I want to believe…

…In high speed rail

High speed trains are great. I’d love to see high speed trains in Australia. Its a much better experience than all the hassle with flying and they can emit no greenhouse gas emissions depending on how you get your electricity. There wouldn’t be any technical problems with building a system that could do from the centre of Melbourne to the centre of Sydney in 3 to 4 hours, which would be competitive with flying.

The problem is the economics of it don’t even seem close to working.

Lets assume it will cost around $40 billion. Theres a couple of reasons for this estimate. $40 billion is a cost that has been quoted in the US for a San Fransisco to San Diego link, which is a similar distance to Melbourne-Sydney. 300-400 km stretches in Europe seem to cost 7-10 billion Euros to build – which would translate to 1000 km stretch costing $30-40 billion Australian.

There’s currently around 800,000 Melbourne to Sydney trips a month. Let’s say half of these can be converted to the train- so we’d have annual ridership around 5,000,000. Fares would have to be around the $200 mark to make it competitive. This gives revenues around $1,000,000,000 per annum, and I haven’t even included the running costs yet.

You could do a Net Present Value calculation, but it’s fair to say that any project that could only get 2% of its costs in revenues is going to require a very heavy government subsidy to make it work.

I’ve got no problem in principle with government subisidies if there are significant external benefits that could be realised, but I’m really not sure what they are. High Speed rail could be better than flying, but not that much better to justify these sorts of subsidies.

The current plans to do a study, and try to reserve land for future use seem to be a good idea. Just because it may not be viable now, doesn’t mean it will remain unviable for ever.

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