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The Andrews government's signature level crossing removal project will cost more than $8.2 billion and generate just 78 cents of economic benefit for every dollar spent, according to its business case.
But the true benefit-cost ratio of the project might actually be less than the figure put forward in the business case, which was released on Thursday but written in February 2016.
Budget papers for 2017-18 reveal that the projected cost of removing 50 level crossings has increased by $660 million since the business case was written, from $7.6 billion to $8.26 billion.
This includes $6.89 billion to remove 50 level crossings, plus a further $1.39 billion on the "metropolitan network modernisation program", which includes building new railway stations and walking and cycling trails near the crossing sites.
But the government has given a full-blooded defence of the program's worth, arguing that it will save lives.
Melbourne has 178 metropolitan level crossings, easily the most of any Australian city. In the 10 years to 2014, more than half of all level crossing collisions between a train and a pedestrian happened in Melbourne, and a third of the nation's vehicle-train smashes.
Twenty people died after being hit by a train at one of the 50 crossings on the government's program between 2005 and 2014. There were more than 60 collisions and 680 near misses at those 50 sites.
The cost of those injuries and lost lives is not easily measured in monetary terms, the government said.
"Removing level crossings is not just about economics – it's about saving lives, and the benefit-cost ratio does not take into account the full human and emotional costs of the severe injuries and tragic deaths that these level crossings cause," it said.
The benefit-cost ratio of 0.78 for the level crossing removal program was calculated using a conventional method for transport projects, which is favoured by Infrastructure Australia and the state's Department of Treasury.
Workers remove the North Road level crossing at Ormond railway station last year. Photo: Wayne Taylor
But the government also applied a different measure, used to evaluate social projects such as schools and hospitals, which pushed the full level crossing removal program into profitable territory with a return of $1.34 for every dollar spent.
It argued the social benefits of removing level crossings were significant enough to justify this move.
"This is a project that stacks up – it's about giving people work, saving them time and importantly, saving lives," Public Transport Minister Jacinta Allan said.
The former Napthine government used a similar strategy to get its signature transport project, the cancelled East West Link, into positive economic territory after it was found to have a benefit-cost ratio of just 45 cents in the dollar.
But Ms Allan said there were crucial differences between the two major projects.
"This was an election commitment to remove these level crossings, we said we'd do it and we are doing it," she said. "The East West Link was not an election commitment and when [the Napthine government] did put it to the people they rejected it."
The business case states that the road congestion that Melbourne's level crossings already cause will only get worse in coming years, as traffic gets busier and train frequencies are increased to transport the city's rapidly growing population.
It estimates that the boom gates at the nine level crossings between Caulfield and Dandenong would all be down 90 per cent of the time between 7am and 9am by 2021, effectively closing these roads, including Murrumbeena Road, Clayton Road and Heatherton Road, in the morning peak.
The government will remove those nine crossings by the end of next year by elevating the rail line above the road and turning it into a so-called sky rail.
The removal program is also a "critical enabler" for the Metro Rail Tunnel, the government's other major public transport project, an underground rail connection between Kensington and South Yarra, the business case states.
"These major projects will transform Melbourne's transport network and are expected to have a significant impact on Melbourne's city structure, by encouraging households and businesses to locate along high capacity rail corridors," it says.
This article first appeared on www.theage.com.au
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