Greens to push hard on rail project

 

News article: Greens to push hard on rail project

High-speed rail that runs at 450km/h and offers travel times of less than three hours between the major eastern seaboard capitals would be a major priority of the Australian Greens.

  TheBlacksmith Chief Commissioner

Location: Ankh Morpork
High-speed rail that runs at 450km/h and offers travel times of less than three hours between the major eastern seaboard capitals would be a major priority of the Australian Greens.



The third force in Australian politics will pledge on Tuesday to use its numbers to force the pace on the design work and corridor acquisition for a high-speed rail link between Melbourne, Canberra, Sydney and Brisbane.



It says the project would radically reduce emissions, and return $2.30 to the economy for every dollar invested.



Greens leader Christine Milne and deputy leader Adam Bandt pushed Julia Gillard's government to complete the scoping work that was released early this year.
Greens to push hard on rail project

And despite the previous enquiry revealing that the cost would be greater than the potential benefits, this bunch of dreamers will push the project ahead.

You have to wonder why they persist, given that every examination of this project has revealed it would be a costly failure.

It just shows you why it is better to vote Labour or Liberal and freeze this stupid lot out of the decision making process.


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  Watson374 Chief Commissioner

Location: Fully reclined at the pointy end.
I'm starting to suspect that 'Green' refers to the colour of the plant they smoke in pre-meetings for policy decision.
  Donald Chief Commissioner

Location: Donald. Duck country.
This is still not a good enough reason to vote for these clowns.
  stopblock Junior Train Controller

Location: Planet Earth
And what are you/we going to do if they hold the balance of power after this election.
think about it!,
think very carefully about it!!!

Because, it is not outside the realms of possibility.

The reason that may bring this about being that a whole generation of young voters are totally disenchanted with the immature behaviour of the two traditional parties, and generation X's and Y's think that 'green' is the answer!!!

My two kids (the youngest now just over 18 are keen to teach the libs and labour a lesson) and want to vote [a protest] 'green'.

We could easily be beholden to a minority party again.

think about it......... just sayin.....
  ZH836301 Chief Commissioner

Location: BleakCity
The fact that they still push for it is simply a sign that their policies are purely ideologically driven and not economically.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
And despite the previous enquiry revealing that the cost would be greater than the potential benefits, this bunch of dreamers will push the project ahead.

You have to wonder why they persist, given that every examination of this project has revealed it would be a costly failure.

It just shows you why it is better to vote Labour or Liberal and freeze this stupid lot out of the decision making process.


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TheBlacksmith

Unfortunately they are not alone in pushing this project despite blatantly being not viable, not one single like line as far as distance and population and topography is concerned and when the report and govt says so. The comments are the govt has no vision for the country.
  Simbera Train Controller

I am with the Greens on many issues but this ain't one of them.

I want to know where they've pulled the $2.30 figure from - if the ROI actually were that good I would totally support the project, but it sounds pretty fanciful to me.
  cootanee Chief Commissioner

Location: North of the border!
Trouble with the Greens is they mirror the cock jocks when it comes to logic...

Take A add B and jump to Z Rolling Eyes
  bevans Site Admin

Location: Melbourne, Australia
I thought about this thread overnight and make the following comments.  Have we in Australia become too focused on the fiscal return of nation building projects such as this?  

Why do we constantly find ourselves arguing over the merit of projects in dollar terms rather than the economic and social benefits of such a project?

NBN is a good example of a project that when complete the NBN provide enormous benefit to all Australians.  

I don't feel the same vibe when it comes to the HST project which in my view is an essential project for this country.  Railways need to become more competitive for the travelling dollar, why should we prevent this?  The project is CHEAP in terms of the longer term economic, environmental and social benefits.

Australia has become lazy, disinterested and companies and politicians have become even more selfish about how money should be allocated.  Just look at the garbage east west road tunnel in Melbourne.  We have been bypassed by most if not all of the western world in a very many areas including education and transport.

Tell me, what are the economic, social and environmental benefits of the east - east road tunnel?

Construction of the HST Brisbane-Sydney-Canberra-Melbourne will create a lot of jobs and provide considerable long term benefit to the people of this country.  We need to move into the 21st Century in terms of infrastructure and thinking!

Regards
Brian
  donttellmywife Chief Commissioner

Location: Antofagasta
Here's another example as to how the "respond to the most recent news article" mechanics of this site simply result in the same discussion being repeated ad-infinitum, despite there being plenty of previous threads dealing with this topic.  Anyway...

And despite the previous enquiry revealing that the cost would be greater than the potential benefits, this bunch of dreamers will push the project ahead.
Blacksmith


I want to know where they've pulled the $2.30 figure from - if the ROI actually were that good I would totally support the project, but it sounds pretty fanciful to me.
Simbera


The recent study (and several of the previous studies) have identified that the value of the economic benefit exceeds the cost by a factor of 2.3 (hence the $2.30 for every $1) for the whole network (that ratio is better if you only considered Sydney-Melbourne in isolation).  

But note well... that's economic benefit, not financial.  This is not a return on investment as you would typically define it.  Economic benefit considers somewhat ephemeral quantities such as the time saved by travellers.  For a public project that strikes me as a pretty poor ratio - it wouldn't surprise me to find that other projects of similar magnitude (NBN, Snowy Mountains, Sydney Harbour Bridge - take your pick...) had a benefit to cost ratio that was several times higher than that estimated for this project.  In the absence of malicious motivation it is pretty hard to come up with a project that doesn't have an economic benefit that exceeds cost.

Why do we constantly find ourselves arguing over the merit of projects in dollar terms rather than the economic and social benefits of such a project
bevans


Governments, knowing that society has limited resources, cannot simply approve every project that has a positive benefit to cost ratio - they need to consider the relative ranking and also the context of each project - what does society want?  That's why we have to have debate.

There is then a specific issue with who benefits from this project.  The phase two report (and reports before it...) identifies that the majority of benefit flows to users due to time savings/convenience, etc.  The more frequent the use, the more benefit; and the most frequent users are likely to be be business travellers.  Most of the cost is due to taxpayers.

Why should taxpayers be stumping up large amounts of cash for a select group that is almost certainly already reasonably well off to benefit further?  Why?  In the numerous threads that float around on this topic I put this question - but none of the advocates for the project ever bother to answer!  But this is the issue!

Here's a illustrating example.  Say there are one hundred readers of this thread - collectively we'll say you represent the taxpayers of Australia.  Each of you writes me a cheque for $100.  I take the combined proceeds of $10,000, and use that money to buy myself and my family a nice holiday on an island in the Whitsundays.  I'll certainly benefit - I'll have a great holiday - lots of user benefits there (about $10K worth! We are already at a one to one cost:benefit ratio).  While on holiday I spend your money and maybe some of my own - I'll contribute to the local island economy, keep some people there employed, the airlines will benefit from my fares, etc, etc, etc.  Benefit-benefit-benefit everywhere, much more benefit than cost!  This is an awesome project!

So... where's your cheque?

Construction of the HST Brisbane-Sydney-Canberra-Melbourne will create a lot of jobs and provide considerable long term benefit to the people of this country
"bevans"


Spending 100 billion dollars on anything locally will create lots of jobs.  HSR is nothing special in this regard.  As written above, you should have written "business travellers" rather than "people of this country" (and note the country is a little bit bigger than the thin Brisbane-Sydney-Melbourne strip addressed by this project).

Those who want this project to progress need to address the mismatch between those who pay and those who benefit.  Options exist, but they may not be that popular - for example you could impose something like a $50 levy on every passenger flight along the corridor and use the revenue from that to fund construction (and once built, to artificially suppress competition from aviation, which would further help the financial case).  If that was actually done I image there would be screaming from all over the joint.  But if if potential users aren't willing to pay for something, then perhaps they don't really want it.

A final point - $20 million bucks was recently spent looking at this project in detail.  You may not agree with all of its findings (not that it actually recommends for or against the project...), but at least it lays out all its assumptions and all its logic in a manner that explains how they came up with those findings.  That's set a pretty high standard of supporting material for those who want to argue for vastly different conclusions - we are well beyond the point of simply arguing whether something is "a good idea" or not.  If you are interested in this project then do yourself a favour and READ THE REPORT.
  djf01 Chief Commissioner

I thought about this thread overnight and make the following comments.  Have we in Australia become too focused on the fiscal return of nation building projects such as this?  
bevans

No !!!


Why do we constantly find ourselves arguing over the merit of projects in dollar terms rather than the economic and social benefits of such a project?
bevans

Because this is a way - some such as myself argue the best way - of quantifying the merits or otherwise of any given project and comparing them to others.  Social and other indirect benefits of projects tends to take a back seat with this methodology, but this reflects the difficulty in quantifying these benefits.  So long as all projects are analysed with a similar hard nosed approach it should - more or less - work out in the end as a reasonable way of allocating limited resources.


NBN is a good example of a project that when complete the NBN provide enormous benefit to all Australians.  
bevans
True.  The main criticism of the (Labour) NBN however is no serious quantitative assessment of the project was made (or published) prior to implementation.  The Coalition's version of the NBN has the opposite problem: it's to be built to a (yet to be specified) budget without necessarily delivering any of the desired policy outcomes.
  bevans Site Admin

Location: Melbourne, Australia
My thoughts guys in more detail at: http://www.railpage.com.au/news/article-12992/
Regards
Brian
  railblogger Chief Commissioner

Location: At the back of the train, quitely doing exactly what you'd expect.
My thoughts guys in more detail at: http://www.railpage.com.au/news/article-12992/
Regards
Brian
bevans
As a concept I think it's good but there are far more important things to spend the money on at present.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
I thought about this thread overnight and make the following comments.  Have we in Australia become too focused on the fiscal return of nation building projects such as this?  

Why do we constantly find ourselves arguing over the merit of projects in dollar terms rather than the economic and social benefits of such a project?

NBN is a good example of a project that when complete the NBN provide enormous benefit to all Australians.  

I don't feel the same vibe when it comes to the HST project which in my view is an essential project for this country.  Railways need to become more competitive for the travelling dollar, why should we prevent this?  The project is CHEAP in terms of the longer term economic, environmental and social benefits.

Australia has become lazy, disinterested and companies and politicians have become even more selfish about how money should be allocated.  Just look at the garbage east west road tunnel in Melbourne.  We have been bypassed by most if not all of the western world in a very many areas including education and transport.

Tell me, what are the economic, social and environmental benefits of the east - east road tunnel?

Construction of the HST Brisbane-Sydney-Canberra-Melbourne will create a lot of jobs and provide considerable long term benefit to the people of this country.  We need to move into the 21st Century in terms of infrastructure and thinking!

Regards
Brian
bevans
Hi Brian,
I see your point, but everything has value and with a fixed amount of funds,ie how much taxpayers will pay. The question to b asked is this the best value for nearly $100,000,000,000 of taxpayers money? What else could we do that will give a greater return to the population. NBN is not for off in cost, but nearly every Australian will benefit.

You mention is this project essential for the country? The answer is probably No. The corridor even 100% rolled out is limited to barely 50% of the population and probably even less users. Will the trains be used enough to justify a frequency that makes it attractive to be used, probably not.

Next question, we have a viable airline industry that has limited cost to the taxpayer, yet this project will completely undermine their bread and butter, yet will still loose money, lots and probably wipe out at least one major airline in the process! Yes some people don't like flying, really this is not a taxpayer issue.

HSR has been rolled out in France and parts of Europe and Asia where population densities and city spacings are much closer together. Current HSR technology is still too slow for Australia. At best Syd-Mel will be comparable with flying, In Europe it was often a lot faster than flying due to security and other issues.

Its not viable for commuter use.

The pollution argument is marginal

The sectional times promoted challenge even the fastest sectional times in France over much longer distances. I suspect wheel on rail technology maynot be the technical answer for Australian HSR and Maglev will eventually win with enough time, however Maglev is too expensive currently. They need to remove around 50% of the cost.

So for $100,000,000,000 of my and every other Ozzie's tax, what else could we do that will actually deliver greater value not just as a once of capital but on going. Remember with HSR, its unlikely to even break even on operating costs and will require ongoing support.

Imagine $100B thrown at commuter, regional and interstate conventional rail. Everyday probably another 500,000 people travelling to work by rail. Real value to society including SA, WA and Tas and reduced pollution because you are replacing cars and busses with trains. Probably another 20-50mtpa of freight on rail, replacing trucks with trains and reduced pollution and less accidents. The ongoing cost to the taxpayer would probably be far less than HSR. Regional rail, which would be ignored by HSR would also benefit and would see increased use. Syd-Can would be improved to provide a MSR connection.

Outside rail, I'm sure there are other things as well, such as new energy sources etc.

Yes HSR will add some value to Australia, but I think there is a lot more things that for the same price will add much more. It would not be smart if I could travel from Mel to Syd in 3hr, by-passing much of the regional users along the way with the taxpayer picking up at least 50% of the fare and then a connection to Dubbo would take longer and meanwhile 90% of interstate freight from NSW to Mel and Bris goes via Road because the interstate follows the same path the surveyors mule did.
  Simbera Train Controller

There is then a specific issue with who benefits from this project.  The phase two report (and reports before it...) identifies that the majority of benefit flows to users due to time savings/convenience, etc.  The more frequent the use, the more benefit; and the most frequent users are likely to be be business travellers.  Most of the cost is due to taxpayers.
donttellmywife

You raise some very good points but this is not strictly true. In terms of numbers, business users would be outweighed by leisure users - but when calculating the economic benefits of the project, the time of businesspeople is valued much more highly than leisure users. So the value they represent is higher even though they are not, strictly speaking, "the most frequent users." Which means that the social benefits are better than you might have thought.

Do you have a more specific citation than "In the recent report" for the 2.3 figure? I did read the entire Phase Two report when it came out and that's not how I remember it, but I might have to read it again.
  donttellmywife Chief Commissioner

Location: Antofagasta
You raise some very good points but this is not strictly true. In terms of numbers, business users would be outweighed by leisure users - but when calculating the economic benefits of the project, the time of businesspeople is valued much more highly than leisure users. So the value they represent is higher even though they are not, strictly speaking, "the most frequent users." Which means that the social benefits are better than you might have thought.

Do you have a more specific citation than "In the recent report" for the 2.3 figure? I did read the entire Phase Two report when it came out and that's not how I remember it, but I might have to read it again.
Simbera
You are likely to have a small group of frequent travellers amongst a much larger group of infrequent travellers - exactly the case now for the aviation service.  That small group of frequent travellers, per person, acquire much more benefit than the large infrequent group, per person.  It is also the case that the total benefit is higher for that small group of frequent travellers than it is for the large group (but as you say - that is partly due to the higher value of time for that small group).  How that relates to the makeup of users depends on the relative size of the groups and the relative frequency of travel.

Key findings under Economic assessment (page xii), last sentence of dot point two.  That number appears in section 8 in numerous tables in section 8.6 on.  Table 8-31 appears to be the source of the text in the key findings.
  cootanee Chief Commissioner

Location: North of the border!
This would be the most expensive project ever funded by government. Even the NBN at the end cost of $70b wouldn't compare.

On the other hand the NBN is and will benefit more sectors and individuals more often. The economic benefits of building the thing are spread across the nation including remote areas often using local contractors.

Ultimately the NBN is and will generate far more revenue and associated economic benefits even if the guvmnt component isn't repaid.

If you were to have that much to spend on rail there are plenty of projects across the nation that would provide cumulative benefits far exceeding a HSR.
  Simbera Train Controller

Key findings under Economic assessment (page xii), last sentence of dot point two.  That number appears in section 8 in numerous tables in section 8.6 on.  Table 8-31 appears to be the source of the text in the key findings.
donttellmywife
Ah, ok. I'm told the issue is the discrepancy between the 4% and 7% discount rates.  According to The Urbanist http://blogs.crikey.com.au/theurbanist/2013/08/08/is-high-speed-rail-a-no-brainer-or-a-boondoggle/ the ones the Greens have used is inappropriate, and the correct one comes to the 1:1 CBR I mentioned. But to be perfectly honest I'm not that familiar with the concept of discount rates so I'm looking into it further to see why one is more appropriate than the other for this project.
  donttellmywife Chief Commissioner

Location: Antofagasta
Ah, ok. I'm told the issue is the discrepancy between the 4% and 7% discount rates.  According to The Urbanist http://blogs.crikey.com.au/theurbanist/2013/08/08/is-high-speed-rail-a-no-brainer-or-a-boondoggle/ the ones the Greens have used is inappropriate, and the correct one comes to the 1:1 CBR I mentioned. But to be perfectly honest I'm not that familiar with the concept of discount rates so I'm looking into it further to see why one is more appropriate than the other for this project.
Simbera
That's not a bad blog article.  I don't 100% agree with everything said (I think describing the project as a boondoggle is a bit strong), but the author raises some very pertinent points.

Perhaps this is stating the obvious, but the discount rate you choose is simply a reflection of how much you value having something now relative to having something at some stage in the future.  In the case of HSR the "having something now" is the $100 billion odd of capital spend (or not spending that on HSR and being able to do something else with it), the having something in the future is the ongoing benefit due to time saving, etc.  The interest rate you get on a deposit or pay on a loan is an approximate reflection if you are looking at finance (but they can include an allowance for risk and background inflation, which might or might not be included in a discount rate depending on how you approach things).

I'm not familiar with the specific source of the discount rate assumptions (see the brief discussions in appendix 5), but (perhaps simplistically) I figure there's some support for the lower rate because it is still above the long term bond rate corrected for inflation.  Then again, there's a limit to what you can borrow at that rate - so the discount rate needs to include an allowance above the typical bond rate to account for opportunity cost (if you borrow $100 billion to spend on HSR you probably can't then immediately turn around and borrow another $100 billion for some other potentially beneficial project at the same rate, and we are not exactly struggling for ideas of good things to spend money one).

But it could be a bit of a distraction - regardless of which discount rate you choose you still have a glaring mismatch between who pays and who benefits, plus if you do then decide that society should pick up the bill you then should be considering alternative projects that might achieve the same outcomes for lower cost.  A lower discount rate will shift that comparison towards projects that cop up front pain for longer term gain (which is characteristic of HSR), but even at 4% it probably wouldn't be too hard to generate some competitive options that blow the 2.3 ratio out of the water.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
That's not a bad blog article.  I don't 100% agree with everything said (I think describing the project as a boondoggle is a bit strong), but the author raises some very pertinent points.

Perhaps this is stating the obvious, but the discount rate you choose is simply a reflection of how much you value having something now relative to having something at some stage in the future.  In the case of HSR the "having something now" is the $100 billion odd of capital spend (or not spending that on HSR and being able to do something else with it), the having something in the future is the ongoing benefit due to time saving, etc.  The interest rate you get on a deposit or pay on a loan is an approximate reflection if you are looking at finance (but they can include an allowance for risk and background inflation, which might or might not be included in a discount rate depending on how you approach things).

I'm not familiar with the specific source of the discount rate assumptions (see the brief discussions in appendix 5), but (perhaps simplistically) I figure there's some support for the lower rate because it is still above the long term bond rate corrected for inflation.  Then again, there's a limit to what you can borrow at that rate - so the discount rate needs to include an allowance above the typical bond rate to account for opportunity cost (if you borrow $100 billion to spend on HSR you probably can't then immediately turn around and borrow another $100 billion for some other potentially beneficial project at the same rate, and we are not exactly struggling for ideas of good things to spend money one).

But it could be a bit of a distraction - regardless of which discount rate you choose you still have a glaring mismatch between who pays and who benefits, plus if you do then decide that society should pick up the bill you then should be considering alternative projects that might achieve the same outcomes for lower cost.  A lower discount rate will shift that comparison towards projects that cop up front pain for longer term gain (which is characteristic of HSR), but even at 4% it probably wouldn't be too hard to generate some competitive options that blow the 2.3 ratio out of the water.
donttellmywife

What would you rather?

(1) $100B gets some people out of planes (the safest mode of transport) onto trains and a few more from cars that in general are using the multi carriage freeway that exists between Syd and Can will soon run from Syd to Mel and by 2050, Brisbane where head on and even T-bone collisions are very rare and the operational still burns money just moving those people. With the $100B gone, as mentioned abovem access to further funds is limited and more costly.

Or

(2) $5B on the Inland railway, gets about 5-8mtpa of freight of roads, especially the 2 lane Newell hwy where you have 100t trucks runnin at 200km/hr approach speeds with more trucks and 1t cars with families in them, something HSR cannot resolve

+

Options to improve commuter rail in every capital city and get at least 500,000 people a day out of their car/bus on their way to work.


Which do we think will have the greatest impact on both emissions and safety?
  Simbera Train Controller

I'm not familiar with the specific source of the discount rate assumptions
donttellmywife
Apparently the reason he says 4% is appropriate for schools and hospitals and so on, and 7% is for transport projects, is because this is the position of the Vic Department of Treasury and Finance - so I assume it's a reasonably standardised figure. The basic theory behind Discounting is to make it so that we can more tangibly appreciate the future benefits of a project (which are intangible until the project is finished) to compensate for the fact that humans are bad at predicting such things. So presumably the figures are based on how hard it is to predict the value of a particular project - 7% for transport projects because we can assess the economic benefits with more ease than we can for schools and hospitals.

To me this sounds a little flimsy since in my experience economists are about as scientific as astrologers, so I'm not too sure they'd be using actual evidence to pick these figures. But that is the rationale given.

With regards to your point about us not being able to borrow infinite money at the same rate...that's not something I'd thought of, and that's an interesting point.  My instinct is that we are currently such an attractive investment prospect (one of the few remaining AAA economies, low debt-to-GDP, well-managed financial sector/monetary policy, etc) we wouldn't have a lot of trouble getting money for this and the other most urgent (and actually ready-to-go) projects but you're right, it's something we would have to consider.

There is no doubt that no matter what scale you measure on (carbon, congestion, time, safety) there are a lot more worthwhile projects you could get for that amount of money - plenty of freight and shorter-distance passenger rail.
  Peter Spyker Train Controller

We could easily be beholden to a minority party again.
stopblock
You're not "beholden" to a minority party. Every MP in parliament has the option of voting whatever way he or she likes, and it is only because they are a bunch of spineless weasles that the vast majority of them vote the way they are told to by their party whip.

If only a small group of Liberals had have crossed the floor on any contentious vote, the Greens would have had no say in it.

And beyond that - if you are so concerned about a "minority party", why aren't you out there ralling against the National Party? They have a much lower percentage of the vote and yet control many more seats, and they do "deals" with the Liberal Party. In fact, most of the time, the Liberal Party can never win government in its own right, and has to come to an arrangement with the Nationals. Effectively every Liberal government is a minority party, because they are at the beck and call of the Nats.

Have you ever looked at the members of the National Party? They are the weird extremists, not the Greens. The National Party are a motley crew of conservative, agricultural socialists, who have very little in common with the Liberal Party at all, other than the fact that they both hate Labor. They would quite happily wind back all the sensible economic changes that both Labor and Liberal have made to Australia in the last thirty years. They don't believe in competition (for farmers), they don't believe in labour laws and they're racist, homophobic, sexist and backwards. They are responsible for one of the most wasteful policies this country has: the diesel rebate, where farmers and miners get a taxpayer funded subsidy on their fuel expenses. Scrap this and you'd have more than $5 billion back in the budget.

The Greens are a beacon of light, compared to hot-air, intellectual dwarfs like Barnyard Joyce.
  TheBlacksmith Chief Commissioner

Location: Ankh Morpork
They don't believe in competition (for farmers), they don't believe in labour laws and they're racist, homophobic, sexist and backwards.
Peter Spyker

Meaning they have a morbid fear of the genus Great Apes?
  Simbera Train Controller

Meaning they have a morbid fear of the genus Great Apes?
TheBlacksmith
a. The Great Apes form a family, not a genus, and they are known as Hominidae.
b. The genus Homo refers to modern humans and (extinct) species closely related to them, such as Homo Neanderthalensis.
c. The genus Homo comes from the Latin word "Homo" meaning "Man", while the words "homosexual" and "homophobic" come from the Greek "Homos" meaning "same".
d. You are not as clever as you think you are.
  TheBlacksmith Chief Commissioner

Location: Ankh Morpork
Don't you just hate it when you have to explain a joke to a moron?
Over to you.

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