The paper on light rail commissioned by the Canberra Liberals chooses the most expensive construction method for the project and its use discredits the entire report, according to the Minister for the Environment and Sustainable Development, Simon Corbell.
The report is inaccurate, based on incorrect assumptions and does not stack up to rigorous assessment. It does not include important economic benefits from the project and uses unsound cost and construction assumptions. The paper’s author acknowledged the report assumes a construction alignment which is more expensive than constructing in the median corridor, and makes cost assumptions based only on a very few hand-selected foreign examples.
“Cost benefit analyses for transport projects are complex. The Liberals’ paper is based upon simplistic assumptions, including very limited foreign benchmarking that is not specific to Canberra and it cannot be relied upon,” Mr Corbell said.
“In contrast, Capital Metro’s analysis is robust and will stand up to industry standards for a project of this complexity. Our experienced economic advisers draw upon detailed and well considered inputs prepared by specialists with extensive experience on previous similar projects.
“The Liberals’ paper is based on the most expensive alignment option, a two-tracks system, one on either side of Northbourne Avenue, where the footpaths currently are. The government’s assumptions are based on the use of the median corridor because it is a more cost effective option and one which produces a better transportation outcome.
“The figures cited in the paper on benefit cost ratio and capital expenditure are completely out of the ball park. The BCR in the Liberals’ paper is less than 1.0. In contrast, work undertaken by Capital Metro and its economic advisors confirms the BCR for Capital Metro is positive and therefore delivers a positive economic return to the ACT.”
The analysis fails to include a number of key benefits, including:
– Benefits from urban densification spurred by the project, including increased patronage and the more efficient delivery of utility, health, education, waste collection and other services.
– The residual value of benefits at the end of the review period. It is wrong to say that in 35 years the line will have no value. Rail systems have long lives.
– The analysis does not include health or amenity benefits. In the press conference the Liberals’ own consultant acknowledged studies have proven people prefer light rail over buses.
– No wider economic benefits have been included in the Liberals’ analysis.
The Liberals’ report states that “few projects are funded unless the benefit to cost ratio is greater than 2.0 and usually about 2.5 is expected”. This is incorrect as there are numerous examples of transportation projects having been progressed in Australia with a publicly stated BCR of less than 2, including recent rail and road projects in Queensland and New South Wales. A project with a BCR of greater than 1.0 provides a net social and economic return sufficient to justify a project’s costs. The BCR for Capital Metro will meet this threshold.