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Standing Committee on Infrastructure, Transport and Cities
07/03/2016
Role of transport connectivity in stimulating development and economic activity

LAIRD, Dr Philip Glencoe, Private capacity

[15:21]

CHAIR: Welcome. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the House. Do you wish to make a brief opening statement before we proceed to discussion?

Dr Laird : Thank you. Australia's population reached 24 million last month and it continues to grow, but the rail infrastructure that we have in place and the road pricing arrangements we have are more for a population of 15 million. It was noted by Infrastructure Australia that the cost of road congestion in our larger cities is expected to exceed $20 billion a year by 2020. That is about one per cent of GDP. The submission suggests that better road pricing and better public transport is a much better way forward than building evermore freeways. This is in line with the submission to your committee from Action for Public Transport, which was prepared independently of mine.

Setting aside the iron ore railways of the Pilbara and some other world-class railways, what we have at the moment is generally deficient. For example, the interstate main lines compare poorly in speed-weight capability with the Canadian and the United States counterparts. Hopefully a new inland railway will be built to North American standards. In New South Wales it is particularly wanting. We are addressing deficiencies in the north-west of Sydney but the standard of the rail connections between Sydney and the regional centre of Newcastle, Wollongong and, for that matter, Canberra is poor. It is much better in Victoria and Queensland and WA, where they have trains that do 160 kilometres an hour. We do not because of our track. We need land for corridors, not only for a future high-speed rail, which has been recognised in many reports, but also for upgrading existing systems to medium-speed standards at least.

Value capture offers one way forward. I am no expert in this. But about 10 kilometres from here is a station called Wolli Creek. It opened in the year 2000 with the new Southern Railway, the airport line, and now it has about 12 completed apartment buildings, with four under construction. It is a natural, transit orientated development but, unless the government or the railway agency owns the land, a lost opportunity.

We need more than value capture. We really have to look at road pricing. That was addressed by the AusLink white paper in 2004. It raised congestion pricing for cities as an option, as used in London; also, mass distance pricing is used in New Zealand for heavy trucks. The Henry tax review had the same thoughts in 2010. Here we are in 2016 and we are still thinking about it.

I think we are going backwards as a nation, when other nations, including New Zealand, close by, are going forward. For example, they have continued to push up the price of petrol by increasing excise to generate funds not only for roads but for public transport and freight on rail as well. The costs of the measures taken in 2000 with diesel rebates and in March 2001 with freezing fuel indexation are now about $4 billion a year. We need infrastructure. Okay, we are addressing these slowly—but there we go.

Mr VAN MANEN: Indexation of fuel excises have been reintroduced.

Dr Laird : It has been reintroduced; but why we didn't go up 10c to recover some of it? If you go back to around 2001, road expenditure was below one per cent of GDP. It is now above one per cent of GDP, but the congestion continues. The consultants' report for Infrastructure Australia in 2014—put on their website, and then it evaporated quickly—was called Spend more, waste moreAustralia's roads in 2014: moving beyond gambling. It said we have a 'road spend that can only be only described as hideously inefficient'.

Let me give you an example. On the Pacific Highway, we have done all the bits with the heavy annual average daily traffic, the bits that really needed doing, but now we are doing bits with an annual average traffic of 12,000 vehicles a day, or less. These rollouts are now costing $50 million per kilometre. If we want to achieve the goal of a dual carriageway all the way by 2020, it is another $13 billion. Meanwhile, where I live, there is Mount Ousley Road, carrying five million tonnes a year of coal, plus other stuff, plus car imports, with annual average daily traffic of 40,000 a day. That is the busiest intersection on the Princes Highway, the most dangerous one—but to get funds for the grade separation of this dangerous intersection: 'Oh, it's too hard.'

WestConnex is another one. They want to spend $16.8 billion, added and abetted by Commonwealth money. As the previous witness said, we really need to have clearer guidelines in place for where we spend money.

I conclude with two things. Firstly, Cabbage Tree Creek—you have never heard of it perhaps—north of Bundaberg, crosses the Bruce Highway and the North Coast line. There are tight curves at each end of a wooden bridge, and in 2004, a diesel tilt train came off through driver error, causing $30 million of damage. That old wooden bridge now needs replacement. If it were a road, the road engineer would be sacked if he wanted to replace that bridge on a substandard alignment. But the way things happen, we can have billions of dollars of federal money for the Bruce Highway, but not one federal dollar north of Petrie for the Moreton Bay Rail Link or federal funds for the North Coast line, which has a vital role in keeping the supermarket prices in Townsville and Cairns towards Brisbane levels. By the way, Cabbage Tree Creek Bridge on the Bruce Highway was upgraded and opened last November, with a federal contribution of $1 million. If there is any way we can save that Cabbage Tree Creek Bridge from being replaced on the substandard alignment on the railway it would be great.

Finally, energy efficiency: with petrol so cheap and oil at $30 a barrel, it is not a worry today. But it was during World War II, it was in the early 1970s, it was in the late 1970s and in the years 2004 to 2008, when the price of oil ratcheted up to about US$145 a barrel. It is cheap today, but nobody is thinking it is going to be cheap in the 2020s or 2030s.

In conclusion, our population is growing and the cost of congestion in our major cities is growing. We really need to have a different approach for a larger population. Although, with what we could get away with in the 1990s—a report came out called Building for the job from the National Transport Planning Taskforce which said, 'We've got to change.' We did a little, but I am suggesting now that we have to change a lot more. I would be happy to try to answer any questions. Thank you.

CHAIR: Thank you very much.

Mr VAN MANEN: Thank you, Dr Laird. You have covered a bit of territory in your opening comments. I certainly do agree with you in terms of infrastructure design and replacement. If you had a look at the natural disaster recovery requirements, if you had a piece of infrastructure damaged by a natural disaster you actually had to rebuild the piece of infrastructure to the same specifications as the old one which was damaged or destroyed. You could not actually decide to build a new, better bridge—or whatever the case may be—that would make it flood proof or flood free at a much higher level. There is any number of those things. Part of what you have touched on is an issue that concerns me more generally with infrastructure, and that is the cost of building infrastructure in this country. It is $50 million a kilometre or—I think—several million dollars a kilometre for rail. Irrespectively, they are very big numbers. My question is: why?

Dr Laird : It was touched upon by the Productivity Commission in a report of about three years ago, and also by a New South Wales parliamentary committee about four years ago. To me, New South Wales seems to be the worst offender. Partly, for rail there are too many scope changes in projects. For example, the Parramatta-Epping-Chatswood railway. There was supposed to be a bridge over Lane Cove Tunnel, but then they said, 'No, make it a tunnel.' In the end, we got half of the railway—just Epping-Chatswood—at twice the price. Other ones had blowouts as well. The parliamentary inquiry said, 'Look, it's not that bad.' New South Wales said, 'Perhaps it's not that bad after all.' But you have to wonder how Western Australia could deliver the Perth-Mandurah railway, including two underground stations, at an average of $18 million per kilometre to produce a world-class operating system. 20 million people a year now use that 72-kilometre railway line. The minister responsible, Alannah MacTiernan, who was a state minister then, had to deal with a mining boom and some outrageous claims. But, in the end, it was delivered in 48 months within budget. Whereas, with Epping-Chatswood, albeit all in tunnels, it was $180 million per kilometre.

Mr ZIMMERMAN: Why is that? I mean, it is a tunnel.

Dr Laird : It is tunnels, but it is also the scope change—for example, we cannot have the Lane Cove bridge because some people do not like it so we will put it under.

Mr ZIMMERMAN: As the member for North Sydney, I understand that.

Dr Laird : Yes, but it is what it cost to pay for it. It pushed up not only the capital cost of construction but also forever pushed up the operating cost because of the steep grades.

Mr ZIMMERMAN: That is because they forgot to change the rolling stock to cope with the incline.

CHAIR: And also it prevented the completion from Epping to Parramatta—

Dr Laird : Yes.

CHAIR: due to the cost because they were so far down.

Dr Laird : It was a tremendous thing. I can give four examples of good quality rail project delivery: firstly, the Queensland north-coast line reconstruction to modern engineering standards of 200 kilometres at $1.3 million per kilometre in the 1990s; secondly, Victoria's regional fast rail that basically cost $550 million plus safety add-ons giving tremendous benefits. It made Bendigo, Ballarat, Geelong and East Gippsland desirable places to live with a commute into town as opposed to living in car-dependent outer suburbs of Melbourne. Thirdly, the Alice Springs to Darwin railway. It was built for less than $1 million per kilometre because they had the land corridor. Before the environmental impact assessment, they went out and got competitive tenders to build something. It could have been—

Mr VAN MANEN: It does not go all the way into the centre of Darwin. It finishes at the port.

Dr Laird : Yes, okay, if you were doing it again you would have taken it to the centre of Darwin and you would have laid 60 kilogram per metre rail rather than 50 and with more sleepers. But for cost-effectiveness, it deserves a prize. Fourthly, of course, is the Perth-Mandurah railway I cited. On the flip side, firstly, there is Epping to Chatswood that I mentioned with half the railway at twice the cost. Secondly, the Sutherland-Cronulla duplication was basically $130 million but ballooned to $390 million. Thirdly, I would cite ARTC's Southern Sydney Freight Line. I think it started off at about $200 million and, in fairness it ran into some unforeseen problems, when it was completed it was about $950 million. I think some of these costs do need containment.

Mr VAN MANEN: This question relates generally to what we are discussing here because, at the end of the day, we are talking about how we fund this infrastructure. Obviously you want to keep the projects at a manageable cost to be able to fund them with a reasonable model. But it goes back to the last inquiry this committee did which was about the role of smart ICT. Are you aware, in your experience or involvement or research, of any projects where the projects have used detailed modelling, whether it is through business information modelling or other modelling of that type, to model projects, before they even get to the point where they start turning a sod, to fully understand what the project is about to identify the hurdles and the issues so that they deal with those rather than having to consistently make adjustments to the project while the project is being built?

It is those adjustments to the project while it is being built that become expensive. If you identify them at the outset and deal with them before you start building, you save yourself an enormous cost and angst in terms of the equipment and manpower you require, and a whole range of things. Are you aware, in your experience, of any of that detailed modelling work being done with models such as BIM or equivalent to seek to minimise the costs and improve the efficiency of project construction?

Dr Laird : It is a very good question, but outside my area. I would refer you to evidence given by Mr Peter Martinovich from WA to the New South Wales inquiry as to how they contained the costs for the Perth-Mandurah line. Not content with delivering this world-class outline, they went back as a project team and then said, 'What could we have done better?' I think it goes back to what you are saying: if you plan properly first, you try to anticipate what might go wrong. Contingency planning, proper planning, can save a lot of costs afterwards.

CHAIR: Do you think there are efficiencies to be gained? Some of the people we have talked to in preparation for this say that the greatest cost of doing business in Australia is that, when there is a project to be had, the cost of gearing up and then, because there is no project to continue with, the cost of gearing down has to be apportioned to that one project. And there are the skills and what you were just talking about, where you have had a railway built and then we sit around and discuss how we could have done it better. If they were continuing immediately onto their next project, that accumulation of knowledge, experience and efficiencies, and the team that had delivered it—putting any weak member of the team in the sin bin and moving forward—would create greater efficiencies. Would you agree with that?

Dr Laird : I would agree. It would be very great. For example, over the last few months we have just had four tunnel-boring machines finish their work on the north-west metro of Sydney. Wouldn't it have been lovely if they could have then found their way down to Melbourne to do the nine kilometres of Melbourne metro or the Brisbane Cross River Rail? I think if we can get our planning better it would help that way. This would also be very important for high-speed rail.

CHAIR: Yes. There have been suggestions that high-speed rail should be done in part, maybe from Newcastle to Sydney. The fragmentation of such thinking has been part of our history—it has been ad hoc and piece by piece. The advice that we have received is that you must look at it as a complete and continuing project; that the way to price it to get the greatest efficiency of construction is to look at it as a total project and, once you have completed Melbourne to Sydney, you continue on to Brisbane for efficiencies of construction.

Dr Laird : Agreed. Take, for example, two projects—one of them local, the Hume Highway. There had been some state-funded work before 1974 when the Commonwealth, through the national highways system, started federally funding the Hume and other highways, but, from there, that took 40 years to completion. When you look at the total cost of the Hume in today's dollars, say, very roughly—I do not have an exact figure—$15 billion, and compare it with the much higher price, albeit over more difficult country, for the Pacific Highway, that steady rollout of project after project on the Hume was good.

The second case is in Japan. The Tokaido Shinkansen was opened in 1964, a 517-kilometre Tokyo-Osaka link. As of the end of this month, the full shinkansen network will be about 2,800 kilometres, and every year or two another hundred kilometres or so is rolled out. We cannot do it all at once, but we should start with corridor protection.

CHAIR: The concept we have been working to use is the federal government's role in being able to encourage three levels of government to work together. One reason is that their master planning of certain infrastructure should meet federal criteria. For instance, if your city wants to build some light rail, do not tell us about the bit from Parramatta to Strathfield—tell us about the entire network that you are planning for the next 20, 30, 40 or 50 years—and then you can say, 'We want to do Parramatta to Strathfield first.' We would tie federal funding to the master-planning of your urban renewal and densification around that infrastructure and then to getting agreement between your state and local governments to work in harmony with the federal government and their funding. Does that seem a sensible way to go—to affect long-term planning and efficient delivery?

Dr Laird : I think it is a good way. It would get some agreement on the value-capture mechanisms that could be employed, as well as the land use and the planning of the infrastructure. I want to refer briefly to Auckland, which is getting a 3½ kilometre underground rail loop. My understanding is that there will be two or three new stations, and so anyone with property there is a major beneficiary. So they would pay a higher levy than the CBD of Auckland, which would pay the second highest levy, and ratepayers as a whole benefit and so they pay another levy but lower than the first two. Finally, New Zealand Prime Minister John Key went Auckland and said, 'The population is growing, the rail patronage on the new electrified line is increasing, there is a case for us to consider national government funding.' It is rather nice conceptually: if you are near a station which benefits, you pay one level; if you are in the general area, like the CBD, you contribute a little less; and then the city as a whole contributes; and finally the nation as a whole does.

CHAIR: We do not like it when you use New Zealanders as examples to show that we are coming second. Is there anything else you would like to offer?

Dr Laird : Your inquiry is very timely. The city of Parramatta held a one-day forum on connecting Parramatta CBD to the Sydney CBD, and over 200 people turned up. There is an appetite for this discussion. Another thing is the Gold Coast light rail. If you had said two years ago that within the first year 6 million people would use it and within two years they would be building stage 2, they would have said, 'Oh, you are joking.' Infrastructure, providing that the potential demand is there, can add value to our cities, our productivity and our way of life.

CHAIR: Would you say that we have suffered extraordinarily through having no plan of settlement with the result that there has been a concentration in Sydney and Melbourne, on the eastern seaboard, to the detriment to regional areas, which has not only created an imbalance of settlement but an imbalance in the economy?

It has resulted in our becoming less productive and less competitive because of the very high cost of living in those two cities. It was a long time ago to have started planning, but better late than never. Is it a good time to start planning a strategic decentralisation?

Dr Laird : I would have to agree, given the success of Canberra, for example. There were 12 million people in Australia in 1968, so we have doubled from 1968 to now, to 24 million, but Canberra must have gone up fourfold. But to make it work, even though the transport connections to Sydney were not brilliant, the facilities of the city were so good, and there is work to be had, and it grew. I think Albury-Wodonga would have done very well had it had a better connection, like a fast rail into Melbourne and perhaps on to Canberra. I think, to make the decentralised cities work well, you do need good transport links, preferably faster than cars and not dependent entirely on aircraft, to link your regional centres to your main hubs. It seems to have worked with Victorian Regional Fast Rail.

CHAIR: Thank you for attending today's public hearing. The secretariat will send you a draft transcript of proceedings so requests can be made to correct any errors of transcription. Thank you again for attending.

Dr Laird : Thank you.