By Matthew Burke, Griffith University
Transport Minister Anthony Albanese today released the second phase report for Australia’s High Speed Rail Study. The AECOM report plots out a preferred route from Brisbane to Melbourne, predicts how many passengers will ride the system, and suggests the system would be marginally beneficial and economically feasible.
The costs are staggering. At around $114 billion it would dwarf any national infrastructure program yet undertaken – around three times the size of the National Broadband Network.
Even using a 4% discount rate (which would be considered “unusual” in most economic circles) the economic benefit/cost ratio is worryingly low at around 2.3 to 1 (that is, for every one dollar spent, it generates $2.30). And that’s after factoring strong population and economic growth through to the year 2065.
The patronage projections are also difficult to pull apart. There is a long history of inaccuracy in forecasting patronage in such projects due to two reasons. Bent Flyvberg, Professor of Planning at Oxford, calls “optimism bias and strategic misrepresentation”.
And we are hardly world-beaters in this country in estimating the value and viability of projects. The high speed rail projections are brought to you by the same firm responsible for the calamitous Lane Cove Tunnel, Sydney Cross City Tunnel and Brisbane Clem7 forecasts.