City and SE Light Rail – The Real Business Case (or lack of it)
The extensive documentation on the CSELR EIS, etc, has disappeared from the Transport for NSW website:
This material can now be found on a new Light Rail website:
The “Business Case Summary” which can be downloaded from this site appears to be aimed at primary school children, with numerous cartoons and photoshopped pictures accompanying claims that the NSW State Government’s $1.6 billion investment will deliver “almost $4 billion” in economic benefits over 30 years.
The $1.6 billion capital cost is seriously understated. Jeff Goodling’s previous Light Rail projects in Seattle and Mumbai have each ended up costing irate taxpayers considerably more than original estimates. And the $1.6 billion figure makes no allowance for the extensive disruption to hundreds of businesses and millions of commuters and tourists during the CSELR’s 5 or 6 year construction phase. Somewhere between $3 billion and $5 billion would be a more convincing estimate.
The $4 billion benefit figure appears to have been largely pulled out of thin air in order to produce an attractive-sounding benefit-to-cost ratio. Its main components (accompanied by offensively facile explanations) are:
“Over $2 billion in benefits for public transport customers”. No explanation of or justification for this claim is provided, apart from a reference to “faster, more comfortable, more reliable journeys”. Many journeys are in fact going to take longer when the CSELR is introduced. Most people will have to walk much further to and from a light rail stop than they currently do to their bus stop. And public transport customers who currently get a seat on a bus (which carries them directly to their destination) will be forced to change on or off their bus to travel on light rail vehicles which require most of their passengers to stand. It is very difficult to see how passengers will benefit from or be grateful for these changes. It is impossible to see how these changes can produce any monetary return to public transport customers, or to the taxpayers who will be subsidising the CSELR at an estimated rate of $50-100 million per annum.
“$333 million in benefits for pedestrians”. This is claimed (without any substantiating information) to be the value of “journey time savings and amenity improvements”. However, most other CSELR documentation reveals that there will be little or no saving in journey times – in many cases the reverse – and most of the communities along the CSELR route are outraged at the destruction of their housing, parking, parks and historical trees. The claimed benefits do not exist.
“$308 million in environmental and health benefits”. This is claimed (again, without any substantiating information) to result from “a reduction of air and noise pollution … and improvements in health”. It is very difficult to see how these can represent any genuine return to taxpayers.
“$264 million in benefits to road users”. No explanation of or justification for this claim is provided, apart from a reference to “decongestion, operating savings and road safety improvements”. Given that the CSELR (south of Central Station) will permanently remove between 2 and 4 traffic and/or parking lanes from the majority of roads along its route, this claim defies belief.
“$707 million in operating savings”. This is described as “increased revenues” and “reduced bus operating costs….”. The “Business Case Summary” makes several baffling and unsubstantiated claims that building the CSELR will persuade 17% of current car users to switch to public transport, which may explain the reference to revenue increases. Various public statements – eg by Jeff Goodling at the Adina forum in Surry Hills on 30 June 2014 – have boasted that several (unionised) bus drivers will be replaced by each private-sector light rail “operator”. Figures of 200-300 buses disappearing and a $20-$40 million per annum saving in drivers’ wages are regularly quoted. This is perhaps the only genuine saving in the CSELR proposal, and is a tiny fraction of the cost of building and operating the Light Rail system.
In summary, building the CSELR is likely to cost between $3 billion and $5 billion (including the damage done to Sydney’s economy during its construction). It may possibly save around $700 million, principally by eliminating bus drivers, over 30 years. This represents a benefit-to-cost ratio of, at most, around 0.2.
You’d have to be crazy to invest money in such a project without arranging for a rich and foolish sponsor to reimburse your enormous losses. Whoever wins the “design, build and operate” contract has therefore been guaranteed a profit and has been assured that the NSW Government will bear all financial risks.
No doubt we will be soon see massive rises in fares as the NSW Government struggles to recoup some of the costs of this ill-conceived white elephant.