Going Underground in Australia

Just over a decade ago, governments in Australia were immune to calls for accelerated infrastructure investment in our major urban centres. Plans for strategic reinvestment were rare. Much has changed in that time, maybe too much. It seems that enthusiasm for major urban infrastructure now runs ahead of impartial assessment of the cost, versus the claimed benefits. A proposed $8.2 billion underground rail loop for Brisbane, along with a new underground station for its busy downtown, provides one example of an over exuberant propensity to spend.

The idea of new underground heavy rail lines to connect with the commuter rail system of southeast Queensland isn’t new. I can recall some 15 years ago proposing just that in a policy paper for the Property Council. The paper identified new stations in the CBD as a critical element in making use of rail transit more user friendly. The existing downtown stations, we argued, were barely downtown anymore, because the modern downtown (of close to 2 million square metres of office space, major retail, and entertainment hubs) had shifted toward the river and away from the stations.

This large concentration of office workers should prove prime candidates for public transit, since they typically work regular hours (which helps with service schedules) and are concentrated at the centre of a hub and spoke system. But the walk from their workplace to the nearest stations, in summer heat or rain, represents (among other things) a disincentive to rail transit. So logically a new underground station (or even two) which brings the convenience of commuter rail closer to the workplace should encourage more people to make use public transport. Clearly, if you owned office buildings anywhere along the river edge of the ‘Golden Triangle’, you’d welcome this initiative with open arms and beg the Government to fast track the proposal.

So it could indeed be a great idea. But first there are few unanswered questions about the economics of heavy rail commuter transport. The latest State Government figures show that every trip, by each and every commuter on the City Train network, is now subsidized to the tune of $10. That’s per trip, so for every daily return trip, the taxpayer is forking over $20 per commuter. And that’s after commuters have paid their fare – remember it’s only the subsidy. Even worse, the numbers of patrons are falling, from 60.7 million to 57 million in a year. (Worth reading the article “Taxpayers' share of rail fares increases, while CityTrain passengers continue to decline” in The Courier Mail, June 15, 2010).

The concern here is that under this failed pricing model, more commuters may also mean more subsidies and a greater tax burden on the taxpayer. In short, there doesn’t seem to be an economy of scale: if more people caught the train under the present system, it could cost more in subsidies, not less.

Ironically, an online poll taken in connection with the above story revealed that 79% of respondents (out of 824) claimed that train fares are already too high. This is especially ironic for two reasons: commuters with jobs in the CBD market are, on average, paid more than their suburban counterparts and commuters who use the rail service are increasingly drawn from more affluent inner city and middle ring suburbs. The proportion of public transport users who begin their journey in lower income, outer suburbs, is relatively small.

The evidence for this is found in papers by people such as Dr Paul Rees, School of Global Studies, Social Science & Planning at RMIT, and others. Various studies increasingly point to a rising correlation between rail (and tram in the case of Melbourne) use and proximity to central city workplaces. Put crudely, big chunks of that $10 each way subsidy are being paid for by low and middle income taxpayers in the outer suburbs (far from convenient train stations) so higher paid central city workers can have access to a convenient form of transport from their inner city or middle ring home, to work.
As for the mooted new underground rail network, according to the Queensland Premier Anna Bligh, the network will service “Toowong, West End, the city, Newstead, Bowen Hills, Bulimba and Hamilton North Shore.” In Brisbane’s case, these are inner city areas which enjoy some of the highest real estate prices in the region. In short, this is where the rich people live and will also be subsidized.

A further question needs to be raised about the potential growth in commuter rail traffic, notwithstanding the convenience of a new CBD station. With the exception of the new line to Springfield, there are no new lines being laid and no new stations proposed. The catchment populations around the various train stations that form the City Train network are variously touted as ‘TOD’ (transit oriented development) zones but … there’s been precious little development activity to show for a decade of discussion.

In the end, simply building more housing around train stations won’t mean more commuters to the CBD because most of the jobs are in the suburbs in the first place, and getting more so. I am unaware of any State Planning Policy which aims to concentrate more office and retail workers in the CBD (indeed the pressure is on to decentralize). And without more workers in the CBD, there are simply not going to be more commuters wanting to go there. So you can have more housing around train stations but this won’t mean more people working in the city – unless there’s also going to be more jobs in the city (or the mode share rises).

An additional brake on increasing patronage of the heavy rail network is the inability to get to a suburban train station in order to easily catch the train. If you live more than a kilometre from a train station (the overwhelmingly majority of all residents), you would need to drive your car to a station to ride. But stations have precious little in the way of parking for these commuters, and nearby residents justifiably object to having their streets turned into kerbside carparks for daily rail commuters. This is one of many practical realities holding back increases in mode share of rail as a percentage of all commuter trips. That proportion has remained stubbornly fixed at under 10% of all trips for Brisbane (rail and bus and ferry combined) while for the CBD the mode share sits at some 45% of all commuter trips (bus, rail and ferry combined).

So while the notion of a new underground rail line with a new CBD station sounds like a terrific idea, you’d hope that those who are responsible for spending our money will be running some hard numbers on the feasibility. This cross river rail project is mooted to cost something like $8.2 billion dollars in today’s terms. By the time they get around to building it, it will no doubt cost more.

Even if the cross river rail and new station managed to achieve the result of 100,000 new rail commuters, that still works out to $82,000 per extra commuter. And if those commuters are to continue to be further subsidised to the tune of $10 per trip, each way, every day, this could be the sort of infrastructure initiative which ends up costing the community a great deal.

You’d hope the numbers are being compiled rationally, dispassionately and independently, and the proper questions asked. Quality, strategic infrastructure investment in our urban areas is an economic necessity. But irrationally conceived projects of dubious economic merit are not the way forward.

Ross Elliott is a 20 year veteran of property and real estate in Australia, and has held leading roles with national advocacy organizations. He was written and spoken extensively on housing and urban growth issues in Australia and maintains a blog devoted to public policy discussion: The Pulse.

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