Why are we still taking East Coast High Speed Rail seriously?

As Bent Flyvbjerg frequently reminds us, history says all the risk is on the other side; AECOM's estimate is almost certainly bound to be too low (see Are cost estimates for transport projects reliable?).

If HSR really is a "commercial proposition" as Dr Bygrave contends, then let the investors show what they can do. Interested consortia have had plenty of time to put together a commercially robust proposal; HSR's been evaluated numerous times over the last 30-40 years and AECOM's final report was released on 11 April 2013 i.e. three years ago.

There's nothing unusual about companies lobbying governments about HSR; they've been doing it for decades. There's a huge pot of gold at stake and government – not investors – would likely end up carrying all or most of the considerable commercial risk.

Business knows from sweet experience that governments are suckers when it comes to glamorous infrastructure projects; that's what a "safe return" means.

The claim that HSR would "radically reduce emissions" is important because it's the main reason it attracts so much support from progressives. HSR just sounds right; it's public transport, it looks like the sort of project good people should support.

But here's the rub: the AECOM study found the total value of negative externalities, including emissions, pollution, noise and traffic congestion that would be avoided by HSR would amount, even at a 4% discount rate, to just $2 Billion over the 50 year life of the project. In fact, externalities only account for a mere 3% of the total estimated benefits.

That's consistent with other large rail projects. I noted last week that externalities only account for 10% of the estimated benefits of building Melbourne Metro. The corresponding figure for Sydney's CBD and eastern suburbs light rail project is 8%.

HSR would be such a ridiculously expensive way to reduce emissions compared to other options, it beggars belief that any progressive-minded organisation seriously concerned about climate change could propose it. It's likely it would crowd out public funding of more cost-effective investments like renewable energy generation.

The overwhelming quantum of benefits from HSR (90%) would come in the form of slightly faster door-to-door trips for inter-capital business travellers and regional leisure travellers journeying to the capital cities. Since these are private benefits it's reasonable to expect that if these groups value this benefit they – not taxpayers in general – should pay for it.

Look at it this way: if Airbus Industrie produced an expensive new aircraft that could reduce the door-to-door travel time from Sydney to Melbourne by 5%, would progressives be pushing government to provide upwards of $100 Billion in public subsidies to airlines so they could buy it? Hardly; it would be taken for granted that those who get the benefit should pay for it.

But as I've said a number of times before, East Coast HSR is a boondoggle. It would consume vast amounts of public money to replace one form of public transport (airplanes) with another form of public transport (trains).

There are far better and more transformative ways that a progressive organisation like BZE could consider for spending $100 Billion or so of public funds e.g. improving public transport within our major cities, replacing coal-fired power generation with renewable energy, or building social housing.

Anthony Albanese and Andrew Robb are politicians so I don't expect an objective assessment of East Coast HSR from them; but progressives should look beyond surface appeal when the stakes are this high.