Submission to the Inquiry Into Options for Financing Faster Rail
Total Page：16
File Type：pdf, Size：1020Kb
SUBMISSION TO THE INQUIRY INTO OPTIONS FOR FINANCING FASTER RAIL Phil Potterton and Anthony Ockwell Economic Connections Pty Ltd 18 December 2019 This submission: Outlines reasons that, except in the special circumstances of a private railway developer having monopoly ownership of amounts of adjoining land, faster rail services between capital cities and regional centres are unlikely to be in a position to self-fund their development and operations and may accordingly require predominant government funding for planning, implementation and operation Outlines some principal economic benefits of faster rail services Recommends additions to the Australian Transport Assessment and Planning guidelines for the economic evaluation of transport infrastructure projects, to better reflect the scope of these economic benefits Observes that, while inter-urban agglomeration productivity effects are not at this stage recognised in either the United Kingdom’s or Australia’s guidelines, there is some encouraging research evidence as to their potential materiality Recommends commissioning of research for publication into the drivers of business location decisions and the importance of available business travel options to those decisions, an area that will be important for maximising and recognising the economic benefits of faster rail Contends that ‘passive taxation revenue gain’ is closely linked to the economic benefits of faster rail projects and recommends that a two-part ‘before and after’ research study, aligned with a small number of project cost-benefit and other analyses, is commissioned to gauge their magnitude Identifies some further potential additional taxation and charging revenue sources to, in particular, help finance upfront capital and other costs and having regard to the time lag between investment and full phase-in of the passive taxation revenue effects Indicates ways in which the funding requirement may be minimised by improving incrementally the existing national and regional rail networks, including track straightening to remove century-old excess curvature Recommends that, where speed requirements call for establishment of new lines, opportunities to integrate these lines with the existing network are pursued, benefitting regional centres located ‘further along the line’ and freight traffic, as well as avoiding future network re-integration costs Recommends also that planning of faster rail pursue appropriate opportunities to address missing network links and breaks of gauge, to maximise economic benefits and avoid future costs of network integration or re-integration. The submission comprises nine short sections, with a total of ten recommendations. An appendix provides a reference data set on existing public transport (passenger train and coach) services to regional centres within distance ranges of 100, 200, 300 and 400 kilometres from Australia’s eight capital cities. The appendix has been developed for the submission from the database that underpins a paper on interstate passenger train, coach and ferry services (Potterton, forthcoming), as well as a future paper that compares Australia’s longer distance passenger train and coach services with those of selected countries. 1. Acknowledge that faster rail self-funding is a challenging goal Passenger rail, both urban and regional, is an indispensable transport mode due to several features. These are: the capacity to move large numbers of people quickly and reliably into and out of confined urban spaces for employment and other purposes, thereby pre-empting what might otherwise be a chronically congested road system; the ability (shared with coaches) to connect many places along a 1 route with each other and with major urban centres, so servicing, particularly, those who are unable, or unwilling, to drive; and also for some distinctive service attributes, including high levels of schedule reliability, comfort, low noise nuisance and route legibility. Yet, in commercial terms, longer distance passenger rail is sandwiched between road transport on the one hand and air transport on the other. Road passenger transport comprises both private car travel, offering door to door trip convenience and coach public transport, with an ‘in principle’ capacity, subject to road congestion, to offer cost-competitive services over the entire road network. For its part, air transport around the world typically offers an increasing time and speed advantage over other modes as distances exceed 300 kilometres, except in circumstances where (more costly to fund) high speed rail is in place. While there are many regional centres within 300 kilometres of most Australian capital cities, they are predominantly small. This is intrinsically challenging for rail, as a ‘scale’ transport mode that operates most efficiently at high traffic densities. Just seven non-capital city centres have populations in excess of 100,000 (2016 census estimates). In size order, these are: Gold Coast (86 kilometres from Brisbane); Newcastle (163 kilometres from Sydney); Sunshine Coast (104 kilometres from Brisbane): Wollongong (86 kilometres from Sydney); Geelong (75 kilometres from Melbourne), Toowoomba (126 kilometres from Brisbane); and Maryborough (256 kilometres from Brisbane). Excluding also Canberra (a capital city 286 kilometres from Sydney and with a population, like those of the Gold Coast and Newcastle, above 400,000), the average population of some 17 other larger regional centres, that surround Brisbane, Sydney and Melbourne and which are listed in the appendix, is 52,000. For regional passenger trains to obtain a market-leading position, in which operators are able to charge premium fares, both high frequency services and a substantial speed advantage over private car travel and coach services would be needed. Regional passenger trains do have a timetabled speed advantage over coaches at all distance ranges up to 400 kilometres,1 with the largest estimated at 18 kilometres per hour (25 per cent), for distances between 300 and 400 kilometres (Appendix, Table A.2). However, this speed advantage is unlikely to be large enough in many circumstances to attract passengers away from private car travel 2 and is certainly not large enough for rail operators to be in a position to command high fares. To establish a large speed advantage would likely call for significant investment, the more so on routes within 100 kilometres or so from the capital cities, where new alignments involving tunnelling and other major works may be required in denser, partly urban settings, with many competing land uses. Australia’s economic geography (i.e. two thirds of the population living in five cities) and its large size together make for extremely low population density outside the main cities. Thus it is challenging to find a network of sufficiently dense longer routes that might, through passenger revenues, defray the investment and operating costs and permit private sector self-funding. That said, full or predominant private sector funding of faster rail development may still be feasible in the special circumstances where a private investor, who is seeking to develop a new railway, acquires monopoly ownership of substantial parcels of land that adjoin the rail corridor and is thereby able to capture both consequential land value uplift and profits on ensuing property development and sales. This option raises planning and legal matters which are beyond the scope of this submission. Except, therefore, in this special case, it is to be expected that faster rail projects will require substantial or complete government funding, as do projects in the road and other transport modes. It follows that faster 1 At higher distances, coach services have a slight speed advantage, due in particular to low road congestion conditions further from cities that permit higher speeds for coaches (Potterton, forthcoming). 2 Private car travel is faster than coach travel on most if not all routes, particularly in light of coach stopping patterns. 2 rail projects will need to compete alongside those other projects for government funding, primarily on the basis of their estimated net economic benefits (i.e. economic benefits less resource costs). RECOMMENDATION 1: That the Committee note that: for faster regional passenger rail services to wholly or predominantly self-fund their investment and operational costs, a dense network of routes of up to 300 kilometres from capital cities, a distance over which competition from air transport is generally limited, would be required, enabling premium fares to be charged at high frequencies; and that, as these circumstances do not apply in Australia, except possibly in the special case of a railway developer acquiring monopoly ownership of land that adjoins the rail corridor, faster rail projects will need to compete with other transport projects for government funding, primarily on the basis of their net economic benefits. 2. Recognise the economic benefits of faster rail The economic benefits of transport projects comprise benefits to users, whether measured through the market (e.g. reduction in the market price of a service) or outside it, for example, an increase in leisure time resulting from less time spent travelling. Economic benefits also include (non-user) benefits that accrue to the wider society. Again, these can involve financial transactions – for example, additional government taxation revenue sourced from an increase in labour supply that the improved transport enables – or not,