Look beyond a silver bullet train for stimulus

Amidst a global pandemic, some people are starting to dream big about infrastructure projects to help get Australia moving again. The decades-old dream of an Australian fast train is back in the headlines. But, as alluring as it sounds, the federal opposition’s idea for a bullet train from Melbourne to Brisbane is not a good use of a generation’s worth of infrastructure spending.

After the coronavirus crisis, there may be good reasons to fast-track infrastructure to create jobs and stimulate the economy. But it remains as important as ever that funding go only to worthy projects. A bullet train does not fit the bill.

Read more: Why the focus of stimulus plans has to be construction that puts social housing first

No silver bullet

Federal Labor claims the train would be an “economic game-changer” for the regions in its path. But a study into the train, commissioned by Labor itself in government in 2010, found no evidence for this.

Any regional development was too uncertain, the authors concluded, to be considered in their cost-benefit analysis. In fact, they found the project could damage towns along the route:

The history of the impact of transport improvement in Australian towns is that they concentrate activity in the larger centres and create commuter towns lacking in higher level services. Without concerted efforts to the contrary, this is also a likely outcome of the introduction of HSR [high-speed rail].

Read more: Regional cities beware – fast rail might lead to disadvantaged dormitories, not booming economies

Of course, as advocates will be quick to point out, the study did conclude total benefits would outweigh costs by a considerable margin: $2.30 in benefit for every $1 of cost. But this rosy calculation was based on a series of assumptions that are either outdated or inappropriate. As our upcoming report on fast rail will explain in more detail, it’s unlikely the train’s benefits would exceed its costs if a rigorous independent assessment were carried out today.

The benefits are also narrowly concentrated. The biggest winners would be business travellers between Melbourne, Sydney and Brisbane. Wider benefits to society accounted for only 3% of the total, and the effect on economic growth was expected to be minimal.

That’s because the train would take a very long time to build. According to the study, the project would only be “shovel ready” 15 years after funding was committed. This makes it completely ineffective as a timely stimulus during a downturn.

Read more: We can halve train travel times between our cities by moving to faster rail

Advocates also argue the train would reduce emissions by taking high-emitting planes out of the sky. But a net reduction won’t be achieved for many years – maybe decades – because constructing the line would create so many emissions.

If built, this train would be the most expensive infrastructure project in Australian history. The study estimated the price tag at A$114 billion – A$130 billion in today’s dollars. As our chart shows, this is enough to pay for an entire generation’s worth of infrastructure.