High-speed rail profits underestimated by $190 billion, reveals BZE

Wednesday, 26 June, 2013

Researchers at independent think-tank Beyond Zero Emissions (BZE) have found that the government has underestimated the profits of its Melbourne-Brisbane high-speed rail (HSR) plan by $190 billion - enough to repay the capital cost of the network. 

“They have assumed electricity prices increase 350% from today’s levels and priced fares at half their market value,” explained BZE researcher Gerard Drew. “Correcting these shows that operating high-speed rail will generate more than double the profits than previously thought.”

According to BZE, three major issues with the high-speed rail phase 2 study need to be corrected:

  • The increase in electricity price assumed is twice as large as CSIRO projections as well as 100% renewable energy projections by AEMO;
  • HSR fares have been matched to airfares half of the current market value, significantly underestimating revenue;
  • The timeline needs to be brought forward to allow the benefits to be realised and costs to be recovered sooner.

The government’s phase 2 study recommended 15 years of planning followed by 30 years of construction, with HSR not fully operational until 2063. This was justified on the grounds that HSR would not provide enough returns in earlier years. The BZE finds that this reasoning is no longer valid.

“A change of this magnitude transforms high-speed rail from just paying its bills, to paying off the capital investment,” said Drew.

“Instead of kicking the can down the road for another 20 years, we should aim to have the full Melbourne-Brisbane high-speed rail network built by 2028. We’ve seen this is possible in other countries. It will make enough money in the first 25 years of full operation to repay the up-front costs.

“HSR could be powered by a 100% renewable electricity grid for half the cost assumed in this study.”

“It’s disappointing to see the huge volume of work involved in this study being overlooked and largely dismissed by the public due to these discrepancies which were reviewed and approved by the Department of Infrastructure,” Drew said.

Beyond Zero Emissions have been researching HSR in collaboration with the German Aerospace Centre (DLR) as part of their Zero Carbon Australia Transport project and will soon publish the results of their HSR investigation. BZE’s review of the government’s phase 2 study has been submitted to the Department of Infrastructure and Transport and can be viewed here.

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