East Australia High Speed Rail – Opening Comments

Bernd Felsche has been blogging recently on proposals for a High Speed Rail project for Eastern Australia. The details and Phase 1 report are here.

In Britain there has recently been approved a HSR project from London to Birmingham, costing at least £17.1bn (A$26.7bn) for just 190km of track. The estimated cost of A$61bn to A$108bn for around 1644km looks remarkably good value in comparison. However, it is worth studying the underlying assumptions.

The Taxpayers Alliance has made a number of damming criticisms of the UK project. In particular that the actual costs could be nearly three times the estimated if supporting infrastructure improvements are taken into account. Having also looked at the Manchester Congestion Charging Scheme in 2008, I thought it might be worth a perusal.

The basis for the project is the projected demand, so my first comments are population and demand levels.

Initial Thoughts on Population

The study assumes a high level of population growth for Australia as a whole. From the current 23m, population is forecast to be between 30 and 40m in 2056. That is growth of 30% to 74% over 45 years. Taking the mid-point, that is 52.2% growth to 35m. East Australia is forecast to grow 58.3% from 17.8m to 28.2m, leaving growth in the rest of Australia of 30.7% (5.2 to 6.8m).

Map from page iii of Executive Summary, annotated with city population growth projections for 2011 to 2056.

The highest growth in population (using Australian Bureau of Statistics, Population Projections Australia 2006 – 2101, 2008 (Series B forecasts updated)) is projected to be in the Brisbane area. Given that this is the least populated end of the line, these population projections need to be put through a sensitivity analysis. With much lower projections for South East Queensland growth it could be that the northern stretch of the line and one third the estimated cost is not economically justified.

Passenger Growth

From the Executive Summary page iv

The population of the east coast states and territory of Australia is forecast to increase from 18 million people in 2011 to 28 million people by 2056. Over 100 million long distance trips are made on the east coast of Australia each year, and this is forecast to grow to 264 million long-distance trips over the next 45 years.

So population will grow by 58% and long distance trips by 164%. By 2036 (with 35% growth in population), they will have grabbed half the project air market in 2036 for Melbourne to Sydney and Brisbane to Sydney. With such a huge capital outlay how can this be?

Capital Cost

From the Executive Summary

International experience suggests it is unrealistic to expect the capital cost of a HSR network to be recovered.

The reason that the projected fares look so cheap, so that there is not going to be any recovery of the costs in fares. So the

competitive ticket prices, with one way fares (in $2011) from Brisbane to Sydney costing $75–$177; Sydney to Melbourne $99–$197; and $16.50 for daily commuters between Newcastle and Sydney

are no such thing. A quick check on single flights from Melbourne to Sydney reveals prices of $125 economy and $850 business. The HSR will be financed out of taxation to grab market share from air travel.

Kevin Marshall

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