from a domestic perspective, that affordability is maintained within the market. If costs are offset to developers in particular to fund some of this economic and transport infrastructure, it must be done in a balanced way and not passed on to consumers. That would erode affordability within the market—and that is what makes it appealing for people to relocate out of the capital cities to Geelong, the Barwon region and the G21 region.
Decentralisation
2.55
The potential for decentralisation to benefit both cities and regions was highlighted in the evidence of Professor Burke. Discussing the development of cities, he stated that:
By just moving certain growth in jobs, not current jobs, out of the central business district over the next 20 years to key suburban employment nodes on public transport in the middle and outer suburbs—but definitely at key nodes; not just dispersed willy-nilly—we can obtain as much congestion relief on our road network as what we would in building $12 billion of road tunnels.
2.56
Such relocation, while disruptive in the short turn, eventually resulted in a new equilibrium, ‘with a much more efficient urban structure’. Citing the example of the relocation of public sector workers away from Brisbane CBD, he stated:
For the first time in decades, we moved workers to the northern suburbs and especially to the Ipswich CBD. We have been tracking some of these workers and what happened to their travel behaviour. We are starting to see some people—particularly younger, more mobile people—moving their home and we are seeing turnover in those offices so that a new equilibrium emerges where people are travelling much shorter distances.
2.57
There were also important social benefits to the relocation—access to employment and services for parents:
Because there are some good-quality knowledge jobs in places like Ipswich, we are also seeing that women, who are getting back into the workforce, now do not have to necessarily do a low-level service job in the suburbs to be near child care and schooling; they have got access to a high-quality knowledge job two or three days per week in some of those offices. There are all sorts of social benefits that emerge.
2.58
Professor Burke observed that such outcomes had been observed in other parts of Australia and the world. He stated:
We are already seeing this in Australian cities. The upgrades to moderately fast rail out of Melbourne to Ballarat and Bendigo has already seen a commuter class emerge. They travel to work on that train most days, but not necessarily every day. So we are seeing dispersion effects. There are studies getting underway in China to look at the dispersing effects of high speed rail. I spent a lot of time in Nagoya, and I have seen the commuter class on the high speed rail in Honshu. And you do see these dispersing effects because land rents in the centre of Tokyo are unbelievable. People can live in a regional city and be true citizens there. They can enjoy all the amenities of a nice urban metropolis in a small city and afford a pleasant house in a pleasant suburb rather than a shoebox in the sky somewhere.
2.59
The down side of decentralisation was that the transport options to make it viable often involved substantial subsidies for travel:
There is an issue here, though, in that you need to get significant economic return in land development, and capture a lot of that, because you are probably subsidising people enormously for that commute. In south-east Queensland the most subsidised commuters are those coming from the Gold Coast and from Nambour into Brisbane every day by rail, at $20 plus per trip. There is quite a significant subsidy for that, so you need to be making sure you are getting significant development uplift and opportunity to make that back.
2.60
Dr Philip Laird argued that ‘to make the decentralised cities work well, you do need good transport links, preferably faster than cars and not dependent entirely on aircraft, to link your regional centres to your main hubs’. He noted that it seemed ‘to have worked with Victorian Regional Fast Rail’.
2.61
For a regional centre such as Geelong, fast rail was seen as the principal driver of growth. The Committee for Geelong noted that rail journeys between European centres similar in distance to that between Melbourne and Geelong took a fraction of the time, opening up new opportunities for employment and investment. It urged the development of the connection between Melbourne and Geelong with the ‘ultimate aim of achieving a 45 minute service to and from Geelong/Southern Cross before the end of 2017, or at least a commitment for this’.The Committee for Geelong stated that ‘reliable and improved transport connections are fundamental to facilitate the future growth of Geelong’.
2.62
Smaller regional centres also had a role to play in decentralisation. In its submission, the Peri Urban Group of Rural Councils, a group representing local councils on the peri-urban fringe of Melbourne, stated that:
There is a great opportunity to support the sustainable growth of the regions and to stop the spread of unliveable, overcrowded cities by simply investing into areas adjacent to the major cities and providing a viable alternative to major city living.
2.63
The Peri Urban Group of Rural Councils urged ‘greater recognition of the challenges and opportunities of rural and regional areas to accommodate population growth, new industries and smart growth into the future’. It argued that ‘these areas hold great untapped potential and should be supported’. It stated that ‘a myopic view towards funnelling infrastructure and growth into the major cities and centres will result in poor liveability outcomes for all’.
2.64
For smaller regional centres improved transport connectivity was focused upon roads. Ms Paula Lawrence, representing the Peri Urban Group of Rural Councils, explained:
The region is battling for access to a road network that was built, in Victoria, during the time of the gold rush and on bridges that were designed for horse and cart.
2.65
The Group’s submission highlights the car dependency of the region and the limited value of investment in public transport for relatively dispersed populations that will remain dependent on private road transport.It noted that:
The challenge in the Peri Urban region is that the low population densities make it virtually impossible to utilise a value capture model for funding roads and bridges, particularly those required for point to point transport of primary produce and livestock. These roads are often adjacent to very small numbers of properties resulting in a miniscule pool of beneficiaries to part funds the project.
What must be considered in these areas is that an upgrade may result in increased employment in the region and reduction in commuting numbers, higher production of primary produce or livestock for Australian tables or export and a local economic stimulus that would inject more funds into government coffers over time.
2.66
Addressing the approach to funding transport infrastructure, Ms Lawrence stated:
In the dialogue on funding necessary and basic infrastructure and maintenance in the future, there needs to be acknowledgement of the important role of the rural and regional areas in agriculture, tourism, health, recreation, environment and water supply. Furthermore, there needs to be an acknowledgement that rural and regional areas still require significant infrastructure investment but that infrastructure investment will deliver returns over much longer time frames and through demographic change—reduction of disadvantage, greater employment et cetera.
Rebalancing patterns of settlement
2.67
The potential for improved transport connectivity to allow for the strategic rebalancing of patterns of settlement was highlighted in the evidence presented to the Committee. Financial-Architects.Asia observed:
Over-prioritisation of inner city densification via apartment building, relative to alternatives which exist for lower land costs and enhanced land supply by following a policy of intelligently growing existing regional cities and towns, with adequate transport connectivity—better balance between major cities and the regions is needed in this respect.
2.68
Mr Torkel Patterson explored the potential for HSR to influence patterns of settlement, noting that the ‘rebalance’ of settlement was necessary to drive the ‘economic integration’ of south-eastern Australia, and reduce the strains on the infrastructure of Sydney and Melbourne ‘which are going to be increasingly difficult to overcome’. He noted that both cities have:
… enormous tasks to make the existing infrastructure work, and then to burden that existing infrastructure with an additional 40 per cent population growth is going to be a very difficult task.
2.69
Mrs Emma Woods, representing the Australasian Railway Association, also noted that ‘one of the key benefits to high-speed rail is helping decentralise Australia’s population’:
The whole concept is that you commute up to an hour—and obviously with high-speed rail you can commute much longer distances—and it would mean that a lot of people could relocate to outside of Sydney. It would help Sydney or Melbourne or the other cities, and it would help boost the population growth in regional centres—which would definitely have a value-capture opportunity.
2.70
Mr Ian Bell believed that the effect of HSR would be to transform the relationship between major cities and regions, stating:
If we could redraw a map—take the example of Sydney—under the conditions of high-speed rail from Newcastle down to Canberra and show how shortened travel times would bring everything so much closer and, effectively, change the whole nature of how Sydney and its surrounding regions works, it would be an unbelievable transformation.
… the Central Coast could come as close in time as Cronulla. Newcastle is a standout case—under a 30- to 40-minute transit, rather than currently close to three hours, or two hours by road … Melbourne decentralisation into northern Victoria could be completed … The 200-kilometre linear city of South- East Queensland could be integrated and its transport challenges remedied.
2.72
The ACT Government saw potential benefits in linking Canberra to Sydney by HSR, especially in coordination with the development of Badgerys Creek and international air travel:
With that whole corridor and its interactions there is a lot of pressure on Sydney airport at the moment, and it is clogging up. We see that we could have more international flights coming out of Canberra as we do not have a curfew. Only a very small proportion of Sydney is located right on the eastern seaboard. A very significant part of Sydney is located to the west, so accessing fast rail could get you to Canberra airport—or to Canberra, if that is your destination—quickly. We see that connection to that south-western part of Sydney as being very important.
2.73
Professor Sue Holliday indicated that HSR was essential to the process of decentralisation and regional development, stating:
If we wish to grow those peripheral cities, it needs to be managed in a conscious, planned way. But that initiative is unlikely to succeed without a dramatic shift in accessibility.
High Speed Rail (HSR) provides such a dramatic shift. Evidence in Europe, China and Japan has demonstrated that High Speed Rail is really an economic game changer. More than highways, and more than conventional rail, the fast travel times between centres make the difference in decisions to relocate land uses—both business and residential. If we wish to grow the peripheral cities around our major ones, then linking them together through a network of HSR is the most efficient way to achieve that shift.
2.74
Dr James McIntosh, of LUTI Consulting, highlighted both the agglomeration benefits of HSR and its potential for decentralisation— people being able to travel to central locations for work while living in regional centres that would themselves develop with increased population. He noted:
For instance, a high-speed rail to Newcastle and to Wollongong creates this amazing ability for Sydney to grow, without all the current land-use constraints, and it could be done in a very nodal area. Wollongong is a lovely place. It is a wonderful place to live. But with high-speed rail—the current rail system, whilst commendable, is quite slow. If you cut the trip to Wollongong down by, say, half, and you go from a rail speed of, say, 35 to 40 kilometres per hour, up to 80, then you bring in time Wollongong within the city limits.
2.75
Goulburn would have the same commuting times as suburbs in western Sydney, giving people access to affordable housing and lifestyle benefits:
If you then say, ‘Oh, well, we can save ourselves half or even two-thirds of our housing cost by moving from somewhere in Sydney to a similar sort of residence in Goulburn, the kids can go to a really nice country school and, actually, it is quicker to get to work from Goulburn than it was from Fairfield.’ So then you have these really quite bizarre scenarios where the Sydney that we all thought was within the metropolitan bounds is actually much, much bigger.
2.76
The benefits for regional centres was potentially just as profound:
… whilst one member of the family may commute into the city, what you will see are other aspects of these areas being able to be served more locally. You may see demand for other local employment and other services being attracted there, so you will need, obviously, increases in health, human services and education. As these cities grow, they attract more services and businesses will then go out there … the reduction in travel time will reinforce why people moved there and the service economy can come with it, and it will build its own momentum.
2.77
While the potential benefits of HSR for decentralisation are obvious, it was emphasised by some submissions, that these benefits were not inevitable. AECOM stated that:
International examples show that the introduction of HSR contributes to regional development, but this is not a guaranteed outcome. One key success factor [is] the nature of the economic activity in the region. Cities with knowledge economies that support high-end services were more likely to benefit than those with a mining, manufacturing or agricultural base. Intermediate locations equivalent to the larger regional centres along the east coast of Australia tended to attract population from surrounding communities, resulting in some cases in declining populations and economic activity in cities that did not have a HSR station.
2.78
Another critical factor identified by AECOM in the success of decentralisation was the commitment by governments for supporting regional communities to take advantage of the opportunities afforded by HSR:
Another key success factor of HSR in regional areas overseas is the presence of supporting land use and economic development policies and programs. HSR represents a step change in transport accessibility and investment. Local communities frequently don’t have the resources or knowledge to be able take full advantage of the opportunities created by HSR. Proactive support by the HSR delivery agency and state/provincial government are important factors in leveraging HSR’s contribution to regional development.
2.79
A similar point was made by DIRD:
HSR has the potential to positively impact regions through tourism, housing attractiveness, and business location—but this would be dependent on complimentary regional development policies.
As the [Australian Government’s High Speed Rail Study] Phase 2 report notes, regional development from HSR is not guaranteed, although international experience demonstrates that HSR can contribute to regional development in combination with:
supportive and aligned regional development policies by governments
metropolitan and regional planning policies for regional centres with HSR stations
local business investment and tourism market patterns.
2.80
In evidence before the Committee, DIRD issued cautions about the impact of HSR in terms of agglomeration or decentralisation. The Department noted that:
… transport alone is not the only reason there is an agglomeration of industry or business in the centre of cities, and it is entirely possible that that will continue to occur whether we have high-speed rail or not.
2.81
The Department cautioned seeing HSR as ‘the sole solution. Certainly it will have an effect, but there are other drivers that might counter that effect.’
2.82
The Bureau of Infrastructure, Transport and Regional Economics (BITRE) noted that the trend in settlement patterns was towards greater centralisation and concentration, stating:
We have also done research over a number of years that has looked at that question and there are very few examples where government-driven decentralisation has worked. Albury-Wodonga has very much underachieved the population levels that were anticipated. You are essentially pushing against global forces that are leading to greater and greater centralisation in cities and also larger rural centres. Around the world there are greater concentrations in cities. It would be very difficult to get a city let alone eight cities between Sydney and Melbourne. You would need very great densities of people to make it all work. The only places where it has worked are Canberra and Townsville—Canberra for obvious reasons; Townsville largely because of defence concentrations.
2.83
BITRE observed that ‘there are different agglomerations and within the larger cities like Sydney there are different agglomerations for different types of work as well’:
The CBD attracts high-level service—banking, insurance and those sorts of services—but there are other parts of the city which attract different types of industry. Sometimes, they need to be connected and other times they do not. For instance, there are transport hubs in the western suburbs of Sydney and probably they do not need to talk very much to people in CBDs, but they do need to connect to ports and airports, for instance. It is about connecting the right levels of people.
2.84
Nonetheless, the momentum was towards greater concentration, not less:
There is a range of jobs that follow population density—retail typically but also a whole range of service sectors that follow low density. So you see those jobs distributed throughout suburbs and towns et cetera. There are certain jobs that concentrate in CBD areas that need very large densities and, increasingly, there are returns on scale that lead to a drive to have cities more and more dense.
High Speed Rail
2.85
Investigation of the introduction of High Speed Rail (HSR) to Australia has been going on sporadically since the late 1970s. The most recent government initiative culminated with the High Speed Rail Study Phase 2 Report in April 2013. The principal findings of the Report were that:
The HSR network would comprise approximately 1,748 kilometres of dedicated route between Brisbane-Sydney-Canberra-Melbourne.
The preferred alignment includes four capital city stations, four city-peripheral stations, and stations at the Gold Coast, Casino, Grafton, Coffs Harbour, Port Macquarie, Taree, Newcastle, the Central Coast, Southern Highlands, Wagga Wagga, Albury-Wodonga and Shepparton.
Once fully operational (from 2065), HSR could carry approximately 84 million passengers each year, with express journey times of less than three hours between Melbourne-Sydney and Sydney-Brisbane.
The optimal staging for the HSR program would involve building the Sydney-Melbourne line first, starting with the Sydney-Canberra sector. Subsequent stages would be Canberra-Melbourne, Newcastle-Sydney, Brisbane-Gold Coast and Gold Coast-Newcastle.
The estimated cost of constructing the preferred HSR alignment in its entirety would be around $114 billion (in 2012 dollars).
The HSR program and the majority of its individual stages are expected to produce only a small positive financial return on investment. Governments would be required to fund the majority of the upfront capital costs.
If HSR passenger projections were met at the fare levels proposed, the HSR system, once operational, could generate sufficient fare revenue and other revenue to meet operating costs without ongoing public subsidy.
HSR would substantially improve accessibility for the regional centres it served, and provide opportunity for—although not the automatic realisation of—regional development.
2.86
The purpose of HSR, as defined by the Phase 2 Report, is to provide an alternative form of travel capable of competing with air travel along the main east coast transport corridor. The Report investigated ‘how HSR can play an effective role in meeting future travel demand by providing an alternative mode of transport that would be attractive for people to use’. The Phase 2 Report noted that ‘most of the economic benefits (90 per cent) would accrue to the users of the HSR system’. Two-thirds of user benefits were attributed to ‘business users travelling long distances, which reflects in part the relatively higher value of time attributed to business travellers compared to leisure travellers’. Externalities—indirect benefits—were expected to be ‘relatively minor, accounting for only about three per cent of the benefits’.
2.87
The preferred alignment of the route followed a ‘coastal alignment between Brisbane and Sydney followed by an inland alignment from Sydney to Melbourne, with spur lines to the Gold Coast and Canberra’.
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The Phase 2 Report argued that ‘the potential to attract private finance is limited’:
An expected return of at least 15 per cent would be required at this stage of project development to be attractive to commercial providers of debt and equity to major infrastructure projects. HSR would fall short of this.
2.89
Value capture was seen as having limited value within the context of the development of HSR, making ‘a small contribution at best’.
2.90
Regional development was seen as a possible, though not inevitable, outcome of HSR. The Phase 2 Report noted that international experience ‘demonstrates that HSR can contribute to, but is not always a cause of, regional development’. It observed that ‘HSR would significantly improve accessibility between capital cities and regional centres and would provide the potential for significant regional economic development’. It noted, however, that ‘the extent to which regional towns and cities served by HSR take advantage of that potential would depend on’:
Supportive and aligned regional development policies at the Commonwealth, state and local levels.
The availability and appropriate application of investment.
Metropolitan and regional planning policies that encourage and support new development in regional centres with HSR stations.
The timing of HSR opening in relation to broad economic trends.
2.91
The Phase 2 Report also identified the possibility of ‘unintended consequences and impacts’ for regional areas, ‘such as causing small regional cities to lose jobs and residents to nearby regional centres with HSR stations’. Potential benefits included ‘improvements in regional productivity, changes to tourist spending patterns and, for regions closer to the capital cities, changes to commuting patterns’.
2.92
The Phase 2 Report identified agglomeration benefits as the principal outcome for urban areas, noting that such benefits might arise in a number of ways, including:
It is easier to match workers to specific vacancies and to find employees with appropriate skills.
It enables greater specialisation of supply, leading to more efficient production of goods and provision of services.
It leads to knowledge spill-over (i.e. greater opportunities for formal and informal contact through increased accessibility).
Employees have a greater choice of jobs.
There is more competition between companies and between individuals.
2.93
The Phase 2 Report has come in for criticism from people with alternative visions for high speed rail in Australia. For one, Dr Adams cited HSR as a victim of the ‘invisible worm’ (see p. 20):
The High Speed Rail Study that should have been done was, ‘What is the case for taking out a call option over the corridor?’ But it got distorted by this invisible worm called ‘the guidelines’ and ended up as, ‘What is the value of building high-speed rail?’ because the guidelines do not allow assessment of call options. They only allow assessments of base case—‘Don’t build the project and people live in this way’—and project case—‘Build the project and they live in exactly the same way as the base case.’ They do not allow an assessment of the call option, and the terms of reference went the traditional route, because the worm got to them.
Central Japan Railway
2.94
Contradicting the Phase 2 Report’s assumptions about the purpose of HSR, Mr Torkel Patterson emphasised that HSR was not just about faster travel times; it was first and foremost about economic transformation—about strategic decentralisation and creating cities in the corridor between Sydney and Melbourne. He told the Committee:
If you just want to do transportation, do not build high-speed rail. Do not do it because you already have good intercity transportation. But if you want a transformation, if you want to connect and improve the region, connect them and make this economy of Sydney and Melbourne more competitive globally internationally, then high-speed rail is what can let you do that.
2.95
Mr Patterson highlighted the development of HSR in Japan as an example of strategic decentralisation and regional development:
In the experience of Japan, firstly, it will increase land values—putting forward shinkansen. It will increase regional development. How you capture the value of that—I cannot speak to that in particular. I do not have data on Japanese increase in tax, other than some of the local examples that were mentioned here, but I can say that in the publicly available record there are many instances of increase in land values surrounding stations that have occurred.
Secondly, getting back on the regional development point, areas have shifted the population densities away from Tokyo into other areas. There are several instances of businesses that are also in here that show how businesses are also moving out along the new Hokuriku shinkansen, which just opened last year. They started moving once the line was announced and committed to by the government. The thirst for high-speed rail and the fact that Japan is continuing to build—and another new line will be open this year to Hakodate up in Hokkaido.
2.96
Mr Shoshei Yoshida, General Manager of the Central Japan Railway Company, highlighted both the connectivity and agglomeration benefits of HSR and how these might apply in Australia:
Basically, big cities like Tokyo, Osaka, Sydney and Melbourne tend to attract more people. But the Tokaido Shinkansen expanded the Tokyo area by unifying the regions. Also, in the newer case, in Hokuriku Shinkansen, the population of most big cities is around 400,000. That is much less than around Sydney and Melbourne, and even less than for Newcastle, I think. So we are extending the Shinkansen network around Japan, but now the population is not so big—those cities do not have as much population as Sydney, Canberra, Melbourne or Newcastle, but they are attracting more people than other cities.
2.97
The highlighted benefits of HSR for Japan included:
Redistribution of population from Tokyo to regional centres;
Development of new population centres around HSR stations in previously undeveloped areas;
Significant property value uplift in regional centres;
Greater connectivity between Tokyo and regions;
Providing an effective alternative to aviation on major travel routes;and
Increased demand for buildings, services and employment—‘hotels, restaurants, apartments, shopping centres and office buildings’ in HSR connected regional cities.
2.98
Mr Patterson saw HSR as a solution to the expected population growth in Australia’s major cities, stating:
If you do nothing, the cost of supporting that infrastructure is going to be much more expensive than this opportunity you have to spread this population out. Yes, it sounds like these cities are small, but as you build them—I hate to sound like the baseball game—they will come. That is the case of Japan’s example.
2.99
Mr Patterson also emphasised the need for and viability of private sector investment in HSR:
There is ample room in this project, from our experience in the United States in developing high-speed rail, for the private sector to be involved. To what extent the private sector would be involved is a matter of negotiation, but that study [the Phase 2 Report] was based on the government paying everything at an amount per year that the government could swallow—about $500 million a year. That resulted in a very long time line.
2.100
Citing recent HSR developments in Texas, Mr Patterson advised the Committee:
In the case of Texas, which is a completely private project with no US government investment or equity, no grant funding—there would be lower-cost federal loans and Japanese loans applied to the project, but no payout of government money—that project works because of the up-lift in property values that is expected along the route. So the developers are going to capture that property up-lift for themselves and pay for the entire railroad. It is really an extension of their property development plans.
2.101
Regarding the route for the proposed HSR in Australia Mr Patterson suggested that ‘Newcastle to Melbourne is a coherent, good quarter, and the ridership between Newcastle and Sydney would do a lot to drive the success of the project significantly,’ but took the view that extending the line to Brisbane, ‘while a nice idea politically, is not where Australia is in its development at this juncture’.He supported the idea of routing the line through western Sydney rather than the CBD, stating:
If you are going to go to Newcastle it might make more sense to go through Western Sydney. It would be cheaper. You could have either a train service originate in the CBD in Sydney and then come out to the west, and then proceed in either direction, or you could have a different link with a connection across the platform. So people could have one shuttle train every 10 minutes to Parramatta and then they would get off and go either north or south. That is another alternative. You would not necessarily need to have a high-speed rail, because of the short distances, and the people would not be that inconvenienced by it. Although, people who work in the CBD might say that they do not want to do that. But if you think about the overall traffic flow and what kind of ridership you are going to get, it might make more sense to put it in the Western Suburbs. You would create the value-uplift on the property. Where you put this major No. 1 station you will have another Sydney centre—it will be Nagoya. It will be like Shin-Yokohama. It will be your Shin-Yokohama. You will have another large city centre that will be built there.
The Hon Tim Fischer AC
2.102
High speed rail advocate and former Deputy Prime Minister, the Hon Tim Fischer, was also critical of aspects of the Phase 2 Report. Noting the successful implementation of HSR in other countries, he highlighted the ‘poison pills’ of the two dead-end spurs in the route proposed in the Phase 2 Report. He stated:
No system in the world builds dead-end spurs along high-speed rail corridors … I recommend that you need to challenge the concept of dead-end spurs in a through high-speed rail corridor with whatever system you go with. For maglev it would be almost impossible …
2.103
Mr Fischer proposed the use of tunnels through the Brindabellas to eliminate the ‘Yass kink’ and allow the HSR line to pass directly through Canberra. Aside from eliminating the spur line, the tunnels would shorten the direct journey between Sydney and Melbourne by five minutes. Mr Fischer noted that ‘tunnelling for the Italians or the Japanese … is not the high-cost showstopper that it was last century; tunnelling in the 21st century is something that can happen’. He also argued forcefully for rail connections to Melbourne Airport at Tullamarine, ‘the only fair dinkum non-curfew capital city mainland airport in this country’, on standard gauge:
The more powerful case for standard gauge rests on the concept of HSR being (as in the rest of the world) in standard gauge (except to date one link in Russia) and so Southern Cross would help anchor the HSR project by allowing a shuttle to operate city to airport but some trains to go on from Tullamarine to the northbound Mickleham exit corridor of Greater Melbourne and head to Canberra and Sydney. Obviously the reverse direction train traffic would also apply. The actual hub might best be located at North Melbourne.
In other words some HSR trains would go non stop to Canberra from Melbourne and some would loop through the elevated station that space has been allowed for in the curve in front of the main Tullamarine terminal building, others would be short shuttle…
Ultimately in a dream world, Tullamarine as Australia’s only genuine and sustainable NO curfew airport will need: A) Light rail extension in standard gauge of the Airport Tram route B) Standard gauge HSR and shuttle C) Broad gauge new line to Sunbury and thence to Bendigo for regional and shuttle.
2.104
With regard to the development of the Sydney end of the HSR line, Mr Fischer suggested that:
The Homebush concept for HSR terminal hubs, especially Melbourne Brisbane services has some merit but needs to be investigated further, at this stage a high speed entry to Sydney Central from Glenfield could handle the first 25 years of Melbourne Sydney and also with a high speed triangle at Glenfield, could also handle Sydney Newcastle and onto Brisbane with a less than ten minute add on versus direct via tunnel Sydney Central due north to Mona Vale Parkway Hub and thence straight to Gosford.
2.105
Mr Fischer emphasised the regional development opportunities presented by HSR, observing that:
It would be in one masterstroke a massive boost to decentralisation without doing anything else at a place called Cosgrove near Shepparton at the Wodonga Logic hub just west of Albury at the East Wagga airport where there is already a reservation in anticipation made and so forth, especially if there was a station at Tumut. In saying that, not every train—in fact one in 10 trains—will stop there. That is not an issue; that is not a problem. Suddenly they would drop from no train service and a seven- or eight-hour car drive from Wagga to Sydney or Melbourne to one hour 20 minutes and one hour 40 minutes, respectively—one hour 20 minutes to Melbourne, Southern Cross or thereabouts; and one hour 40 minutes through Canberra to Sydney.
2.106
Mr Fischer noted that the key to the viability of HSR was reducing travel time to below three hours—‘the witching time frame for people who do not wish to go through airports but who just go to Gare du Nord and catch the two hour-15-minute service to London—St Pancras—and so forth’. He observed that during his time as Australian Ambassador to the Holy See, ‘the Italians dropped the Rome-Milan service from three hours 40 minutes to two hours 55 minutes and opened a new tunnel between Bologna and Florence as part of that’. He also noted that the Italians had introduced competition on the line, running both a government-owned and privately-owned service, demonstrating that ‘you can even have two different companies operating on high-speed rail infrastructure’. He observed that it ‘became a much more competitive situation and greatly improved service for the passengers using this system’.
2.107
Mr Fischer stated that ‘Australia needs HSR and soon’, and that ‘it is best delivered by a JV [joint venture] involving Governments and Private Enterprise with a direct route concept, involving steel wheel on steel rail of standard gauge’.He noted that ‘after fifty years of safe and very profitable operation of Shinkansen HSR in Japan, thirty years plus of TGV in France, HSR is not rocket science, it is doable in Australia’.He fully supported land value capture.
Mr Peter Knight
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Transport expert, Mr Peter Knight, also had a radically different vision of HSR to that in the Phase 2 Report. His proposal for ‘a private joint high-speed rail, very fast train’, focussed upon the redistribution of population away from Sydney and Melbourne. He did not believe the doubling of the population of Sydney and Melbourne was acceptable. His plan provided that ‘some 10 million’ of the projected 24 million population increase would ‘live in the regions between these cities; thereby, reducing congestion and pollution and maintaining liveability’.
2.109
Mr Knight envisaged new HSR stations being built ‘in regional areas between Melbourne, Sydney and Brisbane’. Land would be purchased to form the core of ‘six new cities with populations eventually growing to 1 million people’. He envisaged ‘more than 2 million people … living in two new cities on either side of Melbourne, Sydney and Brisbane, all connected by HSR, thereby reducing major city population growth and congestion’. New cities would be built ‘up to 2-300km from major cities and commuters would be able to travel by HSR to CBDs in less than 60 minutes’. Express HSR trains ‘would connect Melbourne, Sydney and Brisbane passengers in 3 hours’. Mr Knight noted that ‘road and air cannot provide this redistribution of population, reduction of congestion and maintenance of liveability value added’. He also noted that if done correctly, HSR could potentially meet much of its own costs through value capture:
Many new regional cities would substantially increase the capital value capture of the private HSR company. It would mean that the beneficiaries of the value added would pay for a large part of HSR construction.
2.110
Mr Knight proposed routing the HSR line through Gippsland, to the north-east of Melbourne, rather than directly to the north. He explained:
The reason for going through Gippsland rather than going north through Albury, essentially, relates to: what is the purpose of high-speed rail at all? To me, it is to try to reduce the increase in population in Melbourne and Sydney and Brisbane—Melbourne, in particular, in this case. If it goes north, I cannot, in my own mind, see a million people living in Albury, 300 miles inland. I could see a million people, easily, living in Gippsland. That is the starting point, I suppose.
The second point is that if you take the high-speed rail via Melbourne and Dandenong, you have a very rich possibility of increasing value capture.
2.111
Mr Knight proposed placing the HSR line in trenches that would then be built over, possibly housing ‘half a million people above the railway, between Melbourne and Dandenong’.In this way, HSR ‘would create large value added and value capture on properties located above and adjacent to it … The property would be relatively low capital cost and could be sold for 100% or more than cost, yielding a large value capture’. Mr Knight envisaged the railway and property businesses as ‘separate markets with different customers, but combined within one private company’. He believed that ‘a private enterprise HSR has the potential to cost less, be built quicker and be more convenient and valuable to customers than a government project’.
2.112
Mr Knight thought that the ‘outstanding benefits of HSR to Australia is the redistribution of population increase and the lessening of exponential growth of congestion of the major cities’. He noted that ‘construction of the railways would increase non-mining investment on the east coast, stimulate economic growth and create many more jobs’, and that ‘higher growth would ease the adjustments necessary for budget repair’. He concluded:
These indirect increases in value added created by the railways are captured in the hands of the people, businesses and government (through taxes on higher income). The benefits lie outside the railway company. Indeed, value capture is not really a railway issue. It is a future of Australian prosperity and liveability issue within the context of a doubling of the population. Railways are a means to an end.
Centurion Group
2.113
The Centurion Group, a consortium proposing the development of HSR in Australia utilising Chinese finance and technology, is advocating the staged development of a HSR network based on private sector funding and value capture. Dr Patrick Yu, CEO of the Centurion Group, emphasised that the project was not just about a rail line—it ‘contemplated urban renewal, urban regeneration and greenfield sites’. Centurion was ‘viewing this from infrastructure, urban planning, economic growth and social connectivity’ perspectives, with the potential to turn ‘Wollongong to Newcastle into a city with a population of 10 million, a megacity, to be competitive on a world scale with high-quality, reliable connectivity’.
2.114
The first stage of the Centurion proposal is a bid for the completion of the Maldon-Dombarton rail link and the Port Kembla container terminal, ‘expanded to include a passenger railway line between Wollongong and Campbelltown to alleviate the congestion on the Appin Way’:
This would take the freight off the Illawarra line and would also assist by increasing the speed from Wollongong to Redfern to 40 minutes by putting in an eight-kilometre tunnel to avoid all the switchbacks which currently exist between Waterfall and Stanwell Park.
Fundamentally, you will have passenger connectivity from Redfern down to as far as Shellharbour at high speed and you will also have medium-speed passenger services from Wollongong to Campbelltown. The Picton to Campbelltown section will be pure high speed.
2.115
The improvement in connectivity would mean that travel ‘non-stop from Wollongong to Redfern would be 35 minutes’, bringing Wollongong ‘to about where the Sutherland shire is in terms of transport connectivity’.
2.116
Just as importantly, the project would enable the Macarthur plan, the construction of approximately 100,000 homes.The rail link would create the connectivity which enabled the construction of new suburbs, while the new housing generated the funds to construct the rail link. Dr Yu noted:
It is from the generation of those new homes, from our enabling transport, that the plan is to have a value-creation levy—charge, contribution—from those new homes.
2.117
Centurion estimated that the revenue derived from property sales, approximately $3.75 billion, would cover the cost of the project. Dr Yu stated:
We have been quite conservative. We have assumed each house to be only 150 square metres—and that is very small—and we have applied $250 per square metre. In reality houses are about 250 to 300 square metres, but let us say 200. So we have been fairly conservative and our numbers work at $250 a square metre assuming each residence is 150. I believe that is a low number.
2.118
With this revenue available, Centurion would be able to leave the fare box to the railway’s operators. Ms Annie Chatfield, Chief Operating Officer of the Centurion Group, stated:
We were very fortunate that our funders were able to take a very long-term view on funding this particular route. We do not intend at all to touch the fare box. The fare box would still sit under state government control. We do not see the fare box as necessary to fund this project.
2.119
This project would represent the ‘the first stage of the Canberra to Newcastle high-speed train because the Picton to Campbelltown section, which is 12 kilometres, will be built as pure 300-kilometre high-speed track’. The second stage, ‘the most valuable’, was Hornsby-Wyong, ‘which will go a long way to negate the issues and traffic congestion of the F3 because it deals with the Hawkesbury’. This would connect to Central via a tunnel, the proposed alignment being ‘Hornsby, Circular Quay, Central, Badgerys Creek, Campbelltown to the Hume corridor’. While harder and more expensive than other options, tunnelling was considered the best and least disruptive option.
2.120
Dr Yu emphasised the importance of building HSR in stages. He stated:
It is actually impractical to build the whole thing in one go. There are simply not enough engineers. There are simply not enough human resources in Australia to do that. If we did that we would increase the cost of construction. We would have a big bump in costs for supply materials. We would murder the construction industry. We would because we would suck up steel, concrete, people and engineers. There would be no-one left to do anything else but our project.
2.121
In conclusion, Ms Chatfield emphasised that ‘a piece of infrastructure like this is national and international, and bipartisan’:
It actually brings forward something that I think everyone recognises as necessary. If you have each individual state trying to build various parts of high-speed all by themselves, then you end up with a bit of a mess. Whilst we may be talking in this room about something that is limited to New South Wales, we are also looking—just for information—at a project in Queensland that also involves some high speed. I think this is an opportunity to actually look at how you build such nation-building infrastructure across the board and not just individually, building it state by state, bit by bit. That is where, personally, I would see the federal government having an enormous influence on how this gets rolled out.
Spacecon
2.122
Another detailed proposal for high speed rail development was presented by the Spacecon consortium. With access to Korean technology, experience and finance, Spacecon proposed the development of HSR in the south east of Australia with a view to ultimately linking the mainland capitals between Brisbane and Melbourne over 20 years.The advantage of HSR was that it would provide ‘for solutions to urban overcrowding’ and ‘open up the spaces between our cities and make them far more valuable in terms of the building structures around them, and also make them more affordable so people can live within a reasonable time of Sydney, Melbourne, Canberra and, indeed, Brisbane’.The advantages of Korean technology was that ‘it is tried and proven’, and that the ongoing development of HSR technology in Korea provided ‘futureproofing’—incremental development of higher speeds and new technologies to ensure that HSR could meet future demands for faster trains and better technology.
2.123
The total proposal presented to the Committee provided for a development in three stages:
Our first stage is Sydney to Newcastle tunnel, and that is underground from Central in Sydney, through to Newcastle via tunnel. That is 140 kilometres. Stage 2 is Sydney to Canberra via Western Sydney Airport, which would be a partial tunnel. Stage 3 is Newcastle to Brisbane.
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In stage one, the consortium proposed to ‘engineer, deliver and operate an end-to-end infrastructure solution by using value-capture to fund and develop five smart cities, connected via high-speed rail and car tunnel, between Central Station and Newcastle’. Each smart city would ‘cover 100 hectares and accommodate 40,000 people’. The smart cities were the key to the development, providing both a solution to the problem of urban development and a way of financing the project through value uplift and value capture. Each city would be ‘a totally planned community that is connected, physically and technologically, to facilitate community-based living; collaboration and innovation; integrated; affordable housing; and the celebration of ethnicity’. They would be green cities, utilising ‘zero waste technology; waste burnt at high-temperature to produce electricity; high-speed rail operational costs subsidised through the sale of excess electricity; solar harvesting; green building materials; and other initiatives’. It was noted that as part of its project, Spacecon would be actively implementing green energy:
The impact on existing power infrastructure for this rail line will be minimal, because the aim is to generate their own power. Part of smart cities … is generating your own power from waste, capturing CO2 emissions and reconverting them into other products.
2.125
The Korean city of Songdo was suggested as a model for smart city developments.
2.126
Investment in virtual engineering systems, such as building information modelling, would ensure cost-effectiveness and efficiency in the design, construction and operation of the proposed line and related infrastructure. Virtual engineering would ensure ‘a large amount of investment in mistakes not made’. Real time collection and analysis of operating data would mean greater accuracy and flexibility in scheduling. IT consultant, Mr Jeremy Harkins explained:
We can put 20,000 people in there, run a simulation and see the little trains running around the tracks here and actually see how it is affecting our stations as we go. So once we have done this, it lets us see to a greater level of detail more quickly. Rather than two schedules in a year or in six months, I can do about 20 in an afternoon, which means iteration leads to better outcomes. What is more, this can be used for project engagement, where I can get down to street level and actually see how my system is being affected both from a macro scale and from a micro scale.
There is also a range of extra things—there are analytics in here, a huge amount of data; there can be live data. We can link this up to the actual system so we can have a simulated mode as well as a virtual mode where we are showing the actual state of the tracks—where our trains are, how many people have scanned in at which Opal points to which stations—and we can actually respond to emergencies much better and quicker because of tools like this.
In terms of the high-speed rail and the smart cities, which we are going to be heading towards, these tools are going to be vital in the next five to 10 years in how all of our population interact with both our infrastructure and our smart cities.
2.127
The proposed Sydney to Newcastle tunnel was ‘a two-layer tunnel that will carry two high-speed rail train tracks; three lanes of road traffic, with tidal flow management; and utilities and accommodation. The tunnel will be up to 150 metres below ground.’ The tunnel proposal ensured that the HSR would have little environmental impact and little impact on existing infrastructure, while easing road congestion on the existing route. It was noted that ‘the cost of tunnelling has come down’ and that tunnelling had become ‘quite automated’. In addition, each station would be like an underground city with an underground hinterland over the top of that. The estimated costs of the project were as follows:
The estimated cost to build five smart cities, at 40,000 people each, is approximately $25.7 billion. The land purchase and land development—that is, the infrastructure development on that land to make it viable for a smart city—is about $250 million. The high-speed rail costs, including the train sets, are $30 billion. The revenue expected to come from those smart cities is around $97.5 billion. This leaves a net revenue, before tax, of approximately $41.5 billion.
2.128
Mr John Moore, a consultant to Spacecon, thought that ‘our estimates, that we have undertaken quite vigorously, show that there is significant profit in it to establish both infrastructure and cities’. He concluded that:
We have a great opportunity to shape the funding and participation in infrastructure projects in Australia. Value creation, or value capture, enables all parties; the federal, state and local governments; the technology providers; the consortium; and the community to have agreed and predetermined benefits. This proposal is the delivery and operation of high-speed rail and road infrastructure and smart cities.
CLARA
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Consolidated Land and Rail Australia (CLARA) presented a plan to ‘build eight new, smart, sustainable greenfield cities in between Sydney and Melbourne’ linked by HSR. CLARA’s Chairman, Mr Nick Cleary stated:
These cities will be home to approximately 250,000 to 400,000 people in each of those cities. They will ultimately accommodate around about 2.8 million to 3.2 million people over 35 to 50 years of buildout. There is a wonderful opportunity here for us to harness the great inland and open up the opportunity that exists in our regional areas—and the potential that exists within those regional areas—but also, more importantly, to create urban environments that enhance the liveability, accessibility and affordability for our citizens and our growing population.
2.130
Mr Cleary noted that CLARA was often referred to as a high-speed rail plan. He preferred to see it as a ‘cities plan and as a population strategy, or part of a population strategy, for our nation’:
We are looking to rebalance the Australian settlement. We are keen to do that because the congestion, overcrowding and unaffordability are affecting liveability within our major capital cities—Sydney and Melbourne.
2.131
HSR was, in effect, the means to an end:
Building a high-speed rail, depending on the technology we use and ultimately decide to roll out, will place our cities—by that I mean our first two cities out of Sydney and our first two cities out of Melbourne—within a short commute of 22 to 35 minutes out of the CBDs of both Melbourne and Sydney. Ultimately, even our farthest away city, being in the Henty area in New South Wales, in between Albury and Wagga, would still be no further than one hour from Sydney or Melbourne. If we were to use the Japanese technology of magnetic levitation and the world's fastest train, with a commercial speed of 504 kilometres per hour, it would place Sydney to Melbourne no further than 1 hr 59 m apart. We think that is a game-changer and it is a definite conversation-changer as to where people will choose to live.
2.132
Mr Theo Scherman of Hitachi Consulting Australia, a partner organisation, noted that ‘high-speed rail basically makes the entire network or corridor accessible…you are not building eight individual cities; you are building them as one city with different, specialised components’.
2.133
The key to the CLARA proposal was the funding model. CLARA was ‘seeking no capital from state or federal governments, or from our cities, to build the high-speed rail’:
Our value-uplift model is about vacant farmland and turning it into residential allotments, getting a significant up-lift from those residential allotments, which…is adequate enough to provide for the civil infrastructure, the major infrastructure and the high-speed rail infrastructure, as well as giving a commercial return back to CLARA and its investors.
2.134
The proposed route features smart cities in the Southern Highlands, Goulburn and Yass, with a direct line to Canberra that would see some services operate direct to Canberra and others by-pass the city. The route continues to Gundagai, and southern NSW, with spur lines servicing Albury and Wagga Wagga (the rationale being that these are already substantial centres). The route continues to Tocumwal and Shepparton in Victoria. The Melbourne to Shepparton leg has been identified as the first stage for development. The route would be anchored at each end in the CBDs of Sydney and Melbourne.
2.135
The concept behind the development of each city is that an ‘anchor tenant’ would bring employment to the city, creating a critical mass from which each city would grow. Mr Cleary explained:
We have been in discussion with some global technology companies, as well as some other companies. To start with, as our cities come on line, we need a significant anchor tenant, which we agree with. That anchor tenant has to provide 5,000 to 10,000 jobs. Once we have 10,000 jobs in the heart of our city, that means a population of around 25,000 people. That population of 25,000 people will be enough for a Coles; a Woolies; an Aldi; a 50-bed hospital; a school, both primary and secondary; and the potential for a university. Given the smart city technology, there is the capacity for the research opportunity. We think the educational institutions will absolutely go there—and straightaway we have got that heart. But it does come down to those first 10,000 jobs. We have no doubt about that. All the studies with the players we have been talking to across the world show that the key is to have that job driver at the heart.
2.136
CLARA has already begun the process of land procurement which lies at the basis of its proposal, having secured some 40 per cent of the land needed for its cities (around 30 000 acres) with another 16 000 acres under negotiation. This procurement does not include the corridor for the railway, which would be acquired in conjunction with state governments, but with CLARA paying for it.
2.137
CLARA envisaged the principal role of government within this process as setting the policy foundation for the plan through a population strategy and coordinating the environmental assessment process across jurisdictions to prevent duplication of effort.
RMIT/CSIRO
2.138
A similar conception of the future has been presented by RMIT and CSIRO. The focus of their studies has been the creation of new regional cities, funded by land value capture, connected to each other and the capitals by HSR. The purpose is to find a way to better distribute the expected population growth in Sydney and Melbourne in the next 50 years.At the core of these new developments would be a new paradigm in sustainable development—new ways to design and create cities rather than continually trying to retrofit new concepts and technologies to old cities. In turn, these new cities would take pressure off existing cities, giving them greater scope for renewed development.
2.139
Professor Martyn Hook, of RMIT, noted that:
One of the things we are really interested in is how the creation of these new cities from scratch would allow us to build from scratch using new technologies, allowing them to be immediately connected into the NBN, allowing them to immediately be operating off a new base understanding around environmental controls and thermal capacity.
2.140
He also highlighted ‘the opportunity here in these new settlements for increased housing choice’:
The reality is that that there is a core paradigm of the quarter acre block and the single dwelling, which remains despite evidence that that is not in fact the case. We are in a situation whereby if we could provide new different densities in new places which are provisioned correctly with adequate parks, social spaces and environments that draw on what a regional lifestyle could look like, but do so through a different housing model, then we see this as being beneficial to increasing the opportunities for choice.
2.141
The researchers were also interested in ‘the manner in which these new cities are going to reduce the number of vehicle kilometres travelled’:
The benefits that then sit alongside that—the externalities of that, whether they be emissions, accidents or the various constraints that might sit around insurances—also begin to indicate a real benefit to the manner in which you might look at a different way of spending money.
2.142
The research work done on ‘New Shepparton’ was presented as a model of what could be achieved.
2.143
The key to success from the perspective of resettlement is creating connectivity between centres combined with critical mass within them. Professor Hook emphasised the importance of connectivity, noting that getting people to live outside the capital cities was about ‘making a definitive choice to begin to live somewhere else with the assumption that you are able to return to the city at your convenience, when you would like to’.Dr Simon Toze, of CSIRO, agreed, observing that ‘you need to have these connections, between these different towns, for them to succeed’. He stated:
What is it that is going to attract a person to move from Melbourne or Sydney to one of these areas? It is the good living, but we still need to have the jobs, we still need to have the connectivity and, to a certain extent, a lot of people like the vibrancy that the big cities provide.
2.144
Dr Steve Hatfield-Dodds of CSIRO argued that with effective planning, the new cities would attain the critical mass that would advance their development. He explained:
You will need either to plan and attract a couple of key businesses or to create an enabling environment where they want to come. There are lots of examples of doing that in the US, and it works. In the US it has tended to be manufacturing, which is something Australia has a mixed record in, to be polite. But Australia is very good at digital services, which are extremely exportable as well as transferable.
One of the interesting things in the literature about creating a competitive advantage, which is a key aspect of attracting places, is that it is more effective to create a desirable place to live and compete, essentially, on lifestyle—so have jazz bars and cafes and nice parks and mountain bike trails; that is a more cost-effective strategy than competing on wages. Effectively, it is cheaper per employee to create a nice environment and attract the people. This is particularly for what they call the creative service industries—so software design, marketing, a whole bunch of stuff, where you need high-skilled professionals, but they need to be bringing something creative to it.
So I think it is perfectly plausible that Australia could do this. We already have a reputation for creating the most liveable cities in the world. They are, unfortunately, at the moment, more expensive than they should be, but the notion of Australia being the lifestyle capital of the world is not silly.
2.145
Dr Hatfield-Dodds emphasised that ‘the cities themselves have critical mass. They are a magnet.’ He observed that:
Once something has started, it creates its own momentum. Most of the jobs in the city are actually serving other people in the city. This notion of 'what are they going to do'—you only need a fairly small share of the employment to be, in a sense, externally oriented or export from the city, and most of it hangs together. I think that is quite feasible.
2.146
Dr Hatfield-Dodds stated:
We imagine the new cities much denser and much more diverse than existing cities—just like the difference between Europe and the US. There are lots of advantages to highly walkable compact ones with good green space and parks. We are not talking about a vision in Australia of lots of big country towns, we are talking about a vision in Australia which is much more diverse and flexible, so people can move to one of these new cities, live on a quarter acre block for a period, move into town and it is not like moving into the Sydney CBD—because it is much more affordable.
2.147
Dr Hatfield-Dodds emphasised that HSR is a ‘development strategy; it is not a transport solution’.
2.148
Dr Toze indicated that ‘government can be involved as little or as much as it wants to, but effectively there would be a need for assistance with the rail corridors, whether that is down existing rail corridors or the provision of new through Crown-land type parts’. He noted that industry rather than government ‘could have a higher proportion of the work in building these parts’, but that there ‘is also a whole part to play through state and local governments through regulation, because they hold the key to regulation in development’. The role of the Australian Government would be ‘an enabler role to encourage, if this was seen as the sort of thing to do’. Dr Toze emphasised, however, the importance of policy continuity in such a long-term project:
It would be a bipartisan role. The other part of it is that it is one of those things that you cannot get partly through, have a change of government—I am trying to be very careful not to talk policy—and then suddenly it stops. It has got to have a bipartisan commitment across every layer of government to see it succeed. The government input comes through regulation and policy, and as an enabler.
Other evidence
2.149
Mr Peter Thornton, Managing Director of Transportation Associates Pty Ltd, supported the idea of commencing HSR with ‘a realistic piece: a realistic-scale project’, proposing ‘Sydney-Newcastle, or possibly Sydney-Canberra’:
With Sydney-Newcastle, though, what I can tell you from other work that I have done recently is that in the sector between Hornsby and Wyong the passenger-minutes saved by building a much better alignment in that corridor exceeds 50% of the sum total of all the passenger-minutes saved by every rail corridor improvement project leading in and out of Sydney. That is in that one sector alone.
2.150
The view that HSR was principally about nation building and regional development rather than just another means of transport was strongly supported by other evidence presented to the Committee. In its submission, the Australasian Railway Association (ARA) stated that:
High Speed Rail (HSR) is not just another rail project, and it should not compete with or detract from funding for other rail or public transport investments. HSR is about the future of Australia. It is a transformative project which will benefit a large part of Australia’s population living in capital cities and regional centres along the East Coast.
2.151
The ARA noted that ‘the success of HSR along Australia’s East Coast relies on its ability to travel between capital cities in under 3 hours’, and that the ‘key with HSR is that the travel is CBD to CBD, not airport to airport, further reducing travel time’. The ARA stated that ‘modelling shows at 350km/hr, the required travel times are achievable, thus confirming HSR’s suitability along Australia’s East Coast’. The ARA observed that:
Overseas travel trends show that HSR creates new living circles as people use HSR to commute one hour for work and three hours for recreation. It effectively shrinks the country. Individuals can commute much farther than is achievable with traditional modes of transport, allowing people to relocate outside cities and commute with HSR.
2.152
Financial-Architects.Asia argued that there had been ‘a systematic and prolonged failure for Australia to adapt to the new era of very fast rail technologies’, and that HSR, ‘intelligently designed and implemented, can bring transformational change to a land burdened by the tyranny of distance’. It noted that ‘Australia can “piggy back” on Japan & the USA to move into new technology, very fast, rail systems’.Financial-Architects.Asia concluded that ‘the best way forward is for Australia to have an overall plan for HSR, but just to proceed with it in “mini stages”’, and that the decision to build a second airport for Sydney at Badgerys Creek presented ‘a manageable mini stage of fast rail’:
The Western Sydney Airport location, being some 55 kms from the City of Sydney CBD, does actually need a fast rail link to make it work efficiently, on a world’s “best of breed” basis, and we think that this can be provided by Australia tapping into the latest global advances in fast rail technology.
2.153
KPMG observed that the experience of other countries with HSR pointed to ‘economic development and environmental objectives’ being the principal aims of HSR. In France, HSR was ‘about spreading economic development to areas outside of Paris’. In Germany, ‘transport investment was about connecting major industrial centres in the West before reunification, and then regeneration and boosting activity in the East afterwards’. In the United Kingdom, the proposed High Speed 2 network ‘is about economic growth and a whole realignment of the Victorian-era national rail network’.
2.154
The experiences of Japan and China in particular were highlighted as evidence of the value of HSR. In its submission, AECOM noted that:
Regions serviced by the HSR in Japan generally have higher rates of population and economic growth (22 per cent) than regions that do not have a direct service (7 per cent). The Chinese HSR network has shown similar results in the areas of economic and real estate value growth. Research shows a direct correlation between connecting cities with HSR and property price rises.
2.155
AECOM observed that in Japan, ‘regions served by the Shinkansen generally have higher economic and population growth rates than regions that are not directly serviced by the Shinkansen’. The differences in growth were ‘largest in the areas of knowledge economies, with employment growth rates at 22% in cities with Shinkansen and expressway service compared to 7% in cities with only expressway service’. AECOM stated that ‘land values around Shinkansen stations have increased as a function of the travel times they offered to Tokyo and other large city areas’, resulting from and providing an incentive for the commercial and residential development of areas around HSR stations. AECOM noted that ‘the tax uplift created through the rise in land prices and business activity as a result of the Shinkansen stations enabled the Japanese Government to secure loans for the construction of the HSR lines’. Moreover, ‘the ongoing revenue created through station area developments is also captured to assist in the ongoing operation and maintenance of the Shinkansen’.
2.156
AECOM observed that ‘China has experienced significant gains in labour productivity, jobs, industrial growth and regional development due to investment in HSR’, and that China’s ‘HSR network is generating substantial new passenger flows and increasing land and property prices’. Studies of China’s HSR network had established ‘a direct correlation between connecting cities with HSR and a rise in property prices. It was also noted that ‘China is also realising agglomeration-induced productivity effects as a result of the HSR, with second and third-tier cities seeing substantial increase in GDP’. AECOM concluded that:
While China’s unique political and market structures are not replicable or directly transferable to Australia, the benefits of its HSR network are clearly evident. Rising property prices, new passenger flows, increased productivity, job growth and the broader effects of agglomeration are being realised from China’s investment in high speed rail.
2.157
AECOM noted that in both China and Japan there was evidence that HSR had had a significant positive impact on tourism. In Japan, Kyoto had ‘experienced significant gains in regional businesses, local services and educational institutions within 5km of the station, making it one of Japan’s most popular cultural and leisure destinations ‘. This growth had been assisted by the provision of high-speed services between Kyoto and Tokyo. In China, tourism had ‘increased rapidly to major attractions along the HSR, such as Qufu, an attractive city in the Shandong province’. AECOM observed that ‘provinces with HSR services have approximately 20% higher foreign arrivals and 25% higher tourism revenues than provinces without HSR service’.
2.158
Financial-Architects.Asia urged the Committee to look at ‘how the privatisation of Japanese railway companies has fostered better connectivity’, observing that ‘JR East and JR Central, for instance, make considerable sums from non-rail revenues and benefit significantly from real estate development, office and retail centre ownership, etc. in connection with their HSR stations’; but also that the Japanese companies were now investing in the next generation of HSR technology—Maglev (magnetic levitation). AECOM highlighted current developments in the United States, where private consortia were involved in projects in Texas and Florida. With regards to the Texas project, AECOM stated:
Texas Central Railway, a private company, is progressing with plans to construct a 320km/h 386km high speed rail between Dallas and Houston. One of the company’s backers is JR Central, and the line will be based on Japanese HSR technology. The estimated US$10 billion will be entirely funded through private investment, with Texas Central Railway expecting to return a health profit.
2.159
With regards to the Florida, AECOM stated:
All Aboard Florida (AAF) will link Miami, Fort Lauderdale, West Palm Beach and Orlando by 380km of high speed rail track. The privately funded project is expecting to turn a profit though high passenger numbers generated from Orlando, the most visited city in the US, and revenue created from developing over 390,000 square metres of real estate on the land AAF owns around the station sites. The feasibility of this project is essentially being made through the private application re principles.
2.160
Mr Thornton took the Committee through examples of projects in Taiwan, Sweden and California, highlighting the mixture of approaches and outcomes in the development of HSR. With regards to Taiwan, Mr Thornton stated:
You need to look at Taiwan because it was, for a start, predicated on the private sector being able to build the project, which it has manifestly not been able to do. It has been able to build it but it has not made money. It was also based on a sort of a form of land value capture in the sense of looking at development that was going to take place around stations that were somewhat remote from the existing populations, and this has not occurred to the same level as had been expected. That is a project that has had to be bailed out.
2.161
Mr Thornton noted that Sweden had ‘gone its own way and done its own thing in its own kind of way’, with a system ‘that runs both freight and higher speed passenger rail’. He stated:
There is a project called the Bothnia-Bahn, the Bothnia railway, which runs up the coast of Sweden. That has been built both to reduce travel times and to allow freight to transit it. The issue with freight is the problem of the axle loadings and the poor state of repair that freight operators keep their wagons in, pounding the track to pieces, derailments and those sorts of things. There is a compatibility question. The Swedes are looking at that because they do not have the population densities to justify building totally stand-alone railways. They, like us, need to squeeze as much as they can out of what they build. I think they are an interesting model.
2.162
With regard to California, Mr Thornton stated:
California has a project that is happening right now. What is interesting about California is … they have a rationale for building the project, and that rationale is that they have 35 million people in a state which is about the same size as Melbourne to Grafton. They are building a project only in the bottom half of that state. The reason they are building it is that they have a problem about where people are going to live. Cities such as Los Angeles and San Francisco are becoming crowded, but they do have opportunities in the central valley to accommodate growing populations. So there is a rationale for that project that is related to their plan about how they are going to live.
2.163
Mr Thornton described the Californian project as an interesting project ‘because of the way it is being funded. It is really being funded wholly by government’. He compared it with the development of aviation in Australia, where the government had provided the infrastructure, then, having established the businesses, sold them to the private sector and moved on. He observed that:
In California, they are looking at creating the opportunity and then saying, ‘Okay, we’re going to create these opportunities, and then we’re going to see whether or not the private sector will come and buy us out of those opportunities.’
2.164
Mr Thornton also cited the example of the Madrid-Seville HSR in Spain, one of ‘very few projects in the world where anybody has done an ex post economic assessment of the project’. He thought it had ‘some important lessons’. One lesson was that ‘regional development or social benefits … do not cut it in terms of the overall economics of the project’. Nonetheless, Mr Thornton explained, ‘that in itself is not a reason for government not to build the project’. He stated:
Government has the right to say, ‘We have this long-term view for our country. We think that in the very long term it will reshape the country, and we as the government have the responsibility to do those things.’ You stand or fall on the calibre of that judgement. We in the private sector stand or fall as to whether or not we made a dollar today, but you do not. You have a different job to do. And you can make those decisions, because there is no doubt that transport reshapes cities and it reshapes countries, but you have to stick around long enough for it to do it, because it can take quite a while. You have got to be prepared to take that risk.
2.165
Mr Thornton identified a further consideration for governments—that many private sector players were more interested in building than operating HSR. He stated:
What is remarkably scarce on the ground is anybody who actually wants to operate these as long-term businesses. If you think about it another way around … there are very few people who say: ‘We’re in the transport business. We’re in the high-speed rail operating business. We want to operate this transport system.’ If you do that … then everything is driven by creating and operating the project. It is not being driven by construction companies. To date PPPs in Australia have been largely driven by civil engineering contractors who want another project to build. They certainly do not want to stick around and operate them.
2.166
Mr Thornton believed governments should ‘be looking for an organisation to partner with for the long term to run a transport business. I would then plan that project.’
Other technologies
2.167
Several other innovative transport technologies have been presented to the Committee as potential solutions to transport problems.
Hyperloop
2.168
Hyperloop is a potential competitor and successor to HSR for inter-city travel. It consists of a vehicle—a pod—which travels at high speed through a tube. Its principal features are:
It creates a totally controlled environment, which enables us to do fully autonomous control. We do not get the external factors that we would in, for example, autonomous driving on public roads. We do not get fog; we do not get snow or rain; we do not get people trying to cross, and we do not have cross traffic of any sort. The second major advantage of the tube is that it enables us to vastly reduce the air pressure. This overcomes aerodynamic drag, which is the single greatest factor prohibiting ground transport travelling at aviation-like speeds. The third principle is that we levitate the vehicle rather than using wheels, and that practically eliminates friction. A major difference between our system and previously existing maglev systems is that we use a passive maglev, that requires no power to create levitation. The fourth major element is a linear motor, which we use to accelerate the vehicle.
2.169
The combination of design features allows Hyperloop to accelerate ‘the vehicle from zero to our design speed of 300 metres per second, which is 1080 kilometres per hour’. For passenger use, the pod accelerates at a similar rate to a jet plane taking off. Having attained cruising speed, the pod coasts for tens of kilometres before more power is applied:
Typically, in a passenger application, it coasts for about 60 kilometres before we need to give it any more power. That means we are using power, on the typical route, for only 10 percent of the total journey. This is significantly different to conventional high-speed rail.
2.170
This potentially allows a journey between Sydney and Melbourne of less than one hour.Shepparton to Melbourne was estimated at five minutes ‘including start and stop’; Newcastle into Sydney ‘would be 10 minutes’. Stage one of the project would be the corridor between Sydney and Melbourne, ‘or Geelong and Newcastle’. This would ‘bring the most direct benefits to the economy very quickly with the removal of freight congestion on the Hume Highway and the connectivity of Geelong to Melbourne, and Newcastle to Sydney’. There was also the opportunity to develop a second stage between Brisbane and Sydney, following and inland route ‘via Orange, Dubbo, Armidale, Tamworth and down to Toowoomba that way’. According to Mr Steve Artis, of Ultraspeed Australia, which represents Hyperloop One in Australia, ‘the ongoing opportunities for income from the industry are self-generating and the revenue from the system that we expect could carry between seven and 10 million passengers per annum is quite significant’.Another key feature of Hyperloop is its ability to carry freight, reducing the freight task on roads.
2.171
Mr Sean Duggan, of Ultraspeed Australia, believed that Hyperloop could deliver ‘social and economic transformation’. It would not create just one 30-minute city, but 30-minute cities, connected to each other by high-speed transport. Dr Alan James, of Hyperloop One, stated:
Somebody put it quite well the other day: if you connect A and B with a railway, you get A plus B. If you connect A and B with a Hyperloop, you get ‘AB-ville’; effectively, a single economy where it does not really matter where you live or work.
2.172
Mr Duggan believed that ‘Hyperloop One technology brings connectivity in an Australian context that is simply faster, better, cheaper and greener than any other high-speed alternative’. Hyperloop was cheaper and more flexible than HSR, with an estimated capital cost 20 per cent lower than HSR and operating costs 60 per cent lower than HSR. Lower costs meant greater frequency and flexibility of operation. Dr James stated:
One of the fundamental problems with a high-speed rail system is that you have to wait for 1,000 people to show up before your TGV or Shinkansen is viable. Then you have to propel that vehicle through some dreadfully resistant stuff called air—and that takes a load of energy. We get rid of those problems. Pods are much smaller: they take 24 people in a superluxe configuration; 50 in a rough equivalent to business class; and around about 90 in an all-economy configuration. And because they are levitating in effectively zero friction—because they are in a pressure-reduced environment with effectively zero drag—it costs us next to nothing to move them. We can move a pod with, say, five, 10, 15 per cent occupancy—which would bankrupt a high-speed rail system if you tried to move trains at that level. So we can offer greater frequency from smaller and better dispersed terminals—on the branch network that Sean described earlier—connecting more places, more origins, to more destinations, enabling more people to connect more places of work and more places of residence and, ditto, freight to get from more points of entry at ports and airports to more destinations and distribution hubs. All of that gives us an economic order of magnitude that is a next generation on from what you can do with high-speed rail—and I know: I have banged my head against the economics of high-speed rail, in my professional capacity, for the last 15 years.
2.173
These efficiencies would ensure affordability, with average fares ‘in the tens of dollars rather than hundreds of dollars’.
2.174
Hyperloop’s focus was on the development of existing regional centres rather than new ones. Mr Duggan stated:
We think that linking existing regional centres in that way with capitals means that we can ease capital city growth pressure and, at the same time, stimulate existing regional centres to grow in the way that they were originally thought of. We are not thinking about new centres. In fact, evidence internationally says if you are going to integrate high-speed rail into an existing system, you make sure that it happens. You actually build into existing infrastructure; you do not build new infrastructure.
2.175
This would increase opportunities for value capture:
The intention with the Hyperloop system is to ensure that any stops are fully integrated into existing centres, not to build new ones. All the evidence internationally says that if you want to maximise the use and value of the existing infrastructure and land—to maximise the land-value uplift in terms of property values—that is what you do. That is the intention of our proposition in the first instance. There is the opportunity for land uplift. We believe that transit times of minutes, not hours, between the places where people want to live and want to work, and where businesses want to put their investment, will allow that land up-lift to occur.
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The next stage for Hyperloop is to undertake ‘a very detailed project scoping study to see whether a Hyperloop system can be used in Australia and whether it would generate the benefits that we are anticipating at a lower cost’. Proof of operations is also required, to test Hyperloop in a real world environment. Both require the interest and support of government. Mr Duggan explained:
That proof-of-operations facility cannot just be plonked down at a location. There needs to be some serious conversation about whether it is a viable thing to put in place; about whether state, federal and local authorities can corral themselves together to speak with one voice; about whether there is land available for that operations facility and whether rights of way can be procured; and about whether the most appropriate location is next to existing research universities which can be integrated into a Hyperloop academy, which is part of the proposal.
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In this context, Hyperloop One and Ultraspeed Australia sought a letter of intent from government, ‘to say that the government would want to continue this conversation about the proof-of-operations facility, with a view to discussing whether it is possible to ensure that Hyperloop One could invest in that facility’.
Austrans
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Sydney company Bishop Austrans presented their vision for greater connectivity within the city environment. Austrans is an ‘electrically-driven, fully-automated, computer-controlled, high-speed driverless system that utilises the airspace above existing roadways’. It consists of cars that run on track carrying small numbers of people at high frequency, depending on demand. At peak times, the network could carry 8000 to 10 000 people per hour. When no-one is travelling the cars do not operate—saving costs and maintenance. At such times, the cars operate on demand:
If a nurse comes out of a hospital at midnight and has to get home, she can go to the station, strike her card and within two to three minutes a car will turn up, and she has got personal transport home.
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The system is compact enough to operate beside or above existing roadways, and can be integrated into the design of buildings. Being lightweight and driverless, it has low capital and operating costs compared to other modes of public transport, and requires little power. The cars could be solar and battery powered—‘absolutely green’. The network is designed to be run by two controllers in a centralised control room. Cars can travel up to 120km/h, giving fast non-stop travel between destinations. Estimates included:
Brookvale to Wynyard station, it is 16 minutes; Balgowlah to North Sydney, 8½ minutes; Spit Junction to Martin Place, six minutes. This is pick-up to destination nonstop. I have some other figures here: Parramatta to Epping, 12 minutes; Epping to Rouse Hill, 24 minutes; Parramatta to CBD, 16 minutes; and Rouse Hill to CBD, 38 minutes.
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Austrans was touted as an ideal solution to transport between heavy rail and metro destinations, being superior to buses and light rail. Mr Rob McAuley, representing Austrans, stated:
We see it as the perfect feeder to the main metro lines that billions of dollars have now been spent developing et cetera. The population is away from them but that population still has to get to the main hubs, and there are great gaps in the links between where the metro and light rail connect that need servicing.
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Austrans recommended ‘that a pilot area be chosen and that an Austrans system re-engineered and designed specifically for that be tested’, suggesting routes along Victoria Road, Gladesville, or between Parramatta and Macquarie Park ‘which currently is being redesigned with a future plan for it to be interlinked with buses—the things that you want to get off the road. This can take over from buses and provide an unparalleled service.’
Uber
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In its submission, technology company Uber highlighted ways of improving connectivity in road transport. Uber provides a technology that ‘facilitates ridesharing, connecting registered riders to registered driver-partners in over 400 cities worldwide’. Ridesharing deploys underutilised personal vehicles to provide rides. According to Uber, ‘the emergence of ridesharing demonstrates that transport models driven by smart technology can help to make cities safe, vibrant and better connected’.
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Uber noted that ridesharing was not a substitute for public transport, but ‘complements public transport where reliable service is unavailable’. Uber stated that:
By improving connectivity across the city, ridesharing supports local economic activity. Over 60 per cent of Sydney ridesharing trips are new to the point-to-point market, suggesting that many of those riders may be travelling to destinations that they would not have visited otherwise
Ridesharing demonstrates that smart technology with a smart supply model can help to improve city transport. It offers cities a no-cost, scalable transport alternative to supplement existing transport systems. It supports local economic activity across the day and across the year. It offers partners a safe, flexible source of income and offers riders a safe, reliable and affordable alternative to car ownership. Policymakers must acknowledge these opportunities and ensure that regulatory settings encourage the development of these systems.
Committee conclusions
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The evidence presented to the Committee has highlighted the importance of improved transport connectivity to the economic and social wellbeing of Australia. Improved transport connectivity allows greater accessibility to employment and markets, and cost savings from reduced transit times, less traffic congestion and reduced transport costs. The key benefit of improved transport connectivity, however, is its transformational effects—making cities and regions more accessible and more liveable. Better connectivity creates opportunities for economic development that could not otherwise exist.
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Carefully planned, multi-modal, transport systems make cities more efficient and liveable. The evidence presented to the Committee proposed a focus on rapid transport—the 20 minute city. Intensive development of transport corridors between urban centres combines the benefits of agglomeration with ease of access. The creation of new transport corridors and nodes has the dual advantage of allowing more efficient use of constrained urban space (densification and urban regeneration) while offering opportunities for wealth creation. In short, rapid transit public transport creates the opportunity to create value and use that value to pay for the development of public transport—value capture.
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Improved transport connectivity is also critical to regional development. It provides opportunities for decentralisation and the creation of new centres—rebalancing patterns of settlement. Greater regional connectivity will promote the development of regional areas, make relocation to these areas more attractive and reduce growth pressures on major cities. Indeed, the better the connectivity, the greater the attraction to relocate to regions.
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A key to regional connectivity is the development of high speed rail. HSR has the potential not only to improve connectivity between existing major cities, but allow the creation of new centres closely connected to those cities and each other—thereby achieving economic transformation by rebalancing the pattern of settlement. The Committee is conscious of the success of HSR in achieving economic transformation in other countries—particularly Japan, China and Korea with their extensive and growing HSR networks.
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The Committee was presented with a number of proposals for the development of HSR in Australia. Each was different in its details, but all emphasised the viability of HSR in the east-coast corridor; its potential for transforming our cities and regions; and its potential for wealth creation and, therefore, value capture. HSR can contribute significantly to the costs of its own development while providing meaningful opportunities for new developments in other sectors of the economy. This will create opportunities for private sector leadership in the development of HSR—a leadership that is already maturing into well-developed proposals. The Committee believes the time has come for the Australian Government, in conjunction with the relevant State and Territory Governments, to seek expressions of interest for the development of HSR in eastern Australia with a view to rebalancing the pattern of settlement.
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In addition, the Committee was presented with proposals for other technologies promoting transport. Hyperloop is a potential competitor and/or successor for HSR. Its theoretical capacity to transform intercity transport is undoubted. It is the Committee’s view that this potential should be monitored by governments with a view to exploring the adoption of this technology if it proves feasible. The Australian Government should pursue the matter with its State and Territory counterparts.
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The Austrans system has the potential to significantly increase connectivity within the urban environment, providing a lighter, more cost efficient and flexible alternative to light rail and buses. The Committee recommends that governments should explore the potential of novel and alternative technology to provide an innovative and flexible transport system to urban Australia.
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Finally, the Committee notes that the evidence presented to it indicates the ongoing importance of road transport to both urban and regional Australia. Without promoting any particular technology or system, the Committee believes governments should continue to investigate new technologies which can make road use safer, cheaper and more efficient, including development of autonomous vehicles, low-emission vehicles, and smart road infrastructure.
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The Committee recommends that the Australian Government examines ways to promote a better balance of settlement through decentralisation to the regions linked by faster transport connectivity and particularly through high speed rail.
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The Committee recommends that the Australian Government, in conjunction with state and territory governments, develop a framework for the specification and evaluation of proposals for the development of a high speed rail network in eastern Australia, with an emphasis on strategic decentralisation, regional economic development, value creation and value capture to determine the viability of private sector proposals, routes, schedule for development and funding for the project. The Committee further recommends that it is time to progress the planning work that must be done by all levels of government to facilitate high speed rail. The Committee recommends that state and federal governments consider appropriate coordination arrangements, including if and when a planning authority is required to progress high speed rail.
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The Committee recommends that the Australian Government investigates options for private funding of high speed rail through value capture.
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The Committee recommends that the Australian Government, in conjunction with state and territory governments, monitor and, when appropriate, assess the feasibility of Hyperloop in Australia as a high-speed mass transit system.
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The Committee recommends that the Australian Government, in conjunction with state and territory governments, explore the potential of novel and alternative technology to provide an innovative and flexible transport system to urban Australia.
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The Committee recommends that the Australian Government continue to recognise the importance of road transport in Australia and investigate new technologies which can make road use safer, cheaper and more efficient, including development of autonomous vehicles, low-emission vehicles, and smart road infrastructure.