By Andrew Bolt ~
Australian Prime Minister Malcolm Turnbull’s vague promises of a fast-train network should be treated with suspicion.
As The Australian reported this week, government advisers are working on options to use value capture to pay for big-ticket infrastructure projects such as high-speed rail…
But the projects will generate extra costs, no matter what the funding model. Value capture must involve new levies, such as higher council rates, or stamp duty and capital gains tax that is hypothecated to compensate the developer. It will be difficult for the government to refute claims that it is introducing a new tax..
(T)here’s no guarantee that its total cost can be financed by increased land value. A study last year by AECOM, which also produced the 2012 plan for Labor’s high-speed rail, said that 10 per cent to 30 per cent of the development cost of projects could be funded by adopting the same method as Britain’s Crossrail project and the Hong Kong metro… Martin Albrecht, an engineer who heads the private sector group National Trunk Rail, says value capture had the greatest potential in densely populated areas that were established, whereas the model requires a longer-term horizon to deliver value.
When you Google ‘train fares Paris to Berlin’ … you first thing you see is ‘from $81’. Sounds good but the reality for the date I chose, one week away, was a rather more sobering $353 for second class and $765 for first… This is 1000km trip takes eight hours on the fast train…
Europe’s fast trains aren’t cheap to ride, even with the relatively short distances they travel and economies of scale that we could never match…
Were I a long-term resident of, say, Goulburn, I would be mightily unimpressed to be slugged with taxes of one sort or another to finance a rail line I didn’t ask for, most likely wouldn’t want and if, Europe’s fares are indication, could not afford to ride …
This value-capture financing would be a nightmare administratively and, more than that, electoral suicide for any local politician who threw his or her ardent weight behind it.
Two things are … “innovative” about Malcolm Turnbull’s “very fast”, or perhaps “just slightly faster” train lines.
The first is where they go. For the 30 or 40 years that the idea of replicating France’s — hugely loss-generating — TGVs has been around, the idea has always been to run it Sydney-Canberra-Melbourne. That is to say between the two big population centres, which just might give it passenger scale….
Well, unfortunately the VFT idea itself was not “future-proofed”: it got ambushed by a combination of rocketing cost — it’s well over $100 billion and climbing; and if the NBN is any guide, that’s really $200 billion and climbing — and plunging airfares.
So the PM’s first big, or “innovative”, new idea is to build the lines out from the capital cities to regional centres, starting with a line — there’s that irony thing again — to Sydney’s hypothetical new airport at Badgerys Creek.
So passengers can then get on a plane and fly to, well, Melbourne and Canberra and, well, regional centres.
On the other hand, the new airport might never be built, so it might be a train line to nowhere.
The PM’s second “innovative” idea is to promote “value capture” financing to fund these lines. Build a line to, say, Goulburn and Shepparton and they will become huge growth centres as a consequence; land there will rocket in value; and some of that could be “scooped away” to pay for the line.
Back to irony. Yes, Whyalla is a special case of why regional centres are vulnerable to long-term decay and indeed outright implosion. But it’s hardly unique.
People who say we should follow France, which has a network of very fast trains, overlook several things. For a start it has three times the population in one twelfth the territory and 13 times more tourists. That makes it easier to get the passengers. But even then its TGV fast trains cost money. From 2014:
THEY are admired the world over for their sleekness, speed and sheer French chic. But the 480 high-speed trains (Trains à Grande Vitesse, or TGV) that radiate around France from Paris are struggling to remain in the black. Most of the lines are running at a loss and even the profitable ones are not earning enough to cover their cost of capital…
Traffic peaked at 45 billion passenger kilometres (passengers times journey length) three years ago and results for the first half of this year show profits for SNCF Voyages (the part of the state rail group running TGVs) falling by a third to €259m ($347m) as revenues dropped 3% and the firm’s profit margin declined from 11.4% to 8.1% (three years ago this number stood at over 14%)….
SNCF boss Guillaume Pepy has pointed out how the rise of low-cost airlines in France has won them over half the air traffic at the expense of Air France. He sees no reason why TGVs should not be similarly squeezed as carriers such as easyJet, Ryanair and Vueling multiply their services in and around France.
Andrew Bolt’s columns appear in Melbourne’s Herald Sun, Sydney’s Daily Telegraph and Adelaide’s Advertiser. He runs the most-read political blog in Australia and hosts Channel 10’s The Bolt Report each Sunday at 10am. He is also heard from Monday to Friday at 8am on the breakfast show of radio station MTR 1377, and his book Still Not Sorry remains very widely read.