In early January I took a train from Melbourne to Sydney for the first time. I had plenty of time on the 11-hour trip to consider the state of Australia’s rail infrastructure given the train had no wi-fi. Even in first class not a power point in sight.
Surely, with federal and state debts approaching $1.7 trillion, modernising carriages or even improving the track, so the XPTs could travel their potential 160km/h, could have been easily affordable? There is a distinct 1990s vibe about the features on the Sydney-Brisbane line too.
Australia is terrible at public infrastructure, paying too much for the wrong things, for the wrong reasons. Snowy Hydro 2.0, which the Turnbull government said would cost $2bn, is expected to come in at $20bn, if it’s ever finished. One shudders to think of the final cost of Victoria’s Suburban Rail Loop, which has already blown out to an estimated $216bn.
Dan Andrews quashed a proposal from a consortium to build a high-speed rail link from the airport to the city, which would’ve cost Victorian taxpayers only $5bn.
So, yes, it is easy to dismiss as fanciful the latest proposal for high-speed rail between Sydney and Newcastle. Politicians of all stripes have been banging on about high-speed rail for decades, and we haven’t even done medium-speed rail. According to a 300-page report, released this week, for $90bn we could, by the late 2030s, have 200m trains travelling over 300km/h an hour between NSW’s two biggest cities.
“Even if you believe what they’re saying, it’s far-fetched,” University of Sydney professor David Levinson told the Financial Review, which questioned the rosy patronage assumptions and the claims that over 160,000 new homes could emerge along the route.
Big projects typically cost far more than originally planned for reasons of deliberate bias, hubris and planners’ intrinsic naivety about the hard resource constraints related to labour and skills that ultimately determine costs.
From rail lines to nuclear power plants, the West has forgotten how to build major infrastructure cheaply, suffocating the process with countless series of bureaucratic approval processes. Oxford University academic Bent Flyvbjerg even came up with the Iron Law of Megaprojects: “Over budget, over time, under benefits, over and over again.” Rail projects are typically among the worst, running at least 50 per cent over budget, he found.
On that rule of thumb taxpayers would be looking at $135bn straight up for just the Sydney-Newcastle leg of what would eventually be similar services between Melbourne and Brisbane via Canberra and Sydney.
That’s a lot, but we could afford it. It’s easy to dismiss government spending projects as inherently wasteful but this is one of the few areas where even conservative economists should agree government should play a major role.
The federal government alone already spends over $60bn a year on National Disability support, part of a broader social security budget of well over $300bn a year. It’s a matter of priorities. The perception we could do much better on rail infrastructure is probably accurate. Australia ranks 22nd in the world on infrastructure, according to IMD World Competitiveness Rankings – well behind the US (11th) and Canada (5th).
To be sure, those large nations enjoy greater population densities than Australia, whose vast distances are often forgotten by the inner-city dreamers who want French-style public transport, ideally without the taxation. France, a bit smaller than NSW, is home to 70 million people. Building a high-speed rail network between the eastern capitals might give an increasingly depressed nation something to look forward to and be proud of. It would make housing more affordable too by reducing demand for Sydney dwellings close to the city.
I’d rather governments “waste” money on capital works than handouts too. The Sydney Opera House was 1400 per cent over budget, the third-biggest overrun in history, according to Flyvbjerg (the Suez Canal at 1900 per cent topped his list). Similarly, Eurotunnel, the consortium that built the underground tunnel linking Paris and London, went 140 per cent over budget. No one would seriously argue they shouldn’t have been built.
A costly national project might make it easier for politicians to argue against even more wasteful handouts. “Government alone will not be able to fund this, so part of the development phase is to look for those private sector partners to also bring some of that private capital into investing in high-speed rail,” Infrastructure Minister Catherine King told the ABC this week.
But government would have to fund almost all of the proposed Sydney-Newcastle line given the massive uncertainties surrounding its commercial viability.
Jill Rossouw, chair of the High-Speed Rail Authority, said the project would “prepare us for the significant population growth – vastly outpacing many of our OECD peers – that the coming decades will bring”. But will it?
The economics of such a rail line is predicated on very rapid population growth, which might be about to dissipate, especially if the surge in One Nation support proves lasting. Moreover, as AI threatens to upend the white-collar world, will commuting to the CBD even be a thing by the time the trains are ready?
Before the pandemic the need for more and better infrastructure dominated the political debate. It’s understandable we’ve become cynical about government-backed infrastructure projects given our poor track record.
If the Big Australia advocates win the looming battle over population, we should put our understandable cynicism aside and get serious about high-speed rail.
