A couple of updates on my last post:

First, a letter from Sandy Thomas (another member of the Sydney Morning Herald Public Transport Inquiry that reported last year) published in today’s Herald offers another and probably more achievable scenario on how the North West Rail Link (NWRL) can be built without loss of face by either Federal or State Governments.

He points out that the former State Government submitted a detailed proposal to Infrastructure Australia (IA) for funding for the NWRL. The letter notes that despite this, the funding for the Parramatta-Epping Rail Link was subsequently offered by the Federal Government from another non-IA pool. In summary, Thomas proposes that the previous State Government’s NWRL application for IA funding be revived and properly examined by IA as a basis for funding the North West line.

Second, it has been suggested that a “number eight” for my list should be full retention of the old Kings School site in Parramatta in public hands.

One of the last actions of the Keneally government was to announce that the bulk of the site would be retained and redeveloped as an arts and cultural precinct, with the sale of a small section to the Catholic Church providing some funding. It would appear that the Church still harbours some desire to obtain the whole site and the new government has not yet indicated whether it will continue to support the precinct proposal.

I strongly support this cause, but the “top seven” actions I listed in my last post were mainly to do with public transport infrastructure and strategic planning. However, reassuring the Western Sydney community that the Kings School site will be retained and developed as planned by the previous government (and not sold to fill some budgetary “black hole”) is something Mr O’Farrell could do easily in his first 100 days.

If I prepare a similar ”top seven” for Western Sydney, developing the Kings School as an arts and cultural precinct in public hands will certainly be on my list!

Recent news that Brisbane’s Clem Jones* (Clem7) road tunnel which opened only a few months ago is now on the verge of financial collapse has a familiar ring, confirming a pattern of losses in a string of privately-owned toll roads and other infrastructure projects across Australia.

As part of this growing pattern, a key factor has been what turned out to be a huge over-estimation in forecasts of the tunnel’s use. According the Sydney Morning Herald, the projection for the Clem7 was that 91,000 vehicles would be using the tunnel every day by now, with numbers exceeding 100,000 by late next year.

However, even with a prolonged toll-free period and a current halving of the tolls, less than 28,000 vehicles are now using the tunnel.  As a result the owner, RiverCity, has slashed tunnel’s value by $1.56 billion to only $250 million and is still losing $10 million a month. The Herald article claims the company has just $106 million in cash reserves and needs patronage to double and tolls to return to their normal levels just to meet its interest bills.

The Herald concludes that the forecasts turned out so wrong mainly because they were shaped by the financial models required to fund the project and not vice versa, a problem exacerbated by their apparent reliance on peak-hour demand. As Melbourne Urbanist also points out, this sort of exaggeration is not confined to infrastructure companies – lobby groups and other project promoters are sometimes guilty of the same sin, resulting in a climate of hyperbole in which such exaggerated claims become plausible.

Whatever the cause, investors are going to be understandably more reluctant to go anywhere near private-sector toll-road projects for the foreseeable future. It seems we are at last reaching the end of an era in which toll-roads and motorways were embraced as the answer to all our transport problems.

For a long time they seemed like the ultimate solution. Governments, construction companies and investors combined to give punters what they wanted, or thought they wanted – better roads – and they then got the punters to pay for it through tolls. The toll companies also ran the roads themselves, which was another attraction for governments who didn’t want to put money into boring, unsexy things like railways which they increasingly disliked because of their ongoing costs, unions, public complaints, etc.

Like all get-rich schemes, however, the toll-road bonanza was ultimately good to be true. The music was always going to stop sometime and now it has – leaving the owners of the Clem7 and similar projects holding some very expensive babies.

However, there are a few hopeful conclusions that can be drawn from this mess. First is that there appears to be belated recognition of the need for some rationality and planning to be applied to process of developing major infrastructure proposals. If governments are ultimately going to carry the can – which one way or the other, increasingly seems to be the case – then surely they should exercise more say over what gets built and when, where and how it is built. After all, that’s what they were once elected to do.

One alternative investment approach is the so-called “availability model”, which is being used for Melbourne’s Peninsula Link. Under this arrangement, the Victorian government will make periodic payments to the road’s builder irrespective of volume, thus leaving the government to bear the consequences if the project is a white elephant.

Although at first glance this approach may seem more expensive to governments, it will lessen the incentive for toll-road promoters to exaggerate patronage forecasts or to make the outrageous demands that that accompanied some projects such as Sydney’s M2 that operators be compensated if “competing” public transport projects are constructed to serve the same corridor.

It will also force politicians to be more realistic about some of the hard choices that have to be made about transport funding. For too long the obsession with lower taxes has swept the problem of infrastructure funding under the carpet, which is one of the reasons why toll-roads were seen as such an attractive option. Ultimately, as the Independent Inquiry into Sydney’s public transport (in which I was involved) established, there is no easy way out – extra money will have to be found, from taxes, levies and increased fares – to pay for new infrastructure.

And if governments are going to explicitly shell out the funds for major road infrastructure, either upfront or on an ongoing basis, then from a financing perspective these road proposals lose a lot of their perceived advantages over the proposed rail projects that these same governments have neglected over the years.

Without the hype of exaggerated patronage projections, project costs and anticipated rates of return, both road and rail projects can be considered on a more equitable footing, one that takes into account externalities such as environmental impacts and social outcomes as part of a proper planning process. One result of that should be the realisation that the government abdication of its responsibility to plan and provide public transport in favour of a user-pays toll-road model has grossly distorted transport investment decisions over the past 30 years.

*     Clem Jones (1918-2007) was Lord Mayor of Brisbane, from 1961 to 1975. Although he did much to modernise the city, he also presided over the closure of its tramways in the late 1960s, very much part of an era that saw trams as an impediment to the modernist ethic of the car –based city. There is an obvious irony in a major road project named after him facing financial failure over 40 years later.

In the first four posts in this series I looked at the distribution of Sydney’s forecast population growth across local government areas and in particular the projected increase in the number of councils with populations over 200,000, from two in 2006 to 14 by 2036. I also looked at the characteristics of councils which are forecast to experience above-average population growth rates or above-average increases in population numbers.

I noted that of the “200,000 plus” councils, all but Sydney City Council are in outer-ring suburbs and that nine of the 14 are located in Greater Western Sydney. The GWS region is expected to grow by over a million people or over 58%, significantly higher than the projected metropolitan growth rate of just under 38%, resulting in GWS having over 40% of the total metropolitan area population by 2036.

There was a strong correlation between the so-called mega-councils and those which are forecast to experience above-average growth, either in terms of rates of increase or total numbers. This perspective reinforced the pattern of Sydney’s growth as occurring most strongly in an arc running from the Hunter through most of Greater Western Sydney and tapering off into the Illawarra, with smaller concentrations of growth around Sydney city and parts of the inner west.

There are some interesting conclusions to be drawn from this, some of which I’ll look at under the broad headings of demographics, infrastructure and governance:

    DEMOGRAPHICS 

• Managing Sydney’s growth will always be an issue, irrespective of population policy or overall levels of migration. Whatever policies are adopted in the future, Sydney’s pattern of growth is likely to continue to be highly differentiated between high-growth and low-growth areas.
• Under almost any scenario, Greater Western Sydney (GWS) will experience by far the greatest bulk of this anticipated growth, reflecting lifestyle choices, competitive (though not cheap) housing costs and natural increase.

    INFRASTRUCTURE 

• The outer suburban areas likely to experience growth, particularly in GWS, are those which already suffer from marked under-investment in infrastructure, particularly transport and to a lesser extent in health, education and cultural infrastructure.
• If existing and proposed suburbs in these areas are to continue to accommodate rates of growth significantly higher than the metropolitan average,  then they will need comprehensive planning and early investment in infrastructure to avoid both new bottlenecks and compounding the mistakes of the past.
• Just as they are unlikely to reduce significantly overall  rates of growth, changes in population policy are unlikely to affect the demand for new infrastructure to support transport, education, health, employment social and cultural opportunities in these communities.

    GOVERNANCE 

•  Sydney’s forecast growth and the highly differentiated nature of this growth will pose particular challenges for Sydney’s future urban management
• The growth of Sydney’s outer suburbs in particular will pose significant challenges in terms of resource allocation as well as in attempts to provide additional employment in these areas. This growth is also going to continue to put strain on the environment of these areas, particularly those suburbs at the urban-rural interface.
•  There are likely to be further challenges resulting from the complexities of governance in a city with 53 councils estimated to range in population size by 2036 from under 20,000 to over 480,000.
• The 14 potential “mega councils” (those estimated to be over 200,000 in population by 2036) will experience particular problems because of their high growth but are also likely to have greater capacity to deal with some of these issues.
• It is clear that meeting Sydney’s infrastructure demands will have to involve the Federal Government as well as the State Government and councils. It is also likely to require a review of Sydney’s current governance structures.

Well, I said that I would outline some of the so-called “shovel ready” alternative transport projects the NSW Government could have nominated for Infrastructure Australia funding instead of the less-than-shovel-ready metro proposals that were put up. However, a lot has happened regarding transport – or at least a lot has been said about transport – since my last post.

I’ll come back to discuss “shovel-readiness” in a moment, but first to recap the past two weeks’ events. First, Dr Garry Glazebrook (UTS) released a detailed report which outlines a radically different approach to planning Sydney’s transport future. Glazebrook’s report proposes a metro system, but one quite different from that proposed by the Government, along with an upgraded heavy-rail system, light rail and a set of bus ring-routes. This is an oversimplification of a comprehensive plan, which I’ll return to in a future post.

Second, almost out of nowhere, light rail has been put back on the table by the Minster for Transport, David Campbell, who is said to have been won to the cause by seeing light rail systems in France.

Not surprisingly his initial enthusiasm to extend the line to Dulwich Hill and possibly into the CBD has run into resistance within Government (not to mention comparisons in the media with the vastly more expensive Metro), but the proposal is still being considered. Yet another feasibility study will be conducted and today the Sydney Morning Herald is reporting that inner city councils have agreed to “call the state’s bluff” by agreeing to the Government’s demand that they contribute to the cost of the study.

Campbell’s conversion to light rail apparently occurred after seeing systems in Paris and Nice, which is interesting given their nature. The Paris system comprises a set of four disconnected lines in the outskirts of the city. Like the Sydney light rail, some sections of the system have been converted from former rail lines, but they operate much more as feeders servicing the termini of Paris metro lines and other outer suburban areas.

The Nice system serves the coastal city of Nice, with a population of 350,000; the closest equivalent here in population would be Newcastle. In terms of a planned transport system, the Gold Coast light rail proposal which made up most of Queensland’s successful bid for Federal Government infrastructure funding would probably be the most similar.

Which brings us to the projects that the NSW Government could have put up for Infrastructure Australia funding. These include the North West Rail Link, probably the most expensive but arguably the most important of the cancelled/deferred rail lines. I suspect that the original heavy rail plan, to run from Epping to Rouse Hill, rather than the short-lived NW metro iteration would be the most viable option. The Epping-Rouse Hill section has also passed through all the environmental and planning hoops and could be easily integrated with the Epping to Chatswood line.

Similarly the planning for South West Rail Link is also complete. There is however a question about the timing of this project, given the economic downturn and the slowing in the rate of residential development. The third potential project, the Parramatta to Epping rail link is also a priority for the region and would make a major contribution to reinforcing the role of Parramatta, but some of the original environmental impact assessment and subsequent approvals may have to be updated.

Whilst my personal preference is for the North West Rail Link, any of these projects would have done more to meet Sydney’s transport needs than the proposed Metros, especially the CBD metro. Yes, the capacity problems in the CBD need to be addressed, but it is far from clear that the CBD metro in its current form will really address this issue – and the heavy rail projects are all a lot more shovel-ready!

My last post discussed how NSW had fared relative to the other states in attracting transport infrastructure funding, particularly for public transport, in this week’s federal budget – which, in summary, was not very well.

 It’s useful to look at the five public transport projects which did receive substantial funding to see what characteristics they have in common. First cab off the rank and the project to receive by far the biggest allocation was the Regional Rail Express, which will provide a 40 kilometre link from West Werribee on the Geelong line to Southern Cross Station in Melbourne, joining the Baccus Marsh line near Ravenhall.

According the Federal Government, it will segregate V/Line regional rail services from metropolitan rail services allowing regional trains from Geelong, Ballarat and Bendigo avoid being delayed by suburban trains. It will also provide additional capacity for suburban services from Werribee, Sunbury and Craigeburn in the western growth corridor, delivering capacity for an extra 9,000 passengers in peak hour. 

The next largest public transport project is the 13 kilometre first stage of a light rail system on the Gold Coast, running from the Gold Coast campus of Griffith University to Broadbeach via Southport, which will receive $365 million. Further investment will be provided by State and Local Governments and the private sector with the line ultimately linking to the heavy rail network at Helensvale in the north and extending south to Coolangatta. The Federal Government comments that when completed this project will remove up to 40,000 cars from the road network. 

The next two largest projects are both located in Adelaide. The 42 km Gawler line to the city’s north will receive $294 million for resleepering and electrification to improve services, whilst the Noarlunga line receives $291 million for a 5.5 kilometre extension south to Seaford. Both projects complement SA Government plans to modernise Adelaide’s rail network. The final “big five” project is a $236 million investment to sink the central city section of the Perth to Freemantle rail line, releasing 50,000 sq metres of land for urban redevelopment.

There is quite a step down to the final four projects worth under $100 million each. One of these involves direct capital works – the O-bahn track extension in Adelaide, which receives $61 million for a 4.5 km link from the existing terminus to the CBD. The other three involve preconstruction works or feasibility studies for inner-city rail proposals, with the Sydney West Metro receiving $91 million, the East-West Rail Tunnel $40 million and the Brisbane Inner City Rail feasibility study $20 million.

A few things become clear from this analysis. First, the Federal Government appears to have prioritised well thought out projects providing extensions or improvements to existing heavy rail services that link to outer suburban growth areas, such the western growth corridor in Melbourne and the southern and northern suburbs in Adelaide. It is also prepared to invest substantially in new projects in outer suburban areas such as the Gold Coast light rail. 

Second, where it has funded these projects it has done so substantially and obviously with a view that they will be delivered comparatively quickly. The top five projects received enough funding to complete major stages of work and to be in operation within five or six years. 

Third, the Federal Government does not seem inclined to throw large sums of money at the inner city metro and other rail projects put forward by the various State Governments, especially if they are not shovel ready. The only inner city project to receive substantial funding was the undergrounding of the east-west rail line in Perth – and it can be argued that the (former) WA Government had already wisely invested some of the proceeds of the (former) mining boom in building two complete new rail lines to outer suburban areas in the north and south of the city. 

This caution reflects the view put by IA in its Report to the Council of Australian Governments in December 2008 regarding metro and other “new technology” transport proposals. This is worth quoting in full:

The strategic policy choice facing Australian governments is whether, and under what circumstances, new urban rail systems should adopt such technologies. However, a move towards these technologies raises many issues. To avoid a repetition of the rail gauge problem from the nineteenth century, decisions on these matters need to be made with national input and intergovernmental collaboration. The network that exists today represents more than 40 years of consistent long term planning and investment. An equivalent national commitment to such planning and investment is required in Australia if new technologies are to be applied to the public transport sector.

However, even if a decision is taken to make such a strategic shift, the existing rail networks will be a fundamental part of Australia’s urban transport networks for decades to come. Sensible investment in the capacity of those systems and in life-cycle replacement of assets will continue to be required.

In seeking Federal funding, NSW chose to put all its public transport eggs in two very big baskets– the CBD Metro and the Sydney West Metro – and received only $91 million towards preconstruction works for the latter. Clearly, neither project was assessed as being ready enough to meet IA’s criteria, nor indeed do they reflect the Federal Government’s predisposition (no doubt influenced by the IA perspective quoted above) to fund projects in outer urban areas mostly based on the “old technologies”.

The irony is that NSW did have three shovel-ready projects that met IA’s criteria but did not put them forward. I’ll consider these and some of Sydney’s strategic transport planning issues in my next post.

Much has been said in the media and elsewhere about the shortfall in the Federal Budget infrastructure allocations for NSW transport projects, but it is worthwhile examining its dimensions in more detail.

Just how much (or little) will NSW receive? There are a few ways to look at this – relative to the allocations to other states, relative to population (or some other measure of demand) and relative to the total value of the project proposals lodged by the State Government.

In summary, NSW will receive $2.1 billion for two “shovel-ready” road projects and preliminary works for a single public transport project. By far the largest portion goes to the Hunter Expressway between the F3 and Branxston, which receives $1.5 billion. The Pacific Highway Kempsey Bypass has been allocated $618 million and the proposed Western Metro will receive only $91 million for “pre-construction work”.

Even with the substantial roads allocation, NSW is underweight compared to the other states, receiving only 25% of the total transport allocation (see graph 1). Victoria is the clear winner with 38% of the funding.

Take out the roads allocation and the picture is even more stark. Of the five states to receive public transport funding, NSW has the lowest allocation at just 2%, whilst Victoria receives a whopping 71% of the total public transport budget vote (graph 2). Whilst public transport related projects receive nearly 55% of the national transport infrastructure allocation, in NSW the proportion is only 4.6%.

On a per-head basis (using 2008 population figures), NSW receives just under $13 per resident, whilst the average across the five States to receive public transport funding is $225.80. Victoria will receive $611.39 per head (graph 3).

The most interesting comparison is with the total projects submitted for consideration by Infrastructure Australia. Now, it is unlikely that any State Government would have expected a Federal contribution to every project on its wish list, nor would they have expected any projects that did attract Federal support to be funded in full. It is also hard to get an exact figure for the total allocations sought by each State given the “blue sky” nature of some of the figures supplied, but however you look at it NSW has done extremely poorly.

Just 1% of the total value of NSW public transport project proposals submitted to Infrastructure Australia has been funded, compared with around 19% in South Australia, 43% in Victoria and 90% in Western Australia.

Queensland received only 2% of the total value of its public transport wish list, but that state’s figure was inflated by the $14 billion estimated cost of the Brisbane metro proposals. Queensland’s allocation of $385 million was actually four tines the amount NSW received and will enable the construction of the Gold Coast Light Rail project to commence.

What does this tell us? First, that the Feds appear to have been interested in funding only genuinely “shovel-ready” projects that meet all the IA criteria, at least in this round. The successful projects also address major transport needs as part of a coherent transport strategy and, significantly, there has been an emphasis on extending and improving rail services in outer suburban areas. In my next post I will examine some of the individual public transport projects that were funded and the conclusions that can be drawn from these allocations.