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Planning for a Fast Rail Network

Estimates & Committees
Scott Ludlam 31 May 2011

Rural and Regional Affairs Committee Thursday 26 May 2011

Senator LUDLAM: I am-getting people out of cars, rather than in them more efficiently. What can you tell us about high-speed rail? There is $14 million in the implementation study in the budget. Is it with you folk yet or is it somewhere else?

Mr Mrdak: That is well underway. The study has two components. The first component is in this financial year. We commissioned AECOM, a consortium, to undertake the first stage of the study for us. That study has been ongoing since late last year. In accordance with the government's announced time frame, the first phase of that study, the study report, will be released around July or August this year, we anticipate. It is nearing completion of this stage of work. The first stage will include an examination of a high-speed rail network from Brisbane through Sydney and Canberra to Melbourne along the east coast. The study report will provide indicative preferred corridors and station locations and also high-order costs, based on analysis to date. That study report, including some assumptions around patronage and infrastructure investment requirements to meet that patronage, will be available-we anticipate, and the minister has advised that he intends to publicly release the report-around late July or August this year.

The second stage of the study, which will be the more detailed work over the next 12 months, will build on the first. It will include much more detailed corridor examination, including preliminary geotech examination, because, obviously, this was done in a very truncated way for the first stage. It will also include much more detailed economic and financial analysis of the project. It is due to be completed by the middle of next year.

Senator LUDLAM: As soon as you publish that, you are going to need to engage community consultation, presumably. You are going to need to go out to some of the places you are proposing to send the line through. Is that part of your work plan for the second half?

Mr Mrdak: It would depend on the decisions of government, at this stage. As I say, this is very much a feasibility implementation study. One of the decisions will be for government-not just for the Commonwealth government, obviously. The study closely involves the New South Wales, Queensland, Victorian and ACT governments, who are all on the reference group I chair for the study. Those decisions are yet to be taken. But you are right: this first stage will have an indicative corridor, based on some indicative early modelling, given we have a very short period for this. But, once the report is made available, we will then be talking to potential communities which are on the corridor alignment.

Senator LUDLAM: Are you going to have one corridor or option A, B and C?

Mr Mrdak: The study has undertaken a range of assessment options. We have looked at a whole range of corridors. The first stage of the study will actually have a preferred corridor. That will be a very broad corridor because of its nature. We have not done the detailed geotech. It will largely be done off the back of modelling and for the next stage we will go into more detailed geotech examination of the feasibility of that corridor.

Senator IAN MACDONALD: Are you going off the topic of high-speed rail now?

Senator LUDLAM: No. But by all means-

Senator LUDLAM: You have touched on one or two of the issues I wanted to close on, one of them being the land value of urban development opportunities you get from bringing a fast rail station into a city. Are you looking at innovative funding options such as those being used in North America, Japan and Western Europe whereby the Commonwealth government or state governments can recoup some of the value uplift that you get when you bring a station into a city?

Mr Mrdak: This will be looked at much more intensively in the second stage of the report. We have a team of architects ,working as part of the study team, looking at station design in a way which maximises the value uplift to the station location. In the second stage, we will also look at the scope for private financing given that, by any measure, government financing is unlikely to be available for such a large project in a short period of time. We do need to look at that but, at this stage, most of our value capture is looking at the urban locations, not at a lot of the route.

Senator LUDLAM: That is kind of what I meant.

Senator IAN MACDONALD: If we saved a bit on the NBN we could put it into this.

Senator LUDLAM: We could save a bit on fast rail by not taking it to Queensland. If you had the go-ahead that this fast rail spine was going to be built up the east coast of Australia that would profoundly change your thinking, I would presume, on other transport and infrastructure projects. If that gets built it is going to be a major centrepiece of infrastructure for transport and will allow other railway lines to be freed-up for freight and so on. You are spending billions and billions of dollars in the absence of a green light on this project, which would be a bit of a keystone if it is built. How are you accommodating that? What kinds of assumptions are your planners building in?

Mr Mrdak: The first thing is to complete this stage so we fully understand what the cost and deliverability timeframe would be on a fast rail network. I think that is critical. We are currently facing the issue of capacity pressures on all of our transport modes as the growth of our transport task takes place. As I indicated to Senator Macdonald, talk in the past has been: 'Would a fast rail network obviate the need for additional aviation capacity in Sydney or elsewhere?'

Senator LUDLAM: That is a brilliant question.

Mr Mrdak: The reality though is the timing issue. When would a fast rail network be available, given the pressing and urgent need to expand airport and aviation capacity for a growing market? Similarly, we have traffic pressures on all of our major network roads and rail systems. So it is not an either-or matter. You have to continue to invest in all modes because they will all continue to face demand growth. You are absolutely right-a fast rail network, if and when it was available, would be transformative. That has been the experience in Europe-there is no doubt of that-but Australia also has a number of other conditions which are quite different, and Senator Macdonald alluded to some of those: a relatively small population base and highly efficient other modes of transport which are much more effective competitors in our market than they are in some other parts of the world. So you have to factor that in, because that does fundamentally affect your patronage shift.

Senator LUDLAM: It also depends on what your future oil price assumptions are, which brings us back to where we started.

Mr Mrdak: True. You also have to factor in what the available price would be to the consumer of a fast rail network vis-a-vis other modes. No one is suggesting that a fast rail network would be significantly priced below air travel. You have to work on the basis that if you look at relative ticket prices, unless there is going to be massive public subsidies, you cannot presume that fast rail is going to underprice aviation. In fact, that is not the position internationally. That goes fundamentally to your decisions, because all of the advice is that we have to be able to link our major cities in under three hours, and that is very difficult to do unless you have a fast rail network operating at 300 kilometres an hour plus. It is also costly, because the higher the speed, the higher the cost. That is why I say that the interplay with other transport modes becomes quite critical.
The patronage forecasts we are doing are based on some presumptions of modal shift and also traffic growth, but at the end of the day whether that occurs is very much based on price, and it would be illusory to presume that the cost of a high-speed rail ticket is going to be like the current cost of a rail ticket; it cannot be.

Senator LUDLAM: An air ticket, you mean?

Mr Mrdak: I think some in the community believe that a fast rail ticket can be purchased at the same price as a current rail ticket; it cannot. Similarly, fast rail tends to price at or above the air price-usually well above the air price.

Senator LUDLAM: In an age of very, very cheap aviation.

Mr Mrdak: But also unique demand circumstances in Australia, where aviation is the most effective way to move large numbers of people effectively between our major cities.

Senator LUDLAM: I understand. I very much look forward to seeing the report in July or August. Go well with that. I will leave it there.


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