A pox on rail fanatics

A lot of people are interested (recreationally) in rail transport. I have no issue with such rail fans. When I lived in Sydney, I preferred to live in areas, where it was possible to commute to the city by train, and, internationally, there are many great rail journeys.

What I have issue with, is people, who push the case for rail transport to the point of advocating projects that clearly have no hope of ever being economic. I have even less time for the politicians that indulge them, wasting billions of our taxpayer dollars building train lines that generate massive losses.

Whatever the reason, it seems to be the case that rail fanatics in this country are forever proposing new train lines, and many are strident in such advocacy. The main stated justifications seem to be environmental (overcoming congestion and pollution), engineering, and economics (commonly a pork-barrel dressed up as sound economics).

While railways were hugely profitable in the 19th century and opened up many nations, they have struggled to remain profitable in subsequent centuries. Despite this (and closures of many lines), proposals for new railway ventures, that are clearly uneconomic, get rationalised on the basis of (often questionable) external benefits, being "nation building" projects etc.

The main problem with rail is that almost all public railways run on government subsidies. With rail freight, even if its costs are the same as road, most freight customers will choose road because it is more flexible. Roads also serve motorists, as well as freight and passenger services.

With the current fad for light rail, people seem to forget that countless cities (eg Sydney and Perth in this country) used to have light rail systems but scrapped them in favour of buses. Sydney had a tram system that was in operation from 1861 until 1961. Perth's original tramway network was in operation between the end of the nineteenth century and 1958.

I don't particularly like light rail for two reasons. Firstly, buses can travel on any road, while light rail needs expensive rail lines to be especially built. Secondly, unlike most conventional city rail, which is generally built almost entirely underground or on elevated lines, light rail is commonly built at road level, and regularly intersects with and delays traffic.

One would imagine that objective cost-benefit studies would routinely be used to decide on which rail projects to proceed with. (There is a government body, Infrastructure Australia, established in 2008, that has statutory responsibility for strategically auditing proposed infrastructure, but some of its assessments seem dubious and politically influenced.) Most dud rail schemes fail to pass objective cost-benefit tests, which are then either ignored or get fudged. Moreover, in this country existing rail networks, apart from urban people transport and those serving mines, are bleeding market share.

The rail link between the east coast and Perth is rapidly losing freight market share to foreign-crewed container ships, and to road transport. Price competition has reduced the rail share of non-refrigerated goods travelling to Perth from around 90 per cent to closer to 50 per cent. Worse still, the Sydney-Melbourne rail link now carries only token tonnages of freight, being down to only about one per cent of the market, while Sydney-Brisbane is around 5 per cent. The Sydney-Melbourne rail line is now said to be totally uneconomic, while the Hume Highway has become a major truck route.

The suburban rail networks are also heavily loss-making. Taxpayers are footing the bill for commuter train travellers because the price of tickets does not reflect the full cost of the service. In NSW the cost of each rail journey is subject to an estimated 70 per cent subsidy. The stated justification for such subsidies is that they are claimed to save more than three times the ticket cost in reduced congestion and other social costs.

The big-ticket train projects of recent decades have nearly always ended up being financial disasters. The most obvious such project was the Alice Springs to Darwin Railway. The Commonwealth, SA and NT governments put up a total $560 million towards the $1.1 billion cost, with a private consortium committing $740 million. The all-up cost back then was $1.3 billion. The FreightLink consortium was contracted to build and operate the line with ownership to eventually transfer back to public hands after 50 years.

David Hill, then Chief Executive of NSW Rail, conducted a study on the costs and benefits of completing the line, and concluded that the investment "would constitute a major misallocation of the nation's resources". The Bureau of Transport Economics also investigated the potential of the line and recommended instead that the highway be upgraded. Other critics of the project said it was destined to be a white elephant, with insufficient demand for domestic and export rail freight to cover operating expenses.