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Light Rail aims to make money

By Barcham - 5 July 2013 39

Just in case you haven’t already been bored completely to death by hearing about light rail, here’s some more talk about it.

The ACT Government’s Capital Metro light rail project delivers a benefit cost outcome similar to, or better than, other light rail projects that are going ahead around Australia, Minister for the Environment and Sustainable Development, Simon Corbell said today.

“According to Infrastructure Australia’s own costings methodology, the benefit cost ratio for Capital Metro at our medium growth scenario was 2.34; this is similar to, or better than, the benefit cost ratio for other light rail projects going ahead in QLD and NSW,” Mr Corbell said.

“The Gold Coast light rail project, for example, has a benefit cost ratio of 1.63, and Sydney’s InnerWest light rail project between Lilyfield and Dulwich Hill is understood to have a benefit cost ratio of 1.0.

“Benefit cost ratio is a key indicator of a project’s viability. A ratio greater than 1 demonstrates that economically, for every dollar spent there is a positive economic return.

“A ratio of 2.34 shows that for every dollar spent, there is a return of just over two dollars.

“It’s also important to note that the Infrastructure Australia report, that Opposition Transport spokesman Alistair Coe keeps referring to, has not ruled out light rail, rather it has named a ‘Canberra Transit Corridor’ as an early stage infrastructure priority (page 100).

“Transforming and integrating the city’s public transport system is a big investment that will deliver benefits to Canberrans, and to the economy, for decades to come,” Mr Corbell said.

Cool, profit, yes, whatever! Just build the thing already.

What’s Your opinion?


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39 Responses to
Light Rail aims to make money
Ben_Dover 2:15 pm 07 Jul 13

dungfungus said :

A tram could get from Queanbeyan to Canberra City in 15 minutes.

Then they’re stuffed, as they will have to get to their places of work from the City centre.By bus one would imagine. What a hell of a way to start/end your working day.

Makes the parking fees seem cheap at half the price.

dungfungus said :

I thought one had to be a thinker to comment on this blog.

You are kidding, right?

Masquara 1:58 pm 07 Jul 13

If the bus service can’t even break even, this is a desire to gamble with OUR money. I’d put the odds of any public transport system in Canberra making money as pretty much pokie machine territory.

dungfungus 1:51 pm 07 Jul 13

bundah said :

dungfungus said :

bikhet said :

As sien notes, the benefit cost ratio can be easily manipulated. Achieving that rubbery ratio relies on getting people to actually use light rail in the numbers used in calculating the ration.

Damien Haas comments that ACTION patronage is declining.

How does the government plan to ensure people use the light rail network in sufficient numbers to achieve the benefit cost ratio? How will those plans effect those who don’t benefit from the light rail network?

You raise a good point and the current City to Gungahlin plan is doomed to fail for several reasons. One is that is that it makes an unfounded assumption that everyone in Gungahlin works in Canberra City.
The only way the light rail can be viable is to extend it immediately via the Commonwealth Avenue bridge to the Parliamentary Triangle/Capital Hill, through Parkes, Barton, Kingston to the Railway Station and then to Queanbeyan on the existing railroad.
The network does not have to be electrified either – Canberra has gone to great pains to avoid the visual pollution that poles and wires create so the last thing we need are catenaries over tram tracks.
This amended proposal will generate the necessary users, take a lot of pressure off key road vehicle routes, make the service inclusive to Canberrans living and working South of The Lake and will also make the financing attractive to a PPP (it isn’t in its current form).
The way it is going now (with plans to re-develop EPIC into high density housing) it could end up like what is happening in some parts of the USA:
http://citiwire.net/columns/learning-again-why-plans-sometimes-fail/

Yeah and can you imagine how much it would cost to extend it all the way down to Qbyn FFS!

Last time I looked there was an under-utilised railway line between Kingston and Queanbeyan (read my OP please) so the extension cost will be zero which makes it so attractive. I should add that over 12,000 people a day drive into Canberra to work/go to school etc. and there is a great park and ride facility at the Queanbeyan Railway Station.
The Greens are fanatical about keeping cars out of Canberra and commuters who drive into Canberra daily from across the border are getting sick of paying $55 a week to park in Canberra. A tram could get from Queanbeyan to Canberra City in 15 minutes. It is so logical it is bound to fail I know.
I thought one had to be a thinker to comment on this blog. I am trying my hardest.

bundah 12:15 pm 07 Jul 13

dungfungus said :

bikhet said :

As sien notes, the benefit cost ratio can be easily manipulated. Achieving that rubbery ratio relies on getting people to actually use light rail in the numbers used in calculating the ration.

Damien Haas comments that ACTION patronage is declining.

How does the government plan to ensure people use the light rail network in sufficient numbers to achieve the benefit cost ratio? How will those plans effect those who don’t benefit from the light rail network?

You raise a good point and the current City to Gungahlin plan is doomed to fail for several reasons. One is that is that it makes an unfounded assumption that everyone in Gungahlin works in Canberra City.
The only way the light rail can be viable is to extend it immediately via the Commonwealth Avenue bridge to the Parliamentary Triangle/Capital Hill, through Parkes, Barton, Kingston to the Railway Station and then to Queanbeyan on the existing railroad.
The network does not have to be electrified either – Canberra has gone to great pains to avoid the visual pollution that poles and wires create so the last thing we need are catenaries over tram tracks.
This amended proposal will generate the necessary users, take a lot of pressure off key road vehicle routes, make the service inclusive to Canberrans living and working South of The Lake and will also make the financing attractive to a PPP (it isn’t in its current form).
The way it is going now (with plans to re-develop EPIC into high density housing) it could end up like what is happening in some parts of the USA:
http://citiwire.net/columns/learning-again-why-plans-sometimes-fail/

Yeah and can you imagine how much it would cost to extend it all the way down to Qbyn FFS!

bundah 12:11 pm 07 Jul 13

Ben_Dover said :

The ACT Government’s Capital Metro light rail project delivers a benefit cost outcome similar to, or better than, other light rail projects that are going ahead around Australia, Minister for the Environment and Sustainable Development, Simon Corbell said today.

Thanks for my “coffee down the nose” moment for today.

Old Simon, he really is a card isn’t he?

No question he an absolute crack up with the emphasis on crack(ed)!

dungfungus 11:23 am 07 Jul 13

bikhet said :

As sien notes, the benefit cost ratio can be easily manipulated. Achieving that rubbery ratio relies on getting people to actually use light rail in the numbers used in calculating the ration.

Damien Haas comments that ACTION patronage is declining.

How does the government plan to ensure people use the light rail network in sufficient numbers to achieve the benefit cost ratio? How will those plans effect those who don’t benefit from the light rail network?

You raise a good point and the current City to Gungahlin plan is doomed to fail for several reasons. One is that is that it makes an unfounded assumption that everyone in Gungahlin works in Canberra City.
The only way the light rail can be viable is to extend it immediately via the Commonwealth Avenue bridge to the Parliamentary Triangle/Capital Hill, through Parkes, Barton, Kingston to the Railway Station and then to Queanbeyan on the existing railroad.
The network does not have to be electrified either – Canberra has gone to great pains to avoid the visual pollution that poles and wires create so the last thing we need are catenaries over tram tracks.
This amended proposal will generate the necessary users, take a lot of pressure off key road vehicle routes, make the service inclusive to Canberrans living and working South of The Lake and will also make the financing attractive to a PPP (it isn’t in its current form).
The way it is going now (with plans to re-develop EPIC into high density housing) it could end up like what is happening in some parts of the USA:
http://citiwire.net/columns/learning-again-why-plans-sometimes-fail/

bikhet 7:03 am 07 Jul 13

As sien notes, the benefit cost ratio can be easily manipulated. Achieving that rubbery ratio relies on getting people to actually use light rail in the numbers used in calculating the ration.

Damien Haas comments that ACTION patronage is declining.

How does the government plan to ensure people use the light rail network in sufficient numbers to achieve the benefit cost ratio? How will those plans effect those who don’t benefit from the light rail network?

Felix the Cat 5:22 pm 06 Jul 13

damien haas said :

ACTION Buses are costing ACT Ratepayers $130 million dollars a year, and patronage is declining. Attracting full fare paying riders to public transport, reducing parking demand, reducing road congestion and encouraging Transit Oriented Development along the Northbourne/Flemington Corridor are just a few of the benefits to the ACT and its economy that Capital Metro will provide. Did the GDE do that?

l/

So why would light rail be feasible, not taking into account the community benefits? How many hundreds of millions of dollars will taxpayers need to subsidise it with? Why would someone take a tram rather than a bus?

If people are going to spend say 10-15 minutes drive from their Gungahlin suburb to a light rail interchange at say Mitchell, why wouldn’t they just stay in their cars and drive for another 10-15 minutes to the city and then park near their place of work rather than stand in the freezing cold or boiling sun waiting for a tram and then when it finally reaches the city be faced with a long walk to work (or catch a bus to somewhere else that the tram doesn’t go to).

damien haas 5:29 pm 05 Jul 13

The post heading isn’t really helpful, but something as abstruse as an economic model doesn’t lend itself readily to pithy post headings.

I think Alistair Coe is well within his rights as a shadow to raise the questions he has been raising, and certainly the government needs to communicate its financing model to the public. I suspect that the government hasn’t yet arrived at a model to finance Capital Metro, having only recently determined its actual cost.

I’d like the same questions asked of all transport infrastructure spends. Where is the cost benefit analysis for Majura Parkway ? Have the opposition raised the same level of concern on that project? The true costs of more roads and paid parking are borne by us all. Public transport provides greater benefits than simple economic benefits – which is why triple bottom line measures are applied.

ACTION Buses are costing ACT Ratepayers $130 million dollars a year, and patronage is declining. Attracting full fare paying riders to public transport, reducing parking demand, reducing road congestion and encouraging Transit Oriented Development along the Northbourne/Flemington Corridor are just a few of the benefits to the ACT and its economy that Capital Metro will provide. Did the GDE do that?

At the moment I’m seeing battle of the press release. Capital Metro need a communications strategy and the media need to do more than just be a press release mechanism – perhaps they can assess the claims and report their analysis.

Damien Haas
Chair, ACT Light Rail
http://www.facebook.com/groups/actlightrail/

Ben_Dover 2:44 pm 05 Jul 13

The ACT Government’s Capital Metro light rail project delivers a benefit cost outcome similar to, or better than, other light rail projects that are going ahead around Australia, Minister for the Environment and Sustainable Development, Simon Corbell said today.

Thanks for my “coffee down the nose” moment for today.

Old Simon, he really is a card isn’t he?

Gungahlin Al 2:44 pm 05 Jul 13

Deref said :

Gungahlin Al said :

Yes there’s a big difference between making money and reducing costs. Light rail will do the latter in spades

Do you have any evidence for that, Al?

Well seeing as you appear to have missed it, yes – the benefit:cost ratio of 2.34:1. As determined by PriceWaterhouseCoopers. To which I would point out did not include provisions for (not inconsiderable) increases in land sale revenues or increased rates revenues along the routes, as these were specifically excluded from the Terms of Reference given to PWC (as explained to me by the PWC guy himself).

Deref 1:09 pm 05 Jul 13

Gungahlin Al said :

Yes there’s a big difference between making money and reducing costs. Light rail will do the latter in spades

Do you have any evidence for that, Al?

Gungahlin Al 12:11 pm 05 Jul 13

Yes there’s a big difference between making money and reducing costs. Light rail will do the latter in spades, as opposed to roads, which cost and cost and cost. Well that’s not entirely true – there is an economic return from roads, but the issue is that many people don’t look at the entire transport delivery cost picture when discussing rail costs. It’s like Alistair Coe banging on all the time about the cost of ACTION buses, but never giving a rats about the enormous cost of building new 4-lane roads everywhere.

davo101 11:47 am 05 Jul 13

Light Rail aims to make money

Um, no it doesn’t. I think you are confusing the benefit cost ratio from an economic analysis and the return on investment from a financial analysis. You can quite easily have a project with a high BCR that looses millions of dollars a year. Benefits include everything you can think of to add onto the list such as: reduced noise pollution, visual amenity, reduced travel times of the people not using the tram, increased economic activity brought by about higher levels of development along the corridor (none of which will result in any money in the fare box).

sien 11:37 am 05 Jul 13

That press release doesn’t say that light rail will make money, just that there will be a cost benefit ratio above 1.0.

Costings like that can be manipulated fairly easily. You can just add some ‘social costs’ and get the answer you want. Crikey had an excellent piece about this recently.

http://media.crikey.com.au/dm/newsletter/dailymail_0e637a5e7ad7dc32df975e4f7b027381.html#article_24921

In economics the debate over the Keynsian multiplier is similar.

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