Tuesday, 21 April 2015

High Speed Rail: Roads to Ruin

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Proposals for new high speed rail projects inevitably affect property owners and businesses along the proposed route, not to mention the myriad interests that new construction projects excite. What is less obvious is that interested parties supporting other modes of transport infrastructure, such as roads, can actively de-rail major projects that tick all the boxes in terms of safety, efficiency and environmental friendliness.

Where corridors for high speed rail projects have been identified and protected for some time, or will replace existing transport corridors, things are certainly much easier. If tight government budgets can be removed from the equation, then the success of high speed rail projects getting off the ground in the first instance are more likely. But if either the corridor is yet to be established, or government funds are needed for the project, the problems can drag on interminably.

We've seen the impact of budgets in the ongoing debate over high speed rail in Australia. Trade and Investment Minister Andrew Robb told The Australian that it was not a question of wanting high speed rail, but of how it will be funded. For  head of the Prime Minister's Business Advisory Council, Maurice Newman: "it's not a question of being convinced... it's a question of how we pay for it".

Clearly, the corridor is not the big obstacle for high speed rail in Australia.

But in Texas, the exact opposite is the case. A proposal by Texas Central Railway to link Houston and Dallas by high speed rail would move commuters in 90 minutes. Direct flights between the two cities run more than 30 times per day and take just over one hour. But of course, boarding and disembarking times would make the two modes comparable and in direct competition.

Texas Central's proposal is to deploy the "N700-I Bullet based on the Tokaido Shinkansen", the "oldest and busiest Shinkansen line" in Japan. This system is owned by the Central Japan Railway Company that recently hosted Maurice Newman's visit to Japan.

And the project will be funded entirely by the private sector. Unless its opponents can stop it from happening in the first place.

Two groups are spearheading the opposition to high speed rail: No Texas Central Railway and Texans Against High Speed Rail.

To be sure, there are many factors to consider when any network infrastructure is deployed. And liberal democracies carry the extra burden of property rights that are not so easily remedied for major infrastructure projects as in command economies.

However, it becomes really bizarre when the arguments put forward by the project's opponents are brought to light.

Eric Jaffe from The Atlantic's CityLab points out some of the more disturbing arguments by Texas House of Reps member Will Metcalf: "We need more roads for citizens to travel to ease our existing roadways... We do not need a high-speed railway in Texas that will only benefit a few, while at the same time disturbing thousands of citizens within its path". Others suggest that because 18 million people already choose to drive, it is unlikely that enough people will switch to high speed rail to justify the project.

It is interesting that rail's golden era in Australia was in large part due to legislation protecting the industry from competition from road carriers. It was not until the Hughes and Vale case that State laws were overturned in 1954 and our present day reliance on road transport was spawned. Today, roads have taken some of the steam out of rail, so to speak.

What is clear is that transport infrastructure debates are much more complex than simply debunking the myths. It may well be that crafty legislation is necessary to enable major infrastructure projects to get off the ground. Certainly, there is mounting evidence to suggest that procrastination will lead to lower living standards in the long term.

Previously, I was concerned about the ACT Government's attempt to limit appeals about planning approvals for the Capital Metro project. But if elected representatives can propose laws to stop major projects like Texas Central Railways, why shouldn't elected representatives make laws to enable major projects like Capital Metro?

I have been thinking about the merits of the command economies' approach to transport infrastructure and whether a form of bipartisanship, through Quangos or statutory authorities or other governance mechanisms, can overcome the limitations of day-to-day politics. Of course, there are many problems with this approach such as:
Obviously, I don't have all the answers. But what is obvious is that decades of delay on transport infrastructure we should already have and the embedded cultures related to old modes of transportation - the car - do nothing for the future of our standard of living. There is an urgent need to shift and inform transport infrastructure policy debates to prevent procrastination. Mass transit is one feasible solution, but the road to ruin is already in our collective wind-shields.

Thursday, 16 April 2015

Capital Metro & East West Link: Transport infrastructure too important to be left to political parties

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There is little doubt that adequate funding and provision of efficient transport infrastructure is one of Australia's most pressing policy problems.

But the cancellation of the contract to build Victoria's East West Link by the Victorian Labor Government has set a precedent for the ACT Liberals' to threaten to do the same with the Capital Metro project if they are elected next year.

That is not to say that either project should go ahead regardless. Indeed, the Productivity Commission's recent inquiry into public infrastructure suggested that we are in need of an urgent and major overhaul of the "processes for assessing and developing public infrastructure projects".

Maybe this overhaul should include the removal of important infrastructure decision-making from day-to-day politics. After all, this approach works with various statutory authorities and commissions that already function independently of government. Indeed, a more pragmatic, "Quango" approach to the funding and provision of transport infrastructure might just be the silver bullet that gets our transport infrastructure out of its rut.

Almost any economics textbook will tell you that "productivity is the key determinant of living standards". But most approaches to improving productivity "tend to boil down to... calls for a policy to cut the wages of low income employees". This is often despite growth in labour productivity with the majority of recent decline registering in other elements of multifactor productivity measures.

According to BITRE, there is "Australian evidence that well targeted investments in transport infrastructure result in productivity increases that benefit many other industries". The Harper Review suggests that road pricing will help. It might even be good for the bush.

In addition to the OECD, many interest groups see road pricing as a policy priority. Some research even suggests that Australians are ready for road pricing. But will our politicians be bold enough to break the status quo?

It is much easier for command economies to deploy transport infrastructure. Last week while travelling on Hong Kong's MTR, it struck me that the higher standard of living provided by efficient mass transit systems might be worth the investment, regardless of one's ideological position. Maybe a middle way between command and liberal democratic approaches exists.

The free market does not have all the answers, but clearly it can work. For example, Australia's airports are profitable, even if service levels have not improved. But quality of service is a market function. Frequent international travellers will know that Sydney Airport is the worst for service, and smart travellers will fly out and back through Brisbane Airport where the queues are shorter and the service is better. For now. But why can't our other transport networks be profitable, too?

When I travel by train to Sydney, I find myself getting plenty of work done because the trip takes 4 hours. A high-speed train would be perfect, but that has been on the cards for years. Will it ever happen if left to electoral politics? Would a high-speed train prove profitable? Even if it is deemed to be a good thing, it may not happen for years to come. It may be counter-intuitive, but road pricing might just encourage improvements in our rail networks.

In many ways, electoral politics leads to the avoidance of hard decisions. Implementing the GST was an important but very difficult political decision, but few would disagree that, in hindsight, the GST was a no-brainer. Indeed, Australia's economy is all the better for the GST and most of us have forgotten the drama concerning Fightback! and birthday cakes.

Will it take a "never ever" statement to bring about road pricing? Can we afford to wait that long? Why is it that the Australian Government is prepared to invest in infrastructure in Vietnam using PPPs and other modern approaches to mitigating risk, while at home investment in infrastructure focuses on roads built as public goods?

To be parochial, will Capital Metro fix Canberra's public transport problems? Should it be all about cost? Public-private partnerships (PPPs), when set up appropriately, can help shift some of the risk to the private sector, but again, when caught up in electoral politics, such arrangements have often proven to be "disliked" by citizens.

Attempts have been made to move infrastructure decision-making away from day-to-day politics with bodies such as Infrastructure Australia, Infrastructure Partnerships Australia, and Infrastructure NSW. But that hasn't stopped politicians from deciding the types of infrastructure to receive federal funding. Of course, spending is a big policy lever just waiting to be pulled, often at the expense of State government priorities.

To be fair, State and Territory governments can take advantage of the federal government's Asset Recycling Initiative, which will be used to partly fund Capital Metro. And light rail in Canberra won't happen if it doesn't happen now.

It makes sense that light rail should be built first on a busy route, and Action's Red Rapid service along the Gungahlin-Civic route runs about every 15 minutes and has proven to be popular with commuters. Replacing this route with light rail might free up buses for other under-serviced areas, and it would certainly prove popular with developers. But how the buses run in the ACT is not only about servicing the needs of commuters - often it, too, is caught up in day-to-day politics.

Nevertheless, the ACT Liberals have a point. Why should so much money be invested in light rail when there are so many other infrastructure priorities for the ACT? Will the investment in Capital Metro help commuters, or will it just enhance the property investment for those situated along the route?

Given that Action bus services from Gungahlin to Civic are already very good, it is difficult to see how Capital Metro will help commuters elsewhere in the ACT. Unless of course Capital Metro's network is rapidly expanded once the initial investment is made.

But given the nature of day-to-day politics, for the foreseeable future at least, important decisions about transport infrastructure are likely to remain key electoral policy levers for political parties. Maybe it is time we took a lesson from the command economies and got on with the job of building the most appropriate transport infrastructure to ensure we can continue to improve and maintain our current standard of living. That is, after all, the whole point.

But as they say, the road to hell is paved with good intentions. Let's hope our political representatives lead us down the right road (or rail, or route).

Creative Commons License Except where indicated otherwise, Connecting the Nation by Michael de Percy is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 2.5 Australia License. Based on a work at politicalscience.com.au. Background image ©Depositphotos.com/ @redshinestudio