high speed rail report

7/28/2019 High Speed Rail Report

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High SpeedRail Study

Phase 2 Report

Key ndings andExecutive summary


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In accordance with the east coast high speed rail (HSR)study terms o reerence, AECOM and its sub-consultants(Grimshaw, KPMG, SKM, ACIL asman, Booz & Co andHyder, hereater reerred to collectively as the Study eam)have prepared this report (Report). Te Study eam has

prepared this Report or the sole use o the CommonwealthGovernment: Department o Inrastructure and ransport(Client) and or a specic purpose, each as expressly statedin the Report. No other party should rely on this Reportor the inormation contain in it without the prior writtenconsent o the Study eam.

Te Study eam undertakes no duty, nor accepts anyresponsibility or liability, to any third party who may relyupon or use this Report. Te Study eam has preparedthis Report based on the Clients description o itsrequirements, exercising the degree o skill, care anddiligence expected o a consultant perorming the same orsimilar services or the same or similar study, and havingregard to assumptions that the Study eam can reasonably

be expected to make in accordance with sound proessionalprinciples. Te Study eam may also have relied uponinormation provided by the Client and other third partiesto prepare this Report, some o which may not have beenveried or checked or accuracy, adequacy or completeness.Te Report must not be modied or adapted in any wayand may be transmitted, reproduced or disseminated onlyin its entirety. Any third party that receives this Report, bytheir acceptance or use o it, releases the Study eam andits related entities rom any liability or direct, indirect,consequential or special loss or damage whether arising incontract, warranty, express or implied, tort or otherwise,and irrespective o ault, negligence and strict liability.

Te projections, estimation o capital and operationalcosts, assumptions, methodologies and other inormationin this Report have been developed by the Study eamrom its independent research eort, general knowledgeo the industry and consultations with various third

parties (Inormation Providers) to produce the Reportand arrive at its conclusions. Te Study eam has notveried inormation provided by the Inormation Providers(unless specically noted otherwise) and it assumesno responsibility nor makes any representations withrespect to the adequacy, accuracy or completeness o suchinormation. No responsibility is assumed or inaccuraciesin reporting by Inormation Providers including, withoutlimitation, inaccuracies in any other data source whetherprovided in writing or orally used in preparing or presentingthe Report.

In addition, the Report is based upon inormation that wasobtained on or beore the date in which the Report wasprepared. Circumstances and events may occur ollowing

the date on which such inormation was obtained that arebeyond the Study eams control and which may aect thendings or projections contained in the Report, includingbut not limited to changes in external actors such aschanges in government policy; changes in law; fuctuationsin market conditions, needs and behaviour; the pricing ocarbon, uel, products, materials, equipment, services andlabour; nancing options; alternate modes o transportor construction o other means o transport; populationgrowth or decline; or changes in the Clients needs andrequirements aecting the development o the project.Te Study eam may not be held responsible or liable orsuch circumstances or events and specically disclaim anyresponsibility thereore.


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High Speed Rail Phase 2 / iii

OverviewA strategic study on the implementation o a High Speed Rail

(HSR) network (the study) on the east coast o Australia between

Brisbane, Sydney and Melbourne was announced by the Minister

or Inrastructure and Transport, the Hon Anthony Albanese MP,

in August 2010.

The study has been conducted in two phases. Phase 1, published

in August 2011, identied a short-list o corridors and station

options and estimated preliminary costs and demand or HSR

on the east coast o Australia. Phase 2 built on phase 1, but was

considerably broader and deeper in objectives and scope, and so

rened many o the phase 1 estimates, particularly the demand

and cost estimates. This phase 2 report presents detailed

ndings on the 12 advisory objectives established or the study.

Drawings and maps have been prepared or the purpose o

depicting the recommended alignment or the HSR system andto enable civil construction cost estimates to be made.


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High Speed Rail Phase 2 / v

Keyndings


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Key Findings

Denition o the preerred HSR system

The HSR network would comprise

approximately 1,748 kilometres o dedicated

route with our city centre stations, our

city-peripheral stations (one in Brisbane,

two in Sydney and one in Melbourne) and 12

regional stations.

HSRwouldrequireadedicatedrailwaynetworktodeliverthenecessarylevelofsystemperformance,intermsofjourneytimeandreliability,tobecompetitivewithothermodesoftransport,particularly aviation.

To meet expected demand, the HSR system

would oer a combination o services,

including direct express services and limited

stop services.

Typicalexpressjourneytimeswouldbetwohoursand37minutesbetweenBrisbaneandSydney,onehourandfourminutesbetweenSydneyandCanberra,andtwohoursand44 minutesbetweenSydneyandMelbourne.

eHSRwouldoperatefrequentservicesbetweencapitalcitiesandregionalcentres.

In2065,itisforecastthatpeakperioddemandforSydney-Melbournewouldbemetbytwonon-stopinter-capitalexpressservicesperhourperdirectionandthreeone-stopinter-capitalexpressservicesperhourperdirection,callingateitherSydneySouthorMelbourneNorthcityperipheralstations.

The dedicated HSR network would need to

be integrated into the hubs o existing urban

public transport systems and road networks

to maximise its connectivity with other

transport networks.

Allcitycentrestationsmustbeintegratedwithotherpublictransportnetworksandthecity-peripheralstationsmusthavegoodaccesstomajorroadnetworks.

Mostofthestationsonthenetworkwouldrequiresomelocalenhancementstopublictransportservices,parkingandinterchangearrangementstoensuregoodconnectivity.

Cost o constructing the HSR system

The estimated cost o constructing the

preerred HSR alignment in its entirety

would be about $114 billion (in 2012 terms),

comprising $64 billion between Brisbane

and Sydney and $50 billion between Sydney,

Canberra and Melbourne.

epreferredHSRalignmenthasbeendesignedrstandforemosttomeetmarket needs(intermsofjourneytimesandreliability),whilealsobeingenvironmentallyandeconomically sustainable.

Tunnellinghasbeenadoptedwherenodedicatedsurfaceroutecouldbecreatedwithoutunacceptabledislocationand/or

environmentalcosts.Tunnelsmakeup144kilometres(eightpercent)ofthepreferredalignmentandarethemostsignicantconstructioncostelement(29 percentof

totalconstructioncosts).AccesstoandfromSydneywouldrequirethemosttunnelling(67kilometres)comparedtoBrisbane(ve kilometres),Melbourne(eightkilometres)andCanberra(fourkilometres).

eHSRsystemwouldadoptinternationallyprovenandavailabletechnologyfortrainsetsandassociatedsystems(suchastraincontrolandpowersupplysystems),whichwouldcostlessthanifacustomiseddesignwererequired.


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High Speed Rail Phase 2 / vii

Forecast HSR demand

Between 46 million and 111 million passengers

are orecast to use HSR services or inter-

city1 and regional trips2, i the preerred HSR

network were ully operational in 2065, with a

central orecast o 83.6 million passengers

per year.

By2065,HSRcouldattract40percentofinter-cityairtravelontheeastcoastand60percentofregionalairtravel(primarilylongregional).Onthethreemainsectors,Sydney-Melbourne,Sydney-BrisbaneandSydney-Canberra,HSRcouldattractmorethan50percentoftheairtravelmarket.

Actualpassengernumberswoulddependontheratesofpopulationandeconomicgrowth,thelevelsofcongestionatairports,includingtravellingtoandfromairports,andthefares charged.

Sydney-MelbourneisexpectedtobethelargestmarketforHSR,withabout19millionpassengertripsperyearforecast.isis

considerablymorethanthenextlargestmarket,Brisbane-Sydney,withnearly

11millionpassengertripsperyear,andalmostfourtimesasmanyastheSydney-Canberramarket,withaboutvemillionpassengertripsperyear.

Inter-city andlongregionaltravel(>250km)areexpectedtoaccountfor49percentandapproximately36 percentoftotalpassengertripsand 62percentand35percentoftotalpassengerkilometrestravelledrespectively.Shortregionaltravel(


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Key Findings

Table1 Commencementandoperationalmi lestonesforoptimalstag ing

Stage

Main construction

commences

Operations

commence

Sydney-Melbourne line

Sydney-Canberra 2027 2035

Canberra-Melbourne 2032 2040

Brisbane-Sydney line

Newcastle-Sydney 2037 2045

Brisbane-GoldCoast 2043 2051

GoldCoast-Newcastle 2048 2058

Somepreliminary(enabling)workstoenableconstructionoftheHSRatSydneyCentralstation(e.g.movingplatformsandutilities)

wouldbeundertakenbefore2027.

ConstructionofthewholeHSRsystemwouldtakearound30years.

eSydney-MelbournelinehasstrongerforecastdemandthantheBrisbane-Sydneyline,wouldbelessexpensivetobuildandispredictedtohavehighereconomicandnancialreturns.Itshouldthereforebecompletedrst.

epreferredstagingofconstructionfortheBrisbane-Sydneyline(Newcastle-Sydney,Brisbane-GoldCoastandthenGoldCoast-Newcastle)reectsbothmarketdemandandeconomiccharacteristics.

Forthepurposeofevaluation,thestudyassumedtheinitialstagebetweenSydneyandCanberra

wouldoperatefrom2035,withtheSydney-Melbournelineoperationalfrom2040.

Brisbane-GoldCoastwouldbecompletedin 2051.

GoldCoast-Newcastlewouldbethelaststagetobebuilt,withthecompleteBrisbane-Melbournelineoperationalby2058.

It is possible the program could be

accelerated, with the Sydney-Melbourne

line operational by 2035. In this case the

Sydney-Canberra stage could be operational

by 2030.

Assumingfunding,nancingandallrelevant

approvalswereinplaceandpreliminarydesignhadbeencompleted,theearliestthatmainconstructionworkcouldreasonablystartwouldbe2022.

Bringingtheprogramforwardwouldreducetheeconomicbenets,primarilybecausethemarket

volumeswouldbelowerwhenoperationsbegan.

Table2 Commencementandoperationalmi lestonesforacceleratedstag ing

StageMain construction

commences

Operations

commence

Sydney-Melbourne line

Sydney-Canberra 2022(earliestpossiblestart) 2030


Brisbane-Sydney line

Newcastle-Sydney 2032 2040

Brisbane-GoldCoast 2038 2046

GoldCoast-Newcastle 2043 2053


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High Speed Rail Phase 2 / ix

Financial assessment

The HSR program and the majority o

its individual stages are expected to

produce only a small positive nancial

return on investment.

edistributionoftheeconomicbenetsofHSRbetweenusersofthesystemandtheoperator(s)woulddependontheprices charged.

Basedonchargingcompetitivefares,theHSRoperationsandancillaryservices(suchascarparkingandleaserevenuesfromrelatedproperty

development)wouldnotdeliversucientrevenuetofundorrecovertheexpectedcapitalcostsoftheHSRprogram.

Governments would be required to und the

majority o the upront capital costs.

epotentialtoattractprivatenanceislimited.Anexpectedreturnofatleast15percentwouldberequiredatthisstageofprojectdevelopmenttobeattractivetocommercialprovidersofdebtandequitytomajorinfrastructureprojects.HSR

wouldfallwellshortofthis. eestimatedrealnancialinternalrateof

return(FIRR)is1.0percentforSydney-Melbourneand0.8percentforthe

wholenetwork.

Ifpotentialcommercialfundingweremaximised,afundinggapintheorderof$98billion,or86 percentoftheup-frontcapitalcostoftheHSRprogram,wouldremain.

I HSR passenger projections were met

at the are levels proposed, the HSR

system, once operational, could generate

sufcient are revenue and other revenue

to meet operating costs without ongoing

public subsidy.

Postconstruction,theHSRprogramasawhole,andeachofitssectors(withtheexceptionofSydney-Canberraasastand-alonesector)areexpectedtogeneratesucientoperatingincometocovertheirongoingoperationalandassetrenewalcosts.

HSR ares adopted or the study have been

assumed to be comparable to air ares on the

inter-capital routes, and it would appear HSR

could sustain higher ares.

Increasingthecostoffareswouldincreasethenancialreturnsandreducethefundinggap,althoughdoingsowouldreducethenumberofpeopleusingthesystem.Evenso,theeconomicbenetsoftheprogramwouldremainpositive.

GiventhatairfaresinAustraliaarealreadyhighlycompetitiveonmajorroutes,itisnotexpectedthatairlineswouldrespondtoHSRcompetitionbyreducingfaresonasustainedbasis.Ithasbeenassumed,inlinewithinternationalexperience,thatairlineswouldquicklyreducecapacity,eitherbyreducingfrequenciesoraircraftsizes,tolocationswithintheHSRcorridorwherethereissignicantpassengerdiversiontoHSR.Itislikelythatanyreductionincapacitywouldberedeployedto

routesoutsidetheHSRcorridor. Nevertheless,totheextentthatairlinesare

abletoinnovateinwaysthathavenotbeenanticipatedinthisstudy,therewouldbeanimpactonHSRpatronageandcapacitytomeetoperatingcosts.esensitivitytestsincludedonescenarioinwhichairfareswerereducedby50percentfortwoyears.


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Key Findings

Economic assessment

Investment in a uture HSR program could

deliver positive net economic benets.

eSydney-Melbournelinewoulddeliveraslightlyhighereconomicinternalrateofreturn(EIRR)oninvestmentthanthewholenetwork

would.eEIRRofSydney-Melbourneisestimatedat7.8percent,comparedto7.6 percentforaninvestmentinthestagedHSRprogramasawhole.

eeconomicbenetcostratio(EBCR)calculatestheratioofthepresentvalueofbenetstothepresentvalueofcosts.Whencalculatedusingadiscountrateoffourpercent,theECBRis2.5forSydney-Melbourneand2.3forthewholenetwork.

eeconomicnetpresentvalue(ENPV)ofcostsandbenetsassociatedwithaprogramofinvestmentinthepreferredHSRsystem

wouldbe$70billionforSydney-Melbourneand$101 billionforthenetworkasawhole,

calculatedusingadiscountrateoffourpercentayearuntilthestartofconstructionin2027(nancialyear2028),andexpressedin $2012.

eeconomicresultsremainpositiveunderarangeofchangedassumptions.Whencalculatedusingasevenpercentdiscountrate,whichrepresentsahigherhurdlerateforjudgingeconomicperformance,theEBCRwouldbe1.1andtheENPVwouldbe$5 billion.

Mostoftheeconomicbenets(90percent)

wouldaccruetotheusersoftheHSRsystem.Abouttwo-thirdsoftheuserbenetsareattributabletobusinessuserstravellinglongdistances,whichreectsinparttherelativelyhighervalueoftimeattributedtobusinesstravellerscomparedtoleisuretravellers.

Externalitieswouldberelativelyminor,accountingforonlyaboutthreepercentofthe benets.

Environmental and social assessment

The preerred HSR alignment has been

selected to avoid major environmental and

social impacts. The residual impacts on

natural environments and heritage can be

managed by appropriate mitigation and,

where necessary, osets.

Potentialsignicantimpactsinurbanareas,suchasnoiseandlargescalepropertyacquisition,havelargelybeenavoidedbytheuseoftunnellingontheapproachestocapital cities.


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High Speed Rail Phase 2 / xi

Broader impacts o HSR

Aligning public policies, programs and

capabilities across Australian Government,

state/territory government and local

government agencies as part o a corridor

regional development concept would be

necessary to realise the ull benets o HSR.

eimplementationofHSRwouldsubstantiallyimproveaccessibilityfortheregionalcentresthatitserves,providingtheopportunityforbutnottheautomaticrealisationofincreasedregionaleconomicdevelopment.eabilityofthese

centrestotakeadvantageoftheopportunitiescreatedbyimprovedaccessibilitywouldrequirecoordinatedandcomplementarypoliciestobeimplemented.

Emerginginternationalevidencesuggeststhatwidereconomicbenetsmaybegeneratedbyregionalaccessibilityimprovements,butthequantitativeestimatesareneithersucientlycertainnorrobustforinclusioninthemaineconomicassessment.

Implementing a uture HSR program

Both the public and private sectors would

play a signicant role in the planning and

implementation o a uture HSR system.

Governmentswouldneedtohaveacentralroleintheplanninganddevelopmentofthe

HSRsystem,includingsecuringthenecessaryapprovals.eprimarypublicsectorroles

wouldbeexecutedthroughasingleHSRdevelopment authority.

AsHSRwouldbepredominantlypubliclyfunded,theAustralian,ACTandrelevantstategovernmentswouldbetheownersofthesystemandwouldassumethekeyroleinthespecicationandprocurementofnetworkinfrastructure,theallocationofitscapacityfortransportservicesandthespecicationof

minimumservicerequirements.

eprivatesectorwouldberesponsibleforbuildingtheHSRinfrastructureundercontract

totheHSRdevelopmentauthority,andforthedeliveryoftrainservicestothepublic.Controlofthemovementoftrainsandmaintenanceofinfrastructurewouldalsobetheroleoftheprivatesector,undercompetitivelytendered

concession arrangements.The key risks to the HSR program and

its successul perormance are common

to all major greeneld inrastructure

projects; most notably, a lack o certainty

about uture demand and revenues,

and the potential or cost over-runs

during construction.

Allowanceforriskanduncertaintyhasbeenincludedinthedemand,economicandnancialassessments,buttheriskscannotbeperfectlycontrolledandaprogramofthisnature,particularlyextendingoveralongperiodoftime,containssignicant uncertainties.


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Key Findings

Key public policy issues or a decision to proceed

Whether to proceed with planning or a

uture HSR program must necessarily be

a policy decision, taking account o many

actors that cannot be known with certainty,

and in the context o risks which cannot be

perectly controlled.

isstudyestimatesthatHSRwouldhavepositiveneteconomicbenets,usingtheAustralianTransportCouncilscost-benetmethodologyguidelines,whichareconventionallyappliedtomajortransportinfrastructureprojects.However,thisappraisalextendsto2085,anecessarilydistanttimehorizonforprogramdeliveryandmarketimpactcomparedtomostinfrastructurefeasibilitystudies.

elong-termfutureisinherentlyuncertainandrequirescautionwhenmakingajudgement,butitismostlikelythatdemographicandeconomictrendswillsupportasteadilyimprovingcaseforHSRontheeastcoastratherthanotherwise.Inthatcase,policy-makers,whetherornot

yetconvincedofthemeritsofcommittingtoHSR,mayalsolegitimatelyweighthepossibleconsequencesofnottakingactionstopreservethatoptionatsometimeinthefuture.

Inthisregard,inactionisnotbenign.Intheabsenceofaprotectedroute,thespreadofcitiesandotherdevelopmentsinthepreferredcorridorwillgraduallyreducetheconstructabilityandincreasethepotentialcapitalcostsofafutureHSRprogram,renderingitincreasinglymorediculttoimplement,even

whilethefundamentaltrendsmaybecomeincreasinglyfavourable.

As in all publicly-unded inrastructure

projects, the balance between public benet

and public cost should be considered.

epositiveeconomicperformancethatisestimatedtobeachievablefromaninvestmentinHSR,mostofwhichwoulddirectlybenettheusersofthesystem,contrastswithlownancialreturns,whichwouldneedtobesupportedby

publicfunding.Althoughthisistrueofmanytransportinfrastructureprojects,includingnationalhighways,itisanissuethatmustbeconfronted.

eexternalbenetsofHSR-fewerroadaccidents,reducedroadcongestionandsoon

whichmightcontributetoitsrationale,wouldbepositivebutareestimatedtofallfarshortofthepublicfundingrequired.

Bycontrast,theopportunitiesforurbanandregionaldevelopmentintheHSRcorridor

willbeconsideredbymanypeopleinAustraliatohaveahighpotentialvalueinpublicpolicyterms,butthosebenetsdonotfollow

automaticallyorwithcertainty.erewouldneedtobecondencethattheywouldbeactivelyexploitedandrealisedtojustifyanygreatweightinthedecisiononwhethertoproceed.atinturnwouldrequirepolicycommitmentatalllevelsofgovernmenttopursuinganintegratedcorridordevelopmentstrategy,synchronised

withthedeliveryoftheHSRprogram.

A related policy issue is the extent to which

the initial capital costs o an HSR program

should be recovered rom users.

Taxpayerswouldneedtomakeasubstantialcontributiontotheup-frontcostsofestablishinganHSRsystem.eanalysissuggeststhatcharginghigherfaresthanthoseassumedwouldbefeasible,andwouldimprovenancialreturns,butwouldreduceoveralleconomicbenetsasfewerpeoplewouldusethesystem.

Whileeconomicprinciplessuggestthatthecommunityseconomicwelfareisbestpursuedbychargingusersonlythemarginalcostofinfrastructure,establishingthebalancebetweenrecoveryofpublicinvestmentininfrastructureandmaximisingitseconomicbenetsisultimatelyapolicymatter.

IfanHSRprogramwereadopted,therewouldneedtobeanup-frontunderstandingofwhatprincipleswouldbeappliedtoinfrastructurepricingandcostrecovery.Certainly,ifpassengernumbersweretogrowovertime,governments

wouldbeinapositiontobegintorecoversomeproportionofitscapitalinvestment.


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High Speed Rail Phase 2 / 1


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ES


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The expected growth in

travel demand

PopulationandemploymentgrowthwillcontinuetochallengethecapacityofexistingtransportnetworksandpublicinfrastructurealongtheeastcoastofAustralia1.TravelontheeastcoastofAustraliaisforecasttogrowataround1.8percentperyearoverthenext20years,increasingbyapproximately60percentby2035.By2065,travelontheeastcoastwillhavemorethandoubled,from152milliontripsin2009to355milliontripsperyear2.

WithoutHSR,aviationwouldremaintheprimarymeansoftransportforlongdistanceinterstate(andsomeinter-regional)tripsandroad-basedtravelbyprivatevehiclewouldremaintheprimarymodeforconnectionswith,andbetween,regionalcentres.Togetherthesewouldcarryover90per

centofthetripsontheeastcoast,subjecttocapacitybeingavailable.

isstrategicstudyinvestigateshowHSRcanplayaneectiveroleinmeetingfuturetraveldemandbyprovidinganalternativemodeoftransportthat

wouldbeattractiveforpeopletouse.

1 AustralianBureauofStatistics(ABS)mid-rangepopulationprojectionsestimatethatbetween2011and2050,thepopulationwillgrowby37percentinNSW,49percentinVictoriaand80percentinQueensland.ABS,PopulationProjectionsAustralia2006to2101,catalogueno.3222.0.

2 SeeChapter 2fordetailofhowtheseforecastsweredetermined.

Executivesummary


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Executive Summary

What is HSR?HSRisgenerallydenedasapurpose-built,xed-trackmodeoftransport,capableofmovingpeopleatspeedsofatleast250kilometresperhour,usuallyoverlongdistances.Internationally,ittypicallyoersservicesbetweenmajorcities,competinginthesametravelmarketasaviation,butalsoprovidesopportunitiesforintermediatestopsinregionalareasandfastcommuterrailservicesfromoutermetropolitanareas.HSRstationsaretypicallylocatedwithincitycentres,

closetopopulationandbusinesscentres.

OriginatinginJapaninthe1960s,HSRsystemsnowoperatein14countries3.Totalglobalkilometresoftrackhaveincreasedfromjustover1,000kilometresin1980,to15,000kilometresin20114.Chinaiscurrentlyconstructinganadditional10,000kilometresofHSRnetwork5.

MostHSRsystemsoperateondedicatedtracksatamaximumspeedofbetween250and300kilometresperhour,withsomesystemsnow

operatinginexcessof300kilometresperhour6.SomeHSRservicesalsousesectionsofconventionaltracksatlowerspeeds,eitheronentrytocitiesortoextendbeyondadedicatedline 7.AllcurrentHSRsystemsuseconventionalsteelwheelsonrailsandarepoweredbyelectrictraction,althoughthereareseveralvariantsintermsofrollingstockandinfrastructure.

Denition o the preerred

HSR system

HSR alignment and station locations

epreferredHSRrouteontheeastcoastofAustraliahasbeendevelopedrstandforemosttomeetmarketneeds(intermsofjourneytimesandreliability),whilealsobeingenvironmentallyandeconomicallysustainable.eroute,illustratedinFigure ES-1,broadlyfollowsacoastalalignmentbetweenBrisbaneandSydneyfollowedbyaninlandalignmentfromSydneytoMelbourne,withspurlinestotheGoldCoastandCanberra.

CitycentrestationswouldbeterminalstationswithintheCBDsofthecapitalcities.eselocationsarethesinglemostimportantoriginanddestinationineachcityandprovidereadyaccessto,andintegratewith,othermetropolitantransportservices.CBDstationswouldbelocatedbeneaththeBrisbaneTransitCentreinBrisbaneandontheeasternfringeofCivicinCanberra,andwouldshareexistingstationsatCentralinSydneyandSouthernCrossinMelbourne.Eachofthethreemaincapitalcities(Sydney,MelbourneandBrisbane)wouldalsohaveaperipheralstation(inSydneyscaseitwouldhavetwoonetothenorthandonetothesouthoftheurbanarea),forpassengerswhowouldnditmoreconvenienttoaccessHSRwithouthavingtotravelintooroutoftheCBD.

eminimumcorridorwidthrequiredtoaccommodatetwodedicatedHSRtracksis30metres.isrepresentsarenementofthephase1evaluation,whichwasbasedona200 metrewidthtoensurethatanysignicant

issueswerecapturedwhencomparinginitialcorridoroptions.e30metrewidthdoesnotincludetheadditionalwidthrequiredforembankmentsorcuttingsnecessarytomaintainthesmoothverticalalignmentrequiredforHSR.

Inmanydevelopedurbanareas,surfacealignmentswouldnotpermitcompetitiveaccesstimestothecitycentresforHSRserviceswithoutmajordislocationoftheurbanpopulationand,insuchcases,thealignmentwouldbeplacedintunnel.Sectionsoftheregionalalignmentwouldalso

bebuiltintunneloronviaductstoavoidbuilt-uporenvironmentallysensitiveareas.Althoughtunnelsaddtothecapitalcost,theywouldallowtheinfrastructuretobedeliveredinawaythatminimisesanypotentialnegativeimpactsonthecommunityandenvironmentduringconstructionandoperation,andminimisesdelaysanddicultiesduringconstruction.

3 Japan,Italy,France,Germany,Spain,Switzerland,Belgium,Netherlands,Luxembourg,China,UnitedKingdom,Korea,TaiwanandTurkey.

4 DerivedfromeWorldBank,High speed rail: the fast track to economic development?,2010(updated).

5 ZhangJianping,Planning and Development of High Speed Rail Network in China,UIC8thWorldCongressonHighSpeedRail,2012.

6 Forexample,bothFranceandSpainoperateserviceswithspeedsofover300kilometresperhourincommercialservice.

7 ParticularlyinFranceandGermanyand,toalimitedextent,inJapanandChina.


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RegionalstationswereselectedonthebasisofpotentialpatronageandhavebeenproposedattheGoldCoast,Casino,Grafton,CosHarbour,PortMacquarie,Taree,Newcastle,CentralCoast,SouthernHighlands,WaggaWagga,Albury-

WodongaandShepparton.Tominimisecostand

avoiddisruptiontobuilt-upareas,thesestationswouldbelocatedoutsidethecurrenturbanareas,althoughtheywouldtypicallybewithintento20kilometresofthetowncentreandwouldhavebothcarparkingfacilitiesandfacilitiestointerchangewithlocalpublictransportservices.

FigureES-1 PreferredHSRalignmentandstationsfortheeastcoastofAustralia

QLD

NSW

VIC

ACT

SYDNEY

BRISBANE

CANBERRA

MELBOURNE

KEY Station locationsState border Not to scale

LINE 1

LINE 2

Taree

Newcastle

Central Coast

Southern Highlands

Casino

Graton

Cofs

Harbour

Port

Macquarie

Wagga Wagga

Shepparton

Albury-

Wodonga

Gold

Coast


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Executive Summary

Types o HSR servicesemarketassessmentshowedstrongdemandontheeastcoast,nowandintothefuture,forhighspeedtravelbetweenthecapitalcitiesandtoandfromregionalcentres.epreferredHSRsystem

wouldthereforeoertwotypesofservices:

Inter-capitalexpressservices,mostlyoperatingnon-stopbetweenthecapitalcitycentralstationsbutwithsomealsostoppingatthecityperipheralstations.

Inter-capitalregionalservicesoeringhigh

speedservicesbetweenthecapitalcitiesandmajorregionalcentres.Regionalserviceswouldalsofacilitatetravelbetweenregionalstations,althoughsomeinter-regionalmovementswithlowdemandmayrequirepassengerstochangefromoneservicetoanotheratanintermediatestationtocompletetheirjourney.

Ifbuilt,thesystemwouldalsohavethecapacitytoaccommodatefastcommuterrailservicesbetweenthecapitalcitiesandtheirnearerregionalcentres(suchastheCentralCoastandNewcastlein

NSW),manyofwhichcurrentlyhaverelativelyslow,ifany,services.Commuterserviceswouldprobablybeoperatedbythirdparties.eyhavebeenallowedforinthephysicalplanningbutthey

wouldnotpositivelycontributetothenancialperformanceofHSR,norwouldtheybethesourceofanysignicantincrementaleconomicbenetinthecost-benetanalysisofHSR.Commuterdemandwasthereforeexcludedfromtheeconomicandnancialappraisals.

HSR service characteristicsAustralianmarketresearchandinternationalexperiencehaveindicatedthatHSRwouldneedtooercompetitivedoor-to-doorjourneytimes,highstandardsofcomfortandconvenienceandacompetitivefarestructuretosuccessfullycompete

withothermodesoftransport,especiallyair.HSRcoulddelivernon-stopjourneytimesunderthreehourscitycentretocitycentre,betweenBrisbaneandSydneyandSydneyandMelbourne,asshowninFigure ES-2andTable ES-1and

Table ES-2.


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FigureES-2 HSRtraveltimesbetweenmajorcities

Not to scaleKEY

HSR preferred alignment

State border

Newcastle

Gold

CoastQLD

NSW

VIC

ACT

SYDNEY

BRISBANE

MELBOURNE

CANBERRA

NEWCASTLE TO SYDNEY

39 mins

SYDNEY TO BRISBANE

2 hrs 37 mins

SYDNEY TO MELBOURNE

2 hrs 44 minsSYDNEY TO CANBERRA

64 mins

Roads

Station locations


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Executive Summary

TableES-1 TypicalHSRtraveltimesanddist ancesbetweenselectedstationsonBrisbane-SydneylineDestination

Cofs

HarbourNewcastle

Central

CoastSydney

Regional Regional Regional Express Regional

Or

igin

Brisbane1hr11min*

(332km)2hr28min

(662km)2hr43min

(714km)2hr37min(797km)

3hr09min(797km)

Cofs Harbour1hr09min

(330km)1hr30min

(382km)-

1hr50min(465km)

Newcastle0hr14min

(52km)-

0hr39min(134km)

Central Coast -0hr27min

(83km)

*Withonestop.Onehour23minuteswiththreestops.Note:Distancesmaynotaddduetorounding.

TableES-2 TypicalHSRtraveltimesanddist ancesbet weenselectedstationsonSydney-Melbourneli ne

Destination

SouthernHighlands

Canberra Albury-Wodonga

Melbourne

Regional Express Regional Regional Express Regional

Origin

Sydney0hr29min

(98km)1hr04min(280km)

1h11min(280km)

1hr55min(540km)

2hr44min(824km)

3hr03min(824km)

Southern

Highlands-

0hr39min(183km)

1h31min*(442km)

-2hr29min(727km)

Canberra1hr16min(366km)

2hr10min(651km)

2hr28min(651km)

Albury-

Wodonga-

1hr09min(284km)

*PlusinterchangetimeatWaggaWagga.Note:Distancesmaynotaddduetorounding.


21/56


Serviceswouldtypicallyoperate18hoursperdayfor365daysperyear.Servicefrequencieswouldtypicallybeatleasthourly,increasingasdemandgrewtoreachpeakperiodservicefrequenciesin2065,asshowninTable ES-3.

Ultimately,trainfrequencieswouldbeinuencedbyfuturemarketneedsandthepreferredtrainoperatingstrategy(operatingspeedsandstoppingpatterns)buttheindicativefrequenciesestablishedforthisstudyarecompatiblewiththeforecastdemandandecienttrainutilisation.

TableES-3 Peakserv icefrequenciesin2065(perhourineachdirection)

Route Inter-capital express Inter-capital regional

Brisbane-Sydney 3-4 2Gold Coast-Sydney - 4

Sydney-Canberra 1 2

Sydney-Melbourne 5 2


Fareswouldbestructuredtobecompetitivewithalternativemodesoftransport.Forthepurposesofthemaindemandassessment,averagefaresforbusinessandleisuretravelweredesignedto

becomparableto,andcompetitivewith,airfaresonthemaininter-capitalroutesontheeastcoast,takingintoaccountthetypesoffarestypicallypurchasedbythedierenttypesofpassenger8.Inpractice,arangeoffareswouldbeoered,targetedtomarketsegmentsandinuencedbyseatutilisationpatternsandcompetitivepressures,asiscurrentlythecasewiththeairlines.

Forecast HSR demand

AnHSRsystemwouldsignicantlyincreaselongandmedium-distancetransportcapacityon

theeastcoastofAustraliaandwouldprovideanalternativemodeoftransportthat,accordingtomarketresearchandsupportedbyinternationalevidence,wouldbeattractivetomanytravellers.IfthecompleteHSRnetworkwasfullyoperational,thestudypredictsthat,underthereferencecaseassumptions9,itcouldattractapproximately83.6 millionpassengertripsby2065,asshowninTable ES-4.Figure ES-3illustratesthemaininter-citypassengertripows.

8 Forexample,theaverageHSRsinglefaresassumedinthereferencecasebetweenSydneyandMelbournewere$141fortheaveragebusinesspassengerand$86fortheaverageleisurepassengerbutsensitivitytestsalsoconsideredfaresupto30percentand50percentgreater.ecorrespondingaveragefarespaidbyairpassengerswereestimatedas$137and$69respectively.

9 ereferencecaseispartofthecentralcaseestablishedforevaluation.


22/56

Executive Summary

FigureES-3 HSRtraveldemandin2065betweenmajorcitiespassengertrips

Not to scale

Newcastle

Gold

CoastQLD

NSW

VIC

ACT

SYDNEY

BRISBANE

MELBOURNE

CANBERRA

SYDNEY TO CENTRAL COAST/

NEWCASTLE

4.75 million

SYDNEY TO BRISBANE

10.86 million

SYDNEY TO MELBOURNE

18.76 millionSYDNEY TO CANBERRA

5.19 million

KEY


State border Roads

Station locations


23/56


TableES-4 HSRtravelmarketfor2065

Total travel market (inter-city and regional)

Trips without HSR (million) 355

Trips with HSR (million)* 389

HSR travel market (inter-city and regional)

HSR trips (million) 83.6

HSR passenger kilometres (billion) 53.1

*IncludesnewdemandinducedbytheconstructionofHSR.Assumesthefullsystemisoperational.

AsetofalternativeassumptionsproducedforecastsforHSRin2065,assumingafullsystemweretobeoperational,ofbetween46millionand111millionpassengertrips.ealternativeassumptionsincludedvariationsinpopulationandeconomicgrowth,increasesinairportcapacityatSydney(andhenceimprovementsintheaviation

levelofservice)andvariationsinHSRfaresrelativetotheprojectedairfaresandcarrunningcosts.

ForecastHSRtraveldemandbyjourneytypeinthereferencecaseispresentedinFigure ES-4(forpassengertrips)andFigure ES-5(forpassengerkilometres).Travelforbusinessaccountsfor35percentofforecastHSRpatronage,withinter-citybusinesstravelbeingthemostimportant 10.Inter-citytravelwouldmakeupabout49percentoftotalpassengertripsand62percentofpassengerkilometres.Regionaltravelwouldrepresentabout

50percentoftotalpassengertripsand38percentofpassengerkilometres.

10 Inter-citytripsarede nedasjourneysover60 0kilometresbetweenthesi xmaintownsandcitiesinthecorridorbasedonpopulation(Brisbane,GoldCoast,Newcastle,Sydney,CanberraandMelbourne).Regionaltripshavebeenbrokenintolongregionaltripsofgreaterthan250kilometres,whichincludesSydney-Canberra,andshortregionaltripsoflessthan250kilometres,whichincludesBrisbane-GoldCoastandNewcastle-Sydney.


24/56

Executive Summary

FigureES-4 HSRtraveldemandin2065byjourneytype(assumingthefullHSRnetworkwasoperational)passengertrips

Inter-city non-business Inter-city business Long regional non-business

Long regional business Short regional non-business Short regional business

1%

13%24%

25%

27%

9%

Note:Totaldoesnotaddto100%duetorounding.

FigureES-5 HSRtraveldemandin2065byjourneytype(assumingthefullHSRnetworkwasoperational)passengerkilometres

Inter-city non-business Inter-city business Long regional non-business

Long regional business Short regional non-business Short regional business


25/56


Table ES-5showstheforecasttravelmatrixforthereferencecasein2065whenthefullnetworkwouldbeoperational.Intermediatestationsbetweencapitalcentresareaggregatedforpresentationpurposes.Excludingcommutermarkets,Sydney-MelbourneisthelargestmarketsegmentforHSRwithabout19 millionpassengertrips,considerablymorethanthenextlargest,Brisbane-Sydney,withnearly11 millionpassengertripsandalmostfourtimesSydney-Canberra,withaboutvemillionpassengertrips.

Sometravelwasomittedfromthematrixbecauseitcoveredonlyashortdistance,orwouldbebestservedbycar,implyingthatfewsuchjourneys

wouldbelikelytotransfertoHSR.isincludedalltravelwhollywithineachoftheintermediate

areas,otherthanthattoandfromWollongong.AsmallproportionoftheomittedlongertripscoulduseHSR,andtothisextent,theHSRforecastsareconservative.Tripstoandfromplacesexternaltothestudyareawerealsoexcluded.eexcludedtripsreferredtoaboveareshownbyanXinthetable.

AbouthalfoftheHSRdemandwouldbedivertedfromforecastairtravelasshowninFigure ES-6.About19percentoftotaltripswouldbenewdemandgeneratedbythe

introductionofanHSRservice(shownasinduceddemand).

TableES-5 HSRtravelmarketmatrixfor2065(0 00tripsinbothdirectionsperyear)

Sectors

Brisbane

GoldCoast

Intermediate

Newcastle

Intermediate

Sydney

Intermediate

Canberra

Intermediate

Melbourn

e

Total

Brisbane X 2,210 1,650 750 600 10,860 1,240 1,130 730 2,490

Gold Coast X 900 520 580 3,830 610 190 440 340

Intermediate X 810 X 5,500 190 330 X 850

Newcastle X 170 1,760 220 250 150 330

Intermediate X 2,990 20 300 X 730

Sydney X 2,690 5,190 2,290 18,760

Intermediate 80 480 100 2,320

Canberra X 640 2,720

Intermediate X 4,660

Melbourne X

Total 83,600*

*Cellsmaynotexactlysumtothetotalduetorounding.


26/56

Executive Summary

FigureES-6 SourceofHSRtraveldemandin2065byjourneytype(passengertrips)

All

Business

Non-business

Air Coach Car Rail Induced

1%

2%

55%

19%

23%


27/56


HowthetotalHSRandairmarketwouldbesharedbetweenthetwomodesoftransportisakeyissueinthedemandassessment.ConsiderableevidencehasbeenassembledintheinternationalliteratureontheimpactsofHSRoninter-capitalairtravelinEuropeandEastAsia.InFigureES-7,theinternationalmarketsarerepresentedbythebluedots,whichshowtheproportionofthecombinedairandHSRtravelmarketcapturedbyHSRonselectedroutes.ForHSRjourneytimesoflessthantwohours,thisistypicallyover80percent,whereasifHSRjourneytimesexceedfourandahalfhours,theHSRsharefallsbelow30percent.Fortripsofuptothreehours(asforSydney-

MelbourneandSydney-Brisbane),observedHSRmarketsharesrangefromaround55percentuptoaround70percent.

isstudysreferencecaseinter-capitalforecastsfor2035havebeenincludedinthegureforcomparisonandshowahighdegreeofconsistency

withtheinternationalexperience.Sydney-Canberraislowerthantheexpectedrangefor

journeyslessthantwohours,butthisislargelyexplainedbytherelativelyhighproportionofpassengerstransferringtoconnectingights,

whichareassumedintheforecastsnottodiverttoHSR.

FigureES-7 HSRshareofcombinedHSR/airtravelmarket,comparingthenalmodelforecastfor2035withinternationalevidence

HSRmodeshare(%)

HSR in-vehicle time (mins)

SydneyCanberra

CanberraMelbourne

BrisbaneSydney

SydneyMelbourne

BrisbaneMelbourne

10%

0%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 50 100 150 200 250 300 350 400 450

International evidence Model forecasts for 2035


28/56

Executive Summary

Cost o constructing theHSR network

Internationally,HSRsystemsareveryreliablewhentheyoperateasclosedsystemsdedicatedtohighspeedserviceswithpurpose-builtinfrastructureandtrainsets.AlthoughmixingHSRserviceswithconventionalrailservicesonsharedinfrastructuremayreducecapitalcosts,particularlyforaccessintotheurbanareas,operationalperformancecandiminishdramatically.Suchsystemsaregenerallynot

capableofdeliveringthejourneytimesthatwouldbenecessaryforanHSRsystemontheeastcoastofAustraliatoachievetherequiredlevelsofreliabilityandcompetitiveness.

ToachievethetargetjourneytimeofunderthreehoursforSydney-MelbourneandBrisbane- Sydney,anaveragejourneyspeedofapproximately300 kilometresperhourwouldneedtobeachieved.iswouldrequireasystemcapableofamaximumoperatingspeedof350kilometresperhour,toallowforsomeslowersectionsof

trackduetoterrainorotheroperatingconditions.SuchaveragespeedswouldnotbepossibleontheexistingconventionalrailinfrastructureontheeastcoastofAustralia,evenifitwasonlyusedforshortsectionsforcityaccessandegress,sodedicatedHSRinfrastructurewouldberequired.IftheHSRnetworkwereusedtoprovidefastcommuterservices,itislikelytheywouldnotoperateatsuchhighspeeds;amaximumoperatingspeedof200- 250kilometresperhourwouldeectivelyservethecommutermarket,giventherelatively

shorterdistancesandmoreintensivestoppingpatternsoffastcommuterservices.

Inadditiontothephysicalcomponentsofcapitalcost(land,earthworks,structures,track,equipmentandfacilities),thecostestimatesalsoincludedesign,programandconstructionmanagement,andassetrenewalwhenitwouldfalldue.CostcomponentsweredevelopedfromAustralianunitcostsandbenchmarkedagainstinternationalHSRsystemstoensuretherobustnessoftheestimates.Rollingstock(trainsets)isequivalenttoafurtherninepercentofthetotalcapitalcost,butthiswouldonlybeexpendedasdemandbuiltupovertheappraisalperiodandservicefrequenciesincreased.

Tunnell ingwouldbeusedwheretheterrainrequiresit,butwouldalsobeadoptedwherenodedicatedsurfaceroutecouldbecreatedwithoutunacceptablecommunitydislocationand/orenvironmentalcosts.isisparticularlythecase

wheretheroutepassesthroughthemiddleandinnersuburbsofthecapitals,wherenosuitableeasementsareavailable.Ithasalsobeenusedinsomelocationswhicharehighlyenvironmentally

sensitive.Intotal,thepreferredalignmentincludes144kilometresoftunnelalongtheroute,representingaround29percentofthetotalcostofconstruction.Sixtypercentofthetunnellengthisinurbanareas,with67kilometresinSydney,eightkilometresinMelbourne,ve kilometresinBrisbaneandfourkilometresinCanberra.

ecostestimatesreecttheuseofprovenHSRsystemtechnology(suchastraincontrolandpowersupplysystems)andtrainsetsalreadyinservice,andreadilyavailable,andtakeaccountofarange

ofmanufacturersdeliveredcostsforexistingHSRsystems.


29/56


ecapitalcostshavebeenrisk-adjustedtoreectuncertainty,principallyaroundthe scopeofthemajor construction,engineeringandoperationalelementsofafutureHSRprogram.Expectedconstructioncostsareexpressedthroughoutthischapterintermsofrisk-adjustedvalue,in$2012.

Intotal,theriskadjustmentprocessincreasedcapitalcostsbyabout10.8percent11.

eestimatedcapitalcostforthefullHSRsystem,excludingthecostoftrainsets 12,is$114.0 billionin$2012,asshowninTable ES-6.

TableES-6 Risk-adjustedHSRprogramcosts($2012,$bil lion)

Sydney-

Canberra

Canberra

Junction-

Melbourne

Newcastle-

Sydney

Brisbane-

Gold

Coast

Gold

Coast

Junction-

Newcastle

Total

HSR

system

Projectdevelopment

2.2 2.5 1.7 1.0 3.1 10.4

Construction 20.8 24.4 17.2 10.0 31.2 103.6

Total capital costs 23.0 26.9 18.9 11.0 34.3 114.0

Notes:Totaldoesnotaddupexactlyduetorounding.ereferencestoCanberraJunctionandGoldCoastJunctiondescribethepointsatwhichtheGoldCoastandCanberraspursleavethemainalignment.

Figure ES-8presentstheresultsofthe@RISKanalysisfortotalconstructioncostsincludingdevelopmentcostsforthefutureHSRprogram 13.

eanalysisil lustratesthat:

In50percent(P50)ofsimulations,totalconstructioncostsareexpectedtobelessthan$113.9billion($2012).

In90percent(P90)ofsimulations,totalconstructioncostsareexpectedtobelessthan$127.0billion($2012).

Intenpercent(P10)ofsimulations,totalconstructioncostsareexpectedtobelessthan$102.0billion($2012).

11 isistheexp ectedrisk-adjustedcostandiswit hinonepercentofthemedianrisk-adjustedcost,commonlyknownastheP50;thedierencebetweenthemisduetotheriskadjustmentappliedtotheindividualcostcomponentsbeingnon-symmetrical.Takingintoaccounttheallowancesincludedindevelopingthenon-risk-adjustedcosts,theriskallowanceiscomparablewithwhatwouldbeallowedasaphysicalcontingencyforaprojectatasimilarearlystageofdevelopment.

12 Trainsetsareassumedtobeleasedinthenancialassessment.13 efrequencyrepresentsthelikel ihoodofthetotalconstructioncostsbeingwithi na$1bill ionbandcentredonthecorrespondingpointonthecurve.usthereisatwopercentchancethatthecostwillliebetween$100.5billionand$101.5billionandafourpercentchancetheyliebetween$107billionand$108billion.


30/56

Executive Summary

FigureES-8 Totalconstructioncosts(includingdevelopmentcosts)($2012,$billion)

0.06

0.05

0.04

0.03

0.02

0.01

90 95 100 105 110 115 120 125 130 135 140

P10

102.0

P50

113.9

P90

127.0

Frequency

($2012, $billion)

Figure ES-9presentsestimatedaverageconstructioncostsperroutekilometreona

segmentbysegmentbasis.eextensivetunnellingrequiredforaccessintoandoutofSydneyincreasesthecostperroutekilometreforthesesegmentsbytwotothreetimescomparedtothecostsfortheremainderofthenetwork.

PartsoftheroutebetweenBrisbaneandNewcastlealsohavehighcosts,reectingthevolumeofearthworksrequiredintheseareas.


31/56


FigureES-9 HSRprogramaverageconstructioncostsperroute-kilometreinstagingorder($2012,$million)

160

180

185

120

140

8080

100

40

20

60

BrisbanetoGoldCoast

GoldCoastJun

ctiontoCasino

Ca

sinotoGrafton

Graftonto

CoffsHarbour

CoffsHarbourto

PortMacquarie

PortMac

quarietoTaree

TareetoNewcastle

NewcastletoCentralCoast

CentralC

oasttoSydney

SydneytoSout

hernHighlands

SouthernHighlan

dstoCanberra

CanberraJunctionto

WaggaWagga

WaggaWaggatoA

lbury-Wodonga

Albury-Wodonga

toShepparton

Shepparto

ntoMelbourne

($2012$millionperkm)

87

54 5550

38

57 57

43

137

41 4032

25

56

185

Staging the development o HSR

esizeandcomplexityofanHSRsystemontheeastcoastofAustraliawouldbesuchthatitcouldnotbedeliveredasasingleproject;instead,it

wouldbedeliveredinstageslinkingtheprincipalcentres.EventhesestageswouldbelargeprojectsbyAustralianstandards.Stagingwouldnotonlyallowtheupfrontfundingtobereducedandsmoothfuturefundingrequirements,butwouldalsobettermatchsystemdevelopmenttomarketgrowthandwouldallowrevenuetobegeneratedonsectionsofthesystemastheyarecompleted.

estudyhasconcludedthatthebenetsofHSRarestronglyrelatedtothevolumeoftravelbetweenthecapitalcities,inparticularSydney-

Melbourne,andthatestablishingthislinkwouldbetherstpriorityforanyHSRnetworkonthe

eastcoastofAustralia.Ataconstructioncostofabout$50billionin$2012(risk-adjusted),theSydney-Melbournelinewouldrepresentamajorundertakingandwoulditselfneedtobestaged.Canberra,whichwouldbeconnectedbyaspurlinetotheSydney-Melbourneline,isthenextmostimportantcityonthislinefromademand

viewpointandwouldbeanappropriateterminalfortherststagetoensurerevenuewouldbegeneratedasearlyaspossible.


32/56

Executive Summary

FigureES-10 StagingofthepreferredHSRsystemcommencementofoperations

Not to scale

Newcastle

Gold

CoastQLD

NSW

VIC

ACT

SYDNEY

BRISBANE

MELBOURNE

CANBERRA

LINE 2

2051Gold Coast to Brisbane

$11.0 BN

LINE 2

2058Newcastle to Gold Coast

$34.3 BN

LINE 2

2045Sydney to Newcastle

$18.9 BN

LINE 1

2040Canberra to Melbourne

$26.9 BN LINE 1

2035Sydney to Canberra

$23.0 BN

KEY


State border Roads

Station locations


33/56


estagingofthepreferredHSRsystemassumedinthenancialandeconomicevaluations,asshowninFigure ES-10andTable ES-7,takesintoaccounttheextenttowhichindividualsectionscapturetheforecastmarket,thecostofconstructionandtheeconomicandnancialreturnsofeachstage.

TableES-7 StagingofthepreferredHSRsystem

Built

track(km)*

Risk-adjusted

cost ($b)

Cost per

km ($m)

Potential

operationaldate

Line 1 Sydney-Melbourne 894 49.9 56 2040

-Stage1:Sydney-Canberra 283 23.0 81 2035

-Stage2:Canberra-Melbourne** 611 26.9 44 2040

Line 2 Brisbane-Sydney 854 64.1 75 2058

-Stage3:Newcastle-Sydney 134 18.9 141 2045

-Stage4:Brisbane-GoldCoast 115 11.0 96 2051

-Stage5:GoldCoast-Newcastle** 606 34.3 56 2058

Total 1,748 114.0 65 2058

*Notethatthebuilttrackincludesspurjunctionsandotherconnections.esedistancesaredierentfromthetravelkilometresinTable ES-1andTable ES-2.**ConstructionofStages2and5wouldstartattheCanberraJunctionandGoldCoastJunctionrespectively,thepointsat

whichtheGoldCoastandCanberraspursleavethemainal ignment.Note:Totalsdonotaddupexactlyduetorounding.


34/56

Executive Summary

FigureES-11 StagingofthepreferredHSRsystemcumulativecapitalcosts($2012,$billion)

20

40

60

80

100

120

($2012,

$billion)

205520502045204020352030202520202015 2060

Total capital costs

Sydney toCanberra operational

Brisbane to GoldCoast & Newcastle toMelbourne operational

Sydney toMelbourne operational

Network operationalNewcastle toMelbourne operationalA

DB

EC

A B C D E

Figure ES-11showstheproleofcumulativecapitalcostsovertheHSRprogram.

Line1betweenSydneyandMelbournewould

beamajorundertakingintermsofplanning,construction,testingandcommissioningand,basedoncurrentindustryexperience,wouldneedtobedoneindiscretestages.Forevaluationpurposes,astartdateof2035wasassumed.

Workingbackfromthatdate,enablinglegislationwouldneedtobepassedby2019.Priorto2019,thenalpreferredrouteandstationlocationswouldbedetermined,furthertechnicalinvestigationscompletedandallnecessarygovernmentapprovalsobtained.Stepswouldalsobetakentopreservethe

preferredHSRcorridorpriortoanycommitmenttoproceed.

Followingenablinglegislation,aperiodofmorethantwoyearswouldberequiredforconceptdesign,environmentalimpactassessmentand

publicconsultation,beforeadecisiontoproceedtoimplementationwouldbemadein2021.erewouldthenbeaprocurementperiodoftwotothreeyearstoletcontractsandtoacquireland.Enablingworkswouldthenbeundertaken(criticallyatSydneysCentralstation).eseworksareanticipatedtotakefouryearstodivertthecurrentserviceswithintheexistingoperationalstationbeforethemainimplementationcontractscouldcommencein2027(i.e.nancialyear2028).


35/56


eimplementationprogramofafurther84monthsreectstheactualprogramtodelivertheTaiwanHSRandincludesaperiodof34monthsfortestingandcommissioning.Basedonthisevaluationprogram,therstpublicHSRserviceswouldstartinApril2035.Subsequentstageswouldbedeliveredatvetosevenyearintervals,withplanningofeachstageoverlappingwithconstructionofthepreviousstage.Undertheseassumptions,theentirenetworkcouldbeinoperationby2058.

estagingassumedinTable ES-7could,however,beacceleratedbyaboutveyears,althoughitwouldlikelyincuradditionalcostandrisk.etimetakentopasstherelevantlegislationandtomakeaformaldecisiontoproceedcouldbeaccelerated.eenablingworkscouldalsobestartedearlier,soasnottodelaythecommencementofimplementationworksatSydneyCentralstation;thiswouldrequirefundinginadvanceoftheformaldecisiontoproceed,butcouldsave18months.ereisalsopotentialfor

theconstructionperiodtobeshortenedbyasmuchas24months,butthiswouldrequireextendedworkinghoursandcouldbelimitedbyalackofqualiedresources.AnacceleratedprogramcouldthereforestartwiththeSydneyenablingworksin2019,withSydney-Canberraoperationalby2030andSydney-Melbourneoperationalby2035.Underthisacceleratedprogram,thefullnetworkcouldbeoperationalby2053.

Financial assessmentefutureHSRprogramandthemajorityofitsindividualstagesareexpectedtoproduceonlyasmallpositivenancialreturnoninvestment.

eestimatedrealnancialinternalrateofreturn(FIRR)fortheprogramasawholeis0.8percent.ForSydneytoMelbourne,theestimated(post-tax)realFIRRis1.0percent.esefallwellshortofthenancialreturnsthatwouldberequiredbycommercialprovidersofdebtandequitytomajorinfrastructureproviders14.Atafourpercentdiscountrate,thenancialnetpresentvalue(FNPV)ofnancialcostsandrevenuesassociated

withaninvestmentinHSRwouldbenegative$47billion15.GovernmentswouldberequiredtomeetthemajorityofconstructionandestablishmentcostsfortheHSRnetwork.

Postconstruction,thefutureHSRprogramanditsstages(withtheexceptionofSydney-Canberraasastand-alonestage 16)areexpectedtogeneratesucientoperatingincometocover

ongoingoperationalandassetrenewalcosts.isforecastholdstrueforallbutoneofthescenariosandsensitivitiestested.Asaconsequence,HSRoperationswouldbenanciallyself-sustainingiftracandcostassumptionsweremet.

Table ES-8summarisestheresultsoftheFNPVandFIRRanalysisonapreandpost-taxbasisforthefutureHSRprogramanditsstages.esearepresentedonacumulativepresentvaluebasis,

withthesummarycostsandrevenueobtainedbydiscountingcashowsbytheevaluationdiscount

rateoffourpercenttonancialyear2028.Sydney-Canberradeliversanegativenancialreturn.Neithertheprogramasawhole,noranyofthestages,returnsapositiveFNPVatafourpercentdiscountrate.

14 esewouldtypicallybearound15percentormore.15 Discountedto2028andin$2012.

16 atis,ifSydney-CanberrawasoperatedindependentlyofanyotherHSRline.


36/56

Executive Summary

AssumptionsaboutthetimingofthevariousstagesarealsoshowninTable ES-8.

Table ES-9setsoutthesummaryofrisk-adjustedcapitalcosts,revenues,operatingcostsandassetrenewalsovertheevaluationperiodto2085.

eHSRprogramasawholedeliversapositivenetoperatingsurplus.atis,forthepreferredHSRsystem,revenueswouldcoverongoing

operatingcostsandthecostsofrenewingassetswhentheywearout.erefore,providedtracforecastsandcostsestimatesaremet,noongoinggovernmentsubsidywouldberequiredtosustainHSRoperationsoncethesystemisconstructedandoperational.Astracbuildsup,theabilityoftransportoperationstoreturnsomeofthecapitalcostswouldincrease.

TableES-8 Summar yofFNPVandFIRRresu lts(presentvaluediscountedto2028,$2012,$bil lion,4%discountrate)

Future HSR program

Sydney-

Canberra

Sydney-

Melbourne

Newcastle-

Melbourne

Brisbane-

Gold Coast &

Newcastle-

Melbourne

Network

complete 17

Year operations

commence2035 2040 2045 2051 2058

Totalcosts 20.9 41.1 52.8 58.3 72.0

Netoperatingresult* -0.4 10.5 11.6 11.3 15.5

FIRR (real) n/a 1.0% 0.9% 0.4% 0.8%

FIRR (real, pre-tax) n/a 1.4% 0.9% 0.4% 0.8%

FNPV -21.5 -26.5 -35.2 -41.3 -47.0

FNPV (pre-tax) -21.5 -25.0 -35.2 -41.3 -47.0

Notes:*Revenueslessoperatingcostsincludingpaymentsforrollingstockleasesandassetrenewal.Duetoaccumulatedtaxlosses(primarilyfromdepreciationontheinfrastructureassetbase),onlytheSydney-MelbourneHSRstagepayscorporationtaxduringtheevaluationperiod.Wheretaxisnotpayable,theFIRRandFNPVdonotdieronapreandpost-taxbasis.n/adenotesanFIRRoflessthanzeropercentthatcannotbemathematicallycalculated.

17 NetworkcompleterepresentstheentireHSRnetworkbetweenBrisbaneandMelbourne.


37/56


TableES-9 Summar yrisk-adjustedcapitalcosts,revenues,operatingcostsandassetrenewalsoverthetotalevaluationperio dto2085(presentvaluediscountedto2028,$2012,$billion,4%discountrate)

Sydney-

Canberra

Sydney-

Melbourne

Newcastle-

Melbourne

Brisbane-

Gold

Coast &

Newcastle-

Melbourne

Network

complete

Year operations

commence2035 2040 2045 2051 2058

Totaldevelopmentcosts 2.3 4.7 6.1 6.8 8.8

Totalconstructioncosts 18.6 36.4 46.7 51.5 63.2Total capital costs 20.9 41.1 52.8 58.3 72.0

Totalrevenue 5.0 39.4 43.0 43.5 62.7

Totaloperatingcosts 4.4 25.1 27.3 27.9 42.2

Totalpaymentsforrollingstocknanceleases

0.1 1.3 1.3 1.3 1.8

Totalassetrenewals 1.0 2.5 2.8 3.0 3.2

Total operating result -0.4 10.5 11.6 11.3 15.5

Terminal value -0.2 4.0 5.6 5.4 9.1

FNPV -21.5 -26.5 -35.2 -41.3 -47.0

Note:Totalmaynotbeexactduetotimingandroundingdierences.

Risk-adjustedprojectcashowsforeachyearoftheevaluationperiod,reectingtheproposedstagingoftheHSRprogram,areshowninFigure ES-12.

Totalannualprojectcapitalexpenditurerangesfrom$2 billionto$8billionineachoftheeight

yearspriortotheopeningoftheSydney-Canberrasectionin2035,andthencontinuesatbetween$2billionand$7billionperyearforthenext23 yearsuntilthefullnetworkisoperationalin 2058.


38/56

Executive Summary

FigureES-12 HSRprogramrisk-adjustedprojectcashowsperyear($2012,$billion)

Revenue received Operating costs paid GST (paid)/received

Payments for rollingstock fnance leases




Network operationalNewcastle toMelbourne operational

Tax paid Capital expenditure

15

10

5

-5

-10

-15

205520502045204020352030202520202015 2060 2065 2070 2075 2080

($2012,

$b

illion)

A

DB

EC

A B C D E

WiththeexceptionofthecostsassociatedwithaccessingSydney(asshowninFigure ES-9),capitalcostsincreasebroadlyinproportiontothelengthoftheHSRlinebeingconstructed.

AsindicatedinFigure ES-12,extensionstothenetworkleadtostepchangesinpatronageandthereforearecriticaltotheoperatingcashows.Forinstance,completingSydney-CanberraorCanberra-Melbourneasstand-alonesegments

wouldproduceonlymoderatepassengerdemand

andnancialreturns.WhenthewholelineconnectingSydney-Melbourneiscompleted,signicantadditionaldemandwouldbegenerated

(passengernumbersatthatpointincreasebyafactorofve).Operatingcashowsandreturnsthenalsoimprove,reectingthegrowthinpatronagewithoutacorrespondinglymaterialincreaseincapitalcosts.esamebenetwouldbeobservedwhentheGoldCoastisconnectedtoNewcastleandthefullHSRsystemisinoperation,resultinginaconsiderableupliftindemandbetweenBrisbane,SydneyandMelbourne.enancialperformance(annualcashow)ofeach

stageissummarisedinFigure ES-13.


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FigureES-13 HSRprogramrisk-adjustedcashowsperyearbystage($2012,$billion)

($2012

$billion)

Full network Sydney to Canberra

Sydney to MelbourneNewcastle to Melbourne

Brisbane to Gold Coast andNewcastle to Melbourne





A

DB

EC

205520502045204020352030202520202015 2060 2065 2070 2075 2080

4

2

-2

-4

-6

-8

A B C D E

DuetothefutureHSRprogramsexpectedlownancialreturns,signicantprivatesectorfunding(debt/equity)wouldnotbeavailableorappropriatetonancetheprogram.Assuch,aconsiderablecommercialnancinggapwouldexistbetweenthetotalcapitalcostoftheHSRprogramandtheamountofnancingthatcouldberaisedfromthenancialmarketsoncommercialterms,basedonthefutureHSRprogramoperatingcashows.

Basedonthedetailedanalysisofprogramcashows,thecommercialnancinggapfortheentireHSRprogramwouldbeabout$98billion(or86percentofthetotalrisk-adjustedcapitalcost)asshowninTable ES-10.FortheSydney-Melbourneline,thecommercialnancinggapwouldbeabout$45billion,or92 percentofthetotalcapitalcost.


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Executive Summary

TableES-10 Summar yofthecommercialna ncinggapreferencecase($2012,$bil lion)

HSR program Sydney-Melbourne

Total capital cost 114.0 49.9

Debt carrying capacity 16.3 4.1

Commercial coverage 14% 8%

Commercial fnancing gap 97.7 45.7

Valuecapturehasthepotentialtopartiallyclosethecommercialnancinggapthroughmeasures

suchasgovernmentlandsalesandcapturingtheincrementalimpactthattheHSRprogramwouldhaveonstampduty,developmentsandratesintheHSRaectedzones.However,thiswouldbeasmallcontributionatbest.Itishighlyunlikelythatallofthesemeasureswouldbeimplementedandtheultimatebenetthatvaluecapturemight

haveonclosingthecommercialnancinggapisthereforediculttodetermineatthisstage.

UltimatelygovernmentswouldberequiredtofundthemajorityofthefutureHSRprogramsupfrontcapitalcosts.AsummaryofthecashowimplicationsforgovernmentforthewholenetworkispresentedinFigure ES-14.

FigureES-14 HSRprogramgovernmentcashows($2012,$billion)

($2012,

$billion)

205520502045204020352030202520202015 2060 2065 2070 2075 2080

-4

-6

-8

-2

2

4

A B C D E





A

DB

EC


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Economic assessmentestudyadoptedacost-benetmethodologythatisconventionallyappliedtomajortransportinfrastructureprojects.ecostcomponentsoftheanalysis,includingthenecessarycapitalexpenditurerequiredtodevelop,constructandrenewtheHSRsystemascomponentswearout,dependontheproposedHSRengineeringandtechnicalspecicationsadoptedforthepreferredHSRsystemandontheassumedstagingofnetworkdevelopmentsetoutinTable ES-7.

Forthepurposesofevaluation,constructionofstage1ofLine1(i.e.theSydney-CanberrastageoftheSydney-Melbourneline)isassumedtostartin

July2027(startofnancialyear2028).

Onceconstructed,theHSRsystemwouldgenerateastreamofeconomicbenets,linkedtotheassessmentoffuturetraveldemand.Ingeneralterms,thetotaleconomicbenetoftravelonHSR

woulddependonhowmucheachpassengervaluestheirtrip,oftentermedtheirwillingnesstopay.

isiscalculatedbymeasuringthedierences

ingeneralisedtripcostswhencomparingthereferencecase(withHSR)tothebasecase(withoutHSR).AggregatingwillingnesstopayacrossallusersofHSRandovertimeprovidesanassessmentofthetotal(gross)economicvaluecreatedforusersofthesystembytheinvestmentinafutureHSRprogram.

Transportingpassengersconsumeseconomicresourcessuchaslabourandfuel.BecauseHSRcouldreducedemandforothermodesoftransport,andhencetheirconsumptionofresources,the

additionalresourcesrequiredforHSRneedtobeosetagainsttheresourcesavoidedinothermodes.

enetchangeinresourcesisdeductedfromthegrosseconomicvaluetocalculatethestreamofeconomicbenetsderivedfromtheinvestmentinHSR.

edistributionofthenetbenetsbetweentheusersandtheoperator(s)oftheHSRsystemisdeterminedbythepricescharged.Ultimately,priceswouldservetotransfereconomicvaluefromusersofthesystemtoitsoperators.Revenueisthereforeincludedinthecalculations(asacosttousersandabenettooperators)toassesstherelativebenetstousersandoperators.

eneteconomicbenetsinternaltothetransportsystemarethereforemeasuredbyaddingthetwocomponents:

Userbenets(orconsumersurplus)arecalculatedbasedonthedierencebetweenauserswillingnesstopayforaserviceandtheactualpricepaid.

Operatorbenets(orproducersurplus)representthedierencebetweenthepricepaidorrevenuegeneratedbyaserviceandthecostsassociatedwith(orresourcesconsumedby)operatingtheservice.echangeinoperatorbenetsisassessedforeachmode(i.e.HSR,aviation,conventionalrailandcoach).

Inaddition,therewouldbecostsandbenetsthatareexternaltothetransportsystemthatcanbemeasuredinmonetarytermsandincludedinthecost-benetanalysis.eseexternalitiesmeasuretheimpactofHSRtothebroadercommunity,includingenvironmentalandsafetyimpacts,decongestionbenetsandanyalternativeavoidedordeferredtransportnetworkcapitalexpenditure.

Aresidualva luehasalsobeenincludedtocapturetheremainingvalueoftheassetsattheendoftheevaluationperiod 18.epresentvaluesofcostsand

benetsbycategory,discountedatfourpercent,areshowninFigure ES-1519.eeconomicnetpresentvalue(ENPV)isthesumofthepresent

valueoftheeconomiccostsandbenets,whichfortheprogramasawholeis$101billion.

18 A50yearevaluationperiodhasbeenadopted,commencingin2035.19 ediscountrateconvertscashowsoffuturecostsandbenetsintopresentdaydollarstoal lowacomparisonofcostsandbenets,expressedin$2012,andusingacommonbaseyear,inthiscasenancialyear2028,whichistheassumedstartofconstructionoftherststage.


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Executive Summary

FigureES-15 PresentvalueofcostsandbenetsfortheHSRprogram(presentvaluediscountedto2028,$2012,$bill ion,4%discountrate)

Costs Benefts ENPV

100

120

80

60

40

20

0

-40

-20

-60

-80

-100

Capital

expenditure

User

benefts

Operator

benefts

Externalities Residual

value

ENPV

($bn)

14 1

79

141

25 101

eHSRuserbenetsdominatetheeconomicresultsandaccountfor90percentoftheestimatedbenets(excludingtheresidualvalue).Akeycomponentistheassessmentoftimesavingsfortravellersacrosstheirfulljourneyincludingtraveltime,waitingtime,check-intimeandaccesstime,withadjustmentsfortheinconvenienceofhavingtochangemodes.Traveltimesavingsaremeasuredusingvaluesoftimebasedonmarketresearchconductedforthisstudyandtestedforreasonablenessagainstconventionalvaluesusedinroadprojects,whichvarybytrippurpose(e.g.businessversusleisure)20.

Businesstravellerswouldgainthemajorityofuserbenetsduetotheirhighervalueoftime,eventhoughtheyonlyrepresentabout35percentofthetotalHSRtravelmarket,asshowninTable ES-11.

20Austroads,Guide to Project Evaluation,2012.


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TableES-11 Userbenetestimatesbymarketsegment(presentvaluediscountedto2028,$2012,$billion)

Business users Leisure users Total

Short regional 1.7 7.4 9.1

Long regional 31.3 27.1 58.4

Inter-city 60.6 12.6 73.2

Total 93.6 47.1 140.7

esummaryresultsforthereferencecasepredictthataninvestmentinthepreferredHSRprogram

wouldgenerateaneconomicinternalrateofreturn(EIRR)of7.6percentandaneconomiccost-benetratio(EBCR)of2.3usingafourpercent

discountrate21.AsevenpercentdiscountratehasalsobeentestedandwouldreducetheENPVto

$5billionandtheEBCRto1.1,asshowninTable ES-12;althoughmarginal,theestimatedeconomicbenetsremainpositive.

TableES-12 Summar yeconomicindicatorsfortheHSRprogram(presentvaluediscountedto2028,$2012,$billion)

4% discount rate 7% discount rate

Totalcosts 79.3 58.9

Totalbenets 180.6 63.8

EIRR 7.6% 7.6%ENPV 101.3 4.9

EBCR 2.3 1.1

Sydney-Melbourneisthestrongestperformingline,withanestimatedEIRRof7.8percent,asshowninTable ES-13.IthasanestimatedpositiveENPVof$69billionandanEBCRof2.5whenmeasuredonastand-alonebasis.

TableES-13 Summar yeconomicindicatorsforSydney-Melbourne(presentvaluediscountedto2028,$2012,$billion)

4% discount rate 7% discount rate

Totalcosts 46.5 38.9

Totalbenets 115.7 45.3

EIRR 7.8% 7.8%

ENPV 69.3 6.5

EBCR 2.5 1.2

Note:Totalsdonotaddupexactlyduetorounding.

21 eEIRRrepresentsthediscountratethatmakesthenetpresentvalueofalleconomiccashowsequaltozero.ehighertheEIR RthegreatertheneteconomicreturnsachievedbyaprojectrelativetoitscapitalresourcecostsandifEIRRisgreaterthanthediscountrate,thentheprojectwoulddeliverapositiveneteconomicbenet.


44/56

Executive Summary

eincrementaleconomicresultsforeachadditionalstageofthepreferredHSRprogramaresetoutinTable ES-14.eresultssupportthepreferredstagingoftheHSRprogram,withSydney-MelbournedeliveringanestimatedEIRRof7.8percent.esubsequentnorthernstages

fromNewcastle-MelbourneandBrisbane-GoldCoastaddlittleincrementaleconomicvalueonastand-alonebasis(i.e.ENPVdoesnotmateriallychange)andtheresultssuggesttheywouldnotbeundertakenunlesstheintentionweretocompletethelineconnectingBrisbaneandSydney.

TableES-14 Incrementaleconomicimpactsforeachadditiona lstageoftheHSRprogram(presentvaluediscountedto2028,$2012,$billion)

Future HSR program

Sydney-

Canberra

Sydney-

Melbourne

Newcastle-

Melbourne

Brisbane-

Gold

Coast &

Newcastle-

Melbourne

Network

complete

(i.e. Brisbane-

Melbourne)

Year operations

commence2035 2040 2045 2051 2058

Totalcosts* 22.2 46.5 58.6 64.3 79.3

Totalbenets 20.4 115.7 126.7 126.7 180.6

EIRR 3.8% 7.8% 7.3% 7.1% 7.6%

ENPV -1.7 69.3 68.1 63.9 101.3

EBCR 0.9 2.5 2.2 2.0 2.3

*Costsincluderollingstockandassetrenewalcosts.

Overall,theresultsoftheanalysispresentapositiveeconomiccasefortheintroductionofHSR.Forecastswerepreparedforthereferencecase(i.e.withHSR)whichwaspartofthecentralcaseforevaluationpurposes.ereferencecasereectsarangeoflong-termassumptionsandexpectations,including:

Stronggrowthinthebasetravelmarketoverthe52yearsto2065(travelontheeastcoast

willmorethandoublefrom153milliontripsto355milliontrips).

NosignicantincreaseinaviationcapacityintheSydneybasin.isresultsinincreaseddelaysandtheinabilityofpassengerstotravelatpreferredtimes,consistentwithassumptionsintheJointStudyonAviationCapacityfortheSydneyRegion22.AssumedadditionalaviationcapacityinSydneyhastheeectofreducingtheestimatedEIRRfortheHSRprogramasawholefrom7.6percentto7.1percentandreducingtheECBRfrom2.3to2.1.Additionalaviationcapacityalsoreducesthenancialreturnfrom0.8percentto0.3percent.

22 AustralianGovernmentandNSWGovernment,Joint Study on Aviation Capacity for the Sydney Region,Canberra,2012.


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HSRfareswouldbestructuredtobecomparabletoandcompetitivewithalternativemodesoftransportforbothbusinessandleisurepurposes.HSRfareshavebeensettobecompetitivewithairfaresonthemaininter-capitalroutesontheeastcoast,trendingdownwardsovertimeby0.5percentperyearto2015andremainingconstantthereafter,consistentwiththeforecastreductioninrealairfares.Caroperatingcostsincreaseovertimeduetoaforecastrealincreaseinthecostoffuel(13percentrealincreaseby2065afterallowingforforecastimprovementsinfueleciency).

IfHSRfareswereincreasedby30percent,theEIRRfortheprogramasawhole

wouldreduceto7.4percent.However,thenancialreturnwouldimprovefrom0.8percentto2.3 percent,withoperatingcashowsbecomingpositivethreeyearsearlierin2038.

IfHSRfareswereincreasedby50percent,economicreturnswouldfallfurtherbutHSRwouldstillproducesubstantialneteconomicgains,withanEIRRof7.2per

centandanEBCRof2.1(atafourpercentdiscountrate).enancialreturnwouldimprovefurthertothreepercent.

Competitive aviation response

estudypredictsthatoverhalfthe83.6millionHSRtripsforecastin2065wouldbedivertedfromair,whichwouldhaveasignicantimpactonaviationmarkets.

Airlineservicesaremobileinthesensethattherearefewsignicantsunkcapitalcostsinservicingparticularroutesandassetscanbequicklyredeployedtootherroutes.Airlinesoperatingalongkeyregionalandinter-capitalroutesacrosstheeastcoastofAustraliaalreadycompetestronglyagainsteachother,andfarelevelsofmanyfareclasseshavedeclinedovertime,whichsuggeststhatairfarelevelsare

alreadyhighlycompetitiveonmajorroutes.

ItisnotexpectedthatairlineswouldrespondtoHSRcompetitionbyreducingtheirfaresonasustainedbasis.Rather,ithasbeenassumedthatairlineswouldquicklyreducecapacity,eitherbyreducingfrequenciesoraircraftsizes,tolocationswithintheHSRcorridorwherethereissignicantpassengerdiversiontoHSR.isassumptionisconsistentwithoverseasexperiencewhere,followingtheintroductionofHSR,theairlineresponsehasgenerallybeentoreduceservicesonthecompetitiveroute.

AirlinesdonotcontrolallofthecomponentsofanendtoendjourneybyairthatinuencetherelativecompetitivenessofairtravelandHSRtravel.Mostimportantofthesearethecostofaccessingtheairport,itslocationrelativetoHSRstationsandairportcapacity.Nevertheless,totheextentthat

airlinesareabletoinnovateinwaysthathavenotbeenanticipatedinthisstudy,itcouldhaveanimpactonactualHSRpatronage.


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Executive Summary

Alowdemand/highcostsensitivitywasdevelopedthatincludedarangeofalternativeassumptionswhichincombinationresultinasetofcircumstancesunfavourabletoHSR.elowdemand/highcostscenarioincludes:

NoaviationcapacityconstraintsinSydney.

A30percentincreaseinpre-riskcapitalcosts.

Lowpopulationgrowthandloweconomicgrowth.

A50percentincreaseinHSRfares.

Whilethecombinationoftheseassumptionsmaybeunlikely,theresultsoftheanalysisprovideausefulbasisforcomparisonandanunderstandingoftheeconomicperformanceoftheHSRprogram.

ecombinationofassumptionssignicantlyreducestheeconomicreturngeneratedbythefutureHSRprogramfrom7.6percentto3.8percent.eimpactonthenancialreturnis,however,modestwiththehighercostsosetbythelargefareincrease.

eeconomicandnancialresultsweretested

againstarangeofsensitivitytests,withtheresultssummarisedinFigure ES-16andFigure ES-17:

elowgrowthscenarioassumeslowereconomicandpopulationgrowth(relativetothereferencecase)resultinginloweroveralldemandfortransportandthuslowerdemandforHSR.ItassumespercapitaGDPgrowthratesareassumedtobe0.3percentperyearlowerthanthereferencecase,andpopulationgrowthisassumedtobe51percentbetween2010and2065,comparedto72percentinthe

referencecase.

ehighgrowthscenarioassumesthattheAustralianeconomyexperiencesstronggrowthintothefuture(highGDPgrowth),withhighpopulationgrowth.isscenarioresultsinhigheroveralldemandfortransportandthushigherdemandforHSR.PercapitaGDPgrowthratesareassumedtobe0.3percentperyearhigherthaninthereferencecase,andpopulationgrowthisassumedtobe103 percentbetween2010and2065,comparedto72percentinthereferencecase.

Higher(+30percentand+50percent)HSRfares.

Anaggressivecompetitiveaviationresponsewhichresultsina50percentreductioninfaresfortwoyears.

AdditionalaviationcapacitywithintheSydneyregion,whichremovesthenegativeeectsoftraveltimeonightsto/fromSydneyfromthereferencecase,andassumesthereisnounmetdemand.

AdditionalaviationcapacitywithintheSydney

region,combinedwith30percentincreaseinHSRfares.

Lowdemandandhighcosts(describedabove).

Modechoicemodelsensitivities(includingalternativespecicconstants(ASCs),access/egressweightingandvaluesoftime).

Higher(+30percent)capitalandoperatingcosts.

Lower(10percent)capitalandoperatingcosts.


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Executive Summary

Environmental andsocial assessment

Astrategicenvironmentalassessmentframework,consistentwithAustralianGovernmentguidelines,

wasdevelopedanditskeyprinciplesincorporatedintotheselectionofthepreferredalignmentandstationlocationstoreducethepotentialfornegativeenvironmentalimpactsshouldtherebeadecisiontoproceedwithHSR.

Apreliminarystrategicassessmentofthe

environmentalandsocialaspectsofaHSRsystemontheeastcoastwasundertakenforthreereasons:

ToensurethatenvironmentalfactorswereintegratedintothedevelopmentoftheHSRsystem,includingdecisionsaboutthecorridorselection,alignment,stationlocationsanddesignfeatures.

ToensurethattheoverallHSRsystemisconsistentwithprinciplesofecologicallysustainabledevelopment.

Toidentifyimportantenvironmentalandsocial

issuestobefurtherinvestigatedandassessedintheimplementationphases,shouldadecisionbemadetoproceedwithHSR.

eassessmentoftheenvironmentalimpactsofHSRwasintegratedintotheevaluationofalignmentoptionsandstationoptions,usingaGeographicInformationSystem(GIS)toolkittoidentifypotentialecologicalandheritageinteractionsandlanduseplanningconstraintsandopportunitiesassociatedwiththevariousoptions.

eseevaluationswerecombinedwithother

considerations,suchasengineeringparameters,constructability,costanduserbenetstodeterminethepreferredalignmentandstationlocations.

epreferredHSRalignmentandstationswereselectedtoavoid,whereverpossible,signicantimpactsoncommunitiesandecologicalandheritageresources.ResidualimpactswouldbemanagedbymitigationstrategiesdevelopedduringtheconceptanddetaileddesignphasesofHSRdevelopment,shouldadecisionbemadetoproceed

withHSR.isisastandardpracticeforlargeinfrastructureprojects.Wherenecessary,osetsfornaturalenvironmentscouldalsobeused.

Inaddition,theassessmentofenvironmentalissuesassociatedwithHSRhasaddressednoiseandvibration,energyuseandcarbonemissions/greenhousegasconsiderations,theimplicationsofclimatechange,andthepromotionofecologicallysustainabledevelopment(ESD).Additionaldetailedinvestigationswouldberequiredacrosseachofthesedisciplines,shouldgovernmentsdecidetoproceedwithHSR,tominimisetheenvironmentalimpactsandmaximisepotentialpositiveoutcomes.

esocialimpactshavebeencanvassedthroughtheme-basedcasestudiesintothreekeyareasidentiedthroughresearchandstakeholderconsultation:

a. Workforceandcommunitydevelopment.

b. Accesstohealthandotherpublicservices.

c. Tourism,recreationandsocialinclusion.

ecasestudieshighlightthatHSRcouldpotentiallyhavearangeofbothpositiveandnegativeimpacts.

Broader impacts o HSR

Impacts on regions

InternationalevidencedemonstratesthatHSRcancontributeto,butisnotalwaysacauseof,regionaldevelopment.ImplementationofHSRwouldsignicantlyimproveaccessibilitybetweencapitalcitiesandregionalcentresandwouldprovidethepotentialforsignicantregionaleconomicdevelopment.However,theextenttowhichregionaltownsandcitiesservedbyHSRtake

advantageofthatpotentialwoulddependon:

SupportiveandalignedregionaldevelopmentpoliciesattheCommonwealth,stateandlocallevels.

eavailabilityandappropriateapplicationofinvestment.

MetropolitanandregionalplanningpoliciesthatencourageandsupportnewdevelopmentinregionalcentreswithHSRstations.

etimingofHSRopeninginrelationtobroad

economictrends.


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Robustandpragmaticplanningwouldberequiredtodeterminehowtheseinitiativesshouldbedevelopedandwhatoutcomesshouldbepursued.Inpart,theyareassociatedwiththenatureandscaleoftheproposedHSRnetworkandrequireforecastingresponsesandconditionsmanyyearsintothefuture.eyarealsouncertain,however,becausetheywouldrequireresponsesfromoutsidethetransportsector.eywouldneedbusinessestochangehowtheyoperate,investmentstoswitchtonewlocations,andtouriststochangetheirtravelpatterns.

AninvestmentofthemagnitudeandnatureofHSRcouldalsohaveunintendedconsequencesandimpacts,suchascausingsmallregionalcitiestolosejobsandresidentstonearbyregionalcentreswithHSRstations.esenegativeimpacts

wouldneedtobemanagedthougheectiveregionaldevelopmentpolicies,earlyandcarefulplanningtopositionlocalbusinessesforchange,andappropriatehumanandcapitalinvestmentincomplementaryassets.

TogainpositiveandsustainedbenetsfromHSR,regionalcommunitiesalongthecorridors

wouldneedtofollowdeliberatestrategies.HSRisnotapanaceaforregionaldevelopmentbut,

whencoupledwithappropriatestrategiesandplans,itcouldhaveapositiveimpactonregionalcommunitiesovertime.

InexaminingthepotentialimpactsofHSR,theinherentuncertaintiesneedtobeacknowledged.However,withproactiveandpositiveresponsesfromkeystakeholders,theimplementationofHSRcouldresultinimprovementsinregionalproductivity,changestotouristspendingpatternsand,forregionsclosertothecapitalcities,changestocommutingpatterns.Emerginginternationalevidencesuggeststhatwidereconomicimpactsattheregionallevelmaybegeneratedbyregionalaccessibilityimprovements,thoughquantitativeestimatesoftheseareconsideredneithersucientlycertainnorrobustforinclusioninthemaineconomicassessment.

Impacts on citiesHSRcouldhavewidereconomicimpactsoncitiesthroughitsimpactoneectiveemploymentdensity,thatis,bybringingplacesofresidenceandemploymentclosertogetherbyareductionintraveltimes.Benetscanthenariseinanumberofways:

Itiseasiertomatchworkerstospecicvacanciesandtondemployeeswithappropriateskills.

Itenablesgreaterspecialisationofsupply,leadingtomoreecientproductionofgoods

andprovisionofservices. Itleadstoknowledgespill-over(i.e.greater

opportunitiesforformalandinformalcontactthroughincreasedaccessibility).

Employeeshaveagreaterchoiceofjobs.

ereismorecompetitionbetweencompaniesandbetweenindividuals.

AstheHSRsystemisconstructed,accessibilitytomajorcitiesfromareassuchastheCentralCoast(toSydney)andtheGoldCoast(toBrisbane)

wouldimprove,al lowingemployerstoaccessalargerlabourpoolandprovidingemployeeswithawiderchoiceofemployers.Internationally,positiveeconomicbenetshavebeenattributedtosuchimpacts,socalledagglomerationbenets,andincludedinthequantitativeassessmentofthebenetsofinvestmentsintransportinfrastructure.However,asnotedabove,becauseoftheuncertaintyoftheseeectsinthecurrentcontext,noadjustmentstotheeconomicreturnshavebeenmadefortheminthisstudy.

Impacts on the national economy

AlthoughthemajorityofbenetsofHSRwouldaccruetousersofthesystem,HSRwouldhaveapositivenetimpactonthesizeofthenationaleconomy,withGDPestimatedtobe0.1percenthigherrelativetothebaselinein2085.

HSRwouldalsoraisetheoveralllevelofinvestmentinAustralia.In2036,HSRinvestment

wouldrepresent0.8percentofaggregateinvestmentintheeconomy,andwouldaverage

around0.4percentduringtheconstructionperiodasawhole.eassumptionthatHSRwouldbenanceddomesticallymeansthat,toaccumulate


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Executive Summary

therequiredHSRcapitalstock,someofAustraliaspoolofinvestmentwouldbechannelledintoHSRinsteadofelsewhere.isinvestmentsubstitutioneectproducesanegativeimpactontheeconomy,sinceitassumesthatinvestmentwouldbedivertedawayfromsectorswithahighernancialreturnthanwouldbeachievableforHSR(whichisprojectedtoachieveonlya0.8percentnancialrateofreturnoncapitalinvested),lowering

Australiasaveragereturnoninvestment.Otherthingsbeingequal,andintheabsenceofhigherproductivitybenetsgeneratedbyHSR,this

wouldlowerconsumptionandGDP.However,businesstraveltimesavingsgeneratedbyHSRareestimatedtoincreaselabourproductivity,whichoverthelongtermdrivesgainsinGDP,osettingthenegativeinvestmentimpacts.

einvestmentimpactsofHSRwouldbedierentifitwereassumedtobenancedbyborrowingfromforeignsources.erewouldbelesscrowdingoutofhigherreturncapital,butcostsinvolvedwithservicingtheforeigndebtwouldbeincurred.

RealconsumptionisestimatedtodecreaseduringtheconstructionofHSR(untilaround2056).Post2056,realconsumptionbeginstoincreaserelativetothebaselineasbenetsstarttoowfromtheoperationofHSR.AsinvestmentinHSRtailsoandproductivitygainsowfromtheoperationalphase,resourcescanberedirectedtootherinvestmentusesandtoconsumption,andnationalincome(movingcloselywithGDPduetotheassumptionofdomesticnancing)beginstoincreaseandmoveabovethebaseline.

Similarly,theinvestmentsubstitutioneectmeansthatHSRwouldimpacteachofthe

Australianstatesindierentways.Allelsebeingequal,anincreaseininvestmentinonestate,forexample,wouldresultinareductioninthelevelofinvestmentacrosstheremainingstates.InthecaseofHSR,theimpactoneachstatereectsthestrengthofinvestmentinandoperationofHSR,andtheconcentrationofindustriesthatcompeteforHSRinputswithineachstate.

Basedontheseassumptions,NSW/ACTisexpectedtobetheprimarybeneciarystatefromHSRduetothesubstantialinvestmentitreceives.

eexpansioninNSW/ACTsGSPwouldcomeatacosttotheotherstates,whichwouldsharetheburdenofreducedinvestmentinothersectors.ProductivitygainsarealsoexpectedtobeconcentratedinNSW/ACT,althoughtherewouldstillbesucientgainsinVictoriaandQueenslandtoyieldapositiveGSPimpact.

econstructionofHSRdrawslabourintoNSW/ACTandawayfromotherstates.eassumedconstraintonlaboursupplymeansthatthebulkoftheexpansioninconstructionsectorlabour

requirementsinNSW/ACTwouldhavetobeosetbycontractionsinothersectors,leadingto

varyingimpactsonemploymentbystatesimilartoimpactsonGSPbystate,butwithlessintensity.

Whilebeyondthescopeofthemodelling,alternativefundingarrangementsinvolvingadierentsharingofthenancingofHSRwouldclearlyalterthepatternofgainsandlossesindierentregions.

Implementing a uture

HSR program

Roles o the public and private sectors

eAustralianGovernment,ACTGovernmentandrelevantstategovernmentswouldneedtohaveacentralroleinthedevelopmentofHSR.

iswouldbeduebothtoitsstrategicnatureandtothefactthattheAustralianpublicwouldhavetofundmostoftheinfrastructure.Governments

wouldowntheinfrastructureandwouldhaveanobligationtoensurethatitwasecientlyand

eectivelyprovidedandused.

Withaninitialcapitalcostinexcessof$100billion,afutureHSRprogramwouldbeoneofthelargestinfrastructureprogramseverundertakeninAustralia.Itssizewouldchallengetheresourcesofthesupplierindustry,bothdomesticallyandglobally,withonlyalimitednumberoforganisationshavingthenancialcapacityanddepthofskillsandresourcesavailabletocompeteforthelikelysizeofworkspackages.Toachievevalueformoney,governmentswouldneed

tocarefullypackageandstagetheprocurementtoensurecompetitivebidswereachievedfor


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eachpackage.Governmentwouldneedtoretainsomeoftherisksaroundtheintegrationofthecomponentparts,buttheseriskscouldbemitigatedthroughrigoroustechnicaloversight.

GovernmentswouldretainanongoingroleinthestewardshipoftheHSRsectorafterconstruction,toensuretheobjectivesandeconomicbenetsoftheHSRprogramwereachieved.isrole

wouldinvolveprovidingoversightofthedeliveryofHSRservicesagainstagreedpriceandservicequalitymetrics,whilebeingcarefultoavoid

constrainingthemarketagilityandinnovationofthosemanagingthetransportservices.Governmentswouldalsoberesponsibleforsafetyandenvironmentalcompliance.

eprivatesectorshouldbecloselyinvolvedinabroadrangeofroles:

DesignandconstructionofcomponentsoftheHSRinfrastructurenetworkundercontracttogovernments.

Developmentofstationprecinctsinpartnership

withtherelevantgovernment. Supplyofrollingstock(trainsets)andthe

signallingandcommunicationssystems.

ControlandoperationofHSRtrainstodeliverhighstandardtransportservicestothepublic.

MaintenanceoftheHSRsystem.

DevelopmentofHSRstations,andassociatedcommercialopportunities,wouldoeranopportunityforprivatenance.Apublic-privatepartnershipmodelisenvisagedforgreeneld

high speed rail report

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