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Standing Committee on Infrastructure, Transport and Cities
Current and future developments in the use of land-based mass transit

GRESTA, Mr Bibop Gabriele, Chairman/Co-Founder, Hyperloop Transportation Technologies Inc.

HERON, Mr Wesley, Lead, Business Development Australia, Hyperloop Transportation Technologies Inc.

Committee met at 10:11

CHAIR ( Mr Alexander ): I declare open the public hearing of the Standing Committee on Infrastructure, Transport, and Cities for the inquiry into automated mass transit. In accordance with the committee's resolution of Tuesday, 11 October 2016. This hearing will be broadcast on the parliament's website, and the proof and official transcripts of proceedings will be published on the parliament's website. Those present here today are advised that filming and recording are permitted during the hearing. I remind members of the media who may be present or listening on the web of the need to fairly and accurately report the proceedings of the committee.

I now welcome representatives of Hyperloop Transportation Technologies to give evidence today. 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 respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. I now invite you to make an opening statement before we proceed to discussion.

Mr Heron : Thank you very much, Chair, and good morning, ladies and gentlemen. Thank you for allowing us to present our hyperloop transportation submission to you today. I've been delivering transportation projects for the last 15 years. I am the lead for Australia. My background is in heavy-haul, passenger and freight rail, as well as in larger defence and transport projects. Our concern today is that cars and trucks gridlock our cities, our air corridors are congested and carbon intensive, and our airports are becoming inefficient. Rail technology is old technology. It's investing in the past. The hyperloop technology is a new technology—an investment in the future, some 200 years of technology since trains and trams were invented. Moreover, the Hyperloop TT technology is in the testing and commissioning phase. It is here and now. It's not a pipedream, somewhere over the rainbow. It's being designed and built in a project in Abu Dhabi this year. I'd like to introduce my chairman, Bibop Gresta, who will talk to Hyperloop Transportation Technologies.

Mr Gresta : Thank you very much, Wesley. First, I'd like to thank the Chair, Deputy Chair and distinguished members of the committee, and I want to honour the Gadigal people of the Eroa nation, the traditional owners of the land on which we meet today. It's a great honour to be here.

We're stuck in traffic, bumper to bumper. We're losing our time—10 minutes here, 30 minutes or one hour there. The hyperloop promises to change our lives, not by going faster but by bringing people closer faster. The Australian population is ageing. Many people live in rural areas. Imagine giving them the opportunity to easily access healthcare specialists in the cities. Imagine giving Australians affected by housing affordability the chance to live in the country and commute to work in the city in minutes.

The hyperloop is a simple concept with a very complex set of technologies to guarantee safety and reliability. Simply put, imagine a capsule with 30 people. Put this capsule inside a tube. You take out the air from the tube to eliminate resistance, propel it with a linear motor and levitate it with powerful magnets. You can move the capsule from point A to point B at almost the speed of sound using a tiny fraction of electricity. This has been built at full scale in a facility in the south of France by us. In fact, we completed the first full-scale passenger track this week.

Hyperloop TT is a system for passengers and goods that operates autonomously, and a central control prevents collision between the capsules. To produce the energy, we use a combination of renewables like solar panels. All the feasibility studies that we have conducted around the world have shown us to be net energy positive over one year. We produce zero grams per person per kilometre of greenhouse gas. We build on pillars above the ground or, in some cases, underground. This gives us fewer land acquisition problems. We are able to produce an excess of electricity, carry water and provide high-bandwidth broadband in 5G mobile signals in our tube infrastructure. We are also silent. We have zero sound emissions. We also don't have rolling stock to buy and maintain.

The studies we have conducted around the world have also shown that we will be able to recoup the entire investment in eight to 15 years. In terms of operating costs, our system has fewer moving parts than high-speed rail and no electrification along the track, so it's cheaper to build and to maintain. This means that we can get rid of the subsidised model that normally applies to transportation that is sucking the taxpayers' money and never recoups the investments.

On the freight side, we have just signed our first intermodal freight deal, which will see a new hyperloop system moving containers from the port of Hamburg to a new intermodal freight terminal 50 kilometres away, in the hinterland, in Germany. Safety, for us, is paramount. We have been working very early on with the world's leading insurance company, Munich Re, and the leading certification agency TUV SUD. They have declared our commercial system insurable and have designed a framework for developing a new hyperloop regulation worldwide.

We are rolling out our first operation of hyperloop in Abu Dhabi next year. The first segment of the first commercial line is expected to be five to 10 kilometres. We aim for the grand opening of this first phase to be complete for the Dubai Expo in October 2020. But we have another 12 contracts in different stages of implementation signed with other sovereign nations. We have done all this thanks to the 40-plus world-class partners that have contributed to the project, such as NASA, Lawrence Livermore lab, Harvard, Cambridge, Cadburys and the designers of the Airbus fuselage, just to name a few.

Why are we appearing in front of this committee? In light of the maturity of our technology, we would like you to compare our numbers with the high-speed rail numbers. Let's develop a feasibility study together. We can connect a population of 10 million people with a one-hour commute from city to country using Hyperloop TT. It's on page 11 of our submission. We would also like to bring our R&D to Australia, fostering local talent, companies and universities through an innovation hub that allows them to engage with our potential international partners. The hyperloop presents an opportunity for Australia to invest in the future, to write a new chapter of its transportation history. We can build this future together. Thank you for your attention, and I look forward to answering your questions.

Ms BIRD: Thank you for your presentation and submission. I want to ask about two aspects. I can see the point you're making about the innovative nature of your technology, but can you describe to me what level of automation is involved in your technology?

Mr Gresta : We use artificial intelligence to control our system and we use humans to supervise it. We use an approach that is biomimicry. We steal it from nature, from the ants. The first capsule checks are the tube five kilometres. It sends the signals through the second one to the third one, to the fourth one. So if the mothership loses control of a capsule, the capsule can safely take a decision either to go back to the station or to slow down and evacuate the people.

Ms BIRD: What's the actual physical process of employees on the capsule? How do you stay—

Mr Gresta : Ideally we will have a responsible person just to infuse confidence to the passengers. We did a study and this is required at the initial phase of the project. In the long term we will be probably phasing out this and be completely autonomous.

Ms BIRD: One of the things that's being raised with us is that we've had some evidence that while some of these technologies don't need a driver, there are actually issues around the comfort and safety of the customers. For example, if someone had a heart attack, that there's somebody there who takes charge and so forth. What was your feedback? Just that it was needed because the technology was unfamiliar and people were reassured by that presence? Or is it because they have a broader role to play on their particular vehicle?

Mr Gresta : I don't know if I understood the question, but the majority of accidents in transportation happen because of human mistakes. So we took out that aspect. The rest of the personnel we will have in the capsule would be personnel that have the duty to intervene in case of emergencies.

Ms BIRD: Speaking of circumstances, obviously if your passenger has a heart attack—

Mr Gresta : In that case we are foreseeing to actually behave like a bus. So we are trying to get as fast as we can to the station to actually give them assistance.

Mr Heron : It is like a train. If a passenger has a heart attack in a train, we take the train to the station, we provide CPR and we provide emergency assistance. Our safety case allows us to stop our pods inside the tube and evacuate at certain sections within the tube. That is all fully covered in the safety case.

Ms BIRD: I was wondering more about who's responsible. Is there an emergency intercom system that a passenger would use, or do you actually have a staff member on the train who would take responsibility for that?

Mr Heron : It's a piece of detail inside the safety case. We don't have that detail with us today. But I'm happy to take the question on notice and come back to you with a response.

Mr Gresta : Munich Re asked us to do a study with our safety team. We did all the risk assessment. We can provide you with this.

Ms BIRD: It's mainly that move. I'm interested in whether we'll need people employed who actually have different sets of skills and tasks, as opposed to driving. Some of the conversation we've had is that there will be new jobs, but there'll be a very different, almost retail-type job.

Mr Heron : I think that's a fair assessment.

Ms BIRD: I read your section on security. In my understanding it deals with the technology itself. The other thing I'd be interested in is what we would broadly call cybersecurity—protections around IT systems and so forth from criminal behaviour or malicious intervention by somebody seeking to utilise the IT system to cause trouble.

Mr Gresta : We have a cooperative model. Our company is made of 60 full-time employees, and 800 people from 42 countries are contributing in exchange for stock options. This model allowed us to actually partner with the best companies in the world. That has designed a system that actually guarantees security. We have assessment criteria that we can send to you and you can take a look.

Mr Heron : Are you talking about IT security of the company today or IT security of the train operating system?

Ms BIRD: The train operating system. Automated vehicles are operating and somebody who wants to cause mass disruption could infiltrate the IT system and cause havoc—it's that sort of circumstance.

Mr Heron : Again, this is detail of the system. We'd be happy to do some work to put together a response to your question. But suffice it to say, as Bibop has said, we're aware of security needs and threats. Obviously our safety case for the entire operating system would be subject to the safety case with any operating system where passengers are a part of the system. So our response is that passenger safety is absolutely the most important thing, and our system would need to be capable of withstanding those threats and not be vulnerable to those kinds of threats.

Ms BIRD: So those sorts of things are built in to your project anyway.

Mr Heron : Correct. We can come back to you with some more information on that.

Ms BIRD: I don't need terribly much detail. I'm just interested in that aspect, to be honest not just directly for safety, although that's obviously a key issue, but also potential for economic disruption. We find with our mail system, now that it's all done online people with bad intent can disrupt your business and your economy quite easily. The fact that you are considering that and building that into your systems is just what I wanted to know about.

Mr Heron : Correct.

CHAIR: Can you elaborate on your project in the south of France—how fast is it; how long is the tube system is that you're putting in?

Mr Gresta : The government of France gave us the possibility to build in a former, disused military airport. It is called Francazal. We have two tracks. One is 320 metres and one is one kilometre. The 320 metres is being just completed right now. This is the first track to not only test the full scale capsule they will build in Spain, but also to certify the system. The only thing that we will not be testing is the maximum speed. The rest of the aspects of passenger handling, pressure and the other requirements would be tested in that facility. The speed would be then tested in the one-kilometre track and then in the five-kilometre commercial line that we are developing in Abu Dhabi. At the beginning of our development Hyperloop will be an incremental speed technology. That means that we will be starting with the speeds that can be certified right now, and then we will be incrementally increasing the speed, based on the result of the testing and certification. So right now we don't need to test the higher speeds. That is not a requirement of our first certification.

CHAIR: Whereas the testing I think was in Nevada where you are building your first tube?

Mr Gresta : Hyperloop Transportation Technologies is the first company that took the Elon Musk white paper and brought it to reality. After one year there was another company, called Virgin Hyperloop One, which started to do the same. We are the legitimate owner of the brand Hyperloop in 56 countries, including Australia, but we foster and we push other companies to join this effort. They built an up-scale project in Nevada that is mainly for cargo, as I understood it. But this is another project. It's about my competitor.

CHAIR: Have they had successful trials?

Mr Gresta : They had some successful trials and they did several speed tests inside that track.

CHAIR: How long is their track there?

Mr Gresta : It's half a kilometre.

CHAIR: The project in Hamburg, how far off is that from being implemented?

Mr Gresta : We just signed the agreement with the Hamburg port, and we are going to deliver not only the hyperloop system but also all the integration part, intermodal with the existing infrastructure. So we are also taking advantage of their advanced skills—the Hamburg port is one of the most advanced in terms of automation—to actually integrate it into the hyperloop systems.

CHAIR: How long will that trip of 50 kays take for the freight?

Mr Gresta : We are planning to deliver 3,000 TEU a day. That system, depending on the feasibility study, will require probably 10 minutes. But the feasibility study will tell us exactly the speed of carriage.

CHAIR: In your opening statement, the return on investment was eight to 15 years; in your submission, 10 to 20 years. How is that achieved? Is that as an operational activity?

Mr Gresta : Right now, we've conducted several feasibility studies around the world. And, based on the ticket price that we have, let's say, suggested to governments—of course, we are not the ones deciding the final ticket price. We can say how much it costs, but not how much it will cost for the final users. The feasibility study that we have conducted has shown us that there's an ROI of from eight to 15 years. I give you an example of a system that is foreseen to transport 80,000 people a day. On a 70-dirham ticket, it has shown a recoupment of investment—70 dirham is like US$22—in 11 years. So that's shown that a hyperloop system not only is for high-density-populated areas but can also be a solution for low-density-populated areas.

CHAIR: Our previous two inquiries were regarding capturing value and delivering infrastructure. The second inquiry report was Building up & moving out. Both these inquiries looked at the need for us to address the imbalance of settlement that has occurred through no planning of settlement—the need to rebalance our settlement through strategic decentralisation. We see that the essential infrastructure is faster connectivity. Hyperloop is at the very high end of speed, and its energy consumption is green friendly, albeit it's not up and running. But, in all of the cost of this infrastructure, we have looked at funding the capital costs largely, or possibly entirely, through value capture to take advantage of the enormous uplift in regional property values when those regions are connected to our major cities of Melbourne and Sydney. Would you be looking at or interested in having your project funded in such a way?

Mr Gresta : Absolutely. When you have a project that actually can recoup the investment, you can think about very interesting new business models applied to this infrastructure. You can do project financing, for example. That is not that easy in infrastructure that doesn't make money. Or you can actually have private initiatives. In that particular sense, we are looking to work with a real estate developer. For example, we have an agreement with Aldar Properties—that is an Abu Dhabi real estate company owned by the government of Abu Dhabi—and we are actually building the first five kilometres inside their land development. It's a small city of 10,000 people. They will be planning to connect this city at the border of Abu Dhabi with the main city of Abu Dhabi. It's 80 kilometres away. So we are looking at different business models, and one of them can be, absolutely, the upside of the real estate benefits that you create by building this kind of infrastructure.

Mr Heron : And I think, to add to Bibop's comment—and correct me if I'm wrong, Bibop—that, apart from the hyperloop precinct, the Aldar development offers an innovation hub as well, so it will become something like the Silicon Valley of Abu Dhabi. I think for our country towns there are all those opportunities and spin-offs from the hyperloop technology available to us. We don't sit here before you, Chair, and say, 'We want to come and build you the hyperloop and provide all the construction materials to Australia.' We say to you: 'Here's our technology, Australia. Come and build it with us and give Australia the opportunity and those small towns the opportunities to set up the businesses, to set up the technology, to provide our materials to actually build our hyperloop.'

CHAIR: Therefore, while we might look at connecting Sydney to Melbourne initially, you would then be looking at continuing your technology and the rolling out of it and creating an industry to then move to connect, say, Sydney or—sorry, Deputy Chair—Wollongong with Noosa. So we go from south of Sydney to north of Brisbane, Melbourne to Adelaide, Adelaide to Canberra or whatever the future might hold. You'd look at an industry being developed to continue the rollout of this technology?

Mr Heron : That's correct.

Mr Gresta : That's correct. I can add that it's happening. When we went to the moon, by going to the moon we innovated 60 industries. In the hyperloop we are already touching 17 industries. The way we are building pilots is innovative. We're using high-performance concrete that absorbs carbon dioxide and releases oxygen. We're looking at how to optimise the combination of renewable energy to create an excess of 30 per cent in respect of the energy consumption. We're looking to embed different systems in the same infrastructure—a desalinisation system, for example, requires a solar panel in the pipeline. That is very easy to achieve in a system that has pipelines and a solar funnel and so on. So we are integrating several technologies.

To give you a last detail: a capsule that we created is a jewel of engineering. In 30 years of development of the airline industry, they reached 60 per cent of carbon fibre. In one year, working with a tier 2 manufacturer of Airbus, we reached 80 per cent of carbon fibre, and we will reach 90 per cent in the next iteration. That means cheaper, safer and lighter capsules that can actually travel safely in our tubes. And these will innovate also the airline industry because then they will have the possibility to replicate what we have done.

CHAIR: Have you looked at the prospect of where you might trial this in Australia?

Mr Gresta : We are open to discuss eventual pilots. I think a feasibility study will be the first interesting piece of the equation because it will give us real numbers and the possibility of where to build it. When we decide which is the best road, then we can also go and think about raising money to do a pilot.

Mr Heron : I think too, Chair, that we've been speaking to state governments around the country and also the federal government. Apart from the obvious Sydney-Melbourne, Sydney-Brisbane, Sydney-Canberra corridor, the regional corridors are important. The Victorians are looking at Melbourne to Geelong, for example, Melbourne to Ballarat and Melbourne to Shepparton. Hyperloop has the solution for each of those corridors. Here in New South Wales, we're looking at Sydney-Wollongong and Sydney-Newcastle. Imagine travelling to Wollongong in nine minutes, Chair. Imagine the benefit that comes to the local community on the south coast from people really being able to commute quickly, get home to their families, sort out their childcare issues and build another local industry in the Wollongong region. Sydney-Nowra would be 15 minutes; Sydney-Orange, 22 minutes; Sydney-Canberra, 22 minutes. It's an important development. High-speed rail doesn't give you that. Adelaide to Port Augusta would be 33 minutes; Adelaide to Broken Hill, 50 minutes.

This is a game changer. They're the kinds of things that we want to talk to the state governments about, and that's why we want to do some feasibility studies here. This technology is here, as Bibop has said. It's not something that's out there on the horizon. It is here and now and being built, and it's time that Australia takes that leap. It's not a leap of faith given the number of companies that are around this. It's actually here and it's been risk managed, and it's time for us, if we want to give ourselves the best opportunity for the future, to open up the country to take on hyperloop and at least have a look at it beside the traditional solutions that are being purported at the moment.

CHAIR: If this technology were to be embraced, how long would it be until we were actually rolling it out?

Mr Gresta : Usually an implementation plan starts from a feasibility study. That can last for six months depending on the complexity. Then we have 36 months to roll out an entire system. It depends, of course, on the amount of resources that we have available, because the technology that we need to actually build the infrastructure is technology that can benefit a lot from resources. But, depending on the speed you want to go in terms of building, we can do it in four years.

Mr Heron : The feasibility study will look at alternative corridors. The feasibility study will look at costs. The feasibility study for hyperloop, just like a feasibility study for any kind of new rail system, will look at all the factors impacting on the solution that's being looked at and give you opportunities to make some choices based on a number of factors. The feasibility studies will take from six to 12 months. Big corridors take a longer time. Shorter corridors take less time and cost less money. It's horses for courses.

CHAIR: What would you firstly require from government to commence this work?

Mr Heron : We'd require a mandate from government that says government is happy to invest in hyperloop feasibility studies and hyperloop innovation hubs. Give us the opportunity for, let's say, two-hundredths of the cost that is being allocated to things like high speed rail to quote to you what a feasibility study would cost on the corridor of choice. You might like us to look at Melbourne-Sydney or Sydney-Brisbane. You might like us to help state governments and ask the state governments to support us and to give us an opportunity to work alongside their project people that are already doing work in these corridors. We need to move quickly, because these studies are here and now. There are two big airport studies that are going on—one in Victoria and one in New South Wales. There is a hyperloop solution in both those areas as well, but my concern is that we've missed the boat. My concern is that we need to get going now, and that's what we're asking your support for, Chair.

CHAIR: Very good. What about the prospect of partnering with real estate development companies who would develop the areas to realise the capital appreciation of the value of land to maximise that when you combine this infrastructure with a land use plan for the cities that are developed? They would be a worthwhile partner also, I would imagine.

Mr Heron : Absolutely. The state governments are looking at value capture as well. Everyone knows it's a great idea. We would certainly be listening to the state governments and working alongside the state governments as they do that important work.

CHAIR: It's a large public-private partnership in effect, isn't it?

Mr Heron : Correct. In the feasibility stage, though, it's not. In the feasibility stage, it's a partnership between state government, us and our engineering company that we bring with us. We could talk to the state governments about who that engineering company might be, but we work for you. You're our client. In the PPP process, once we've managed the feasibility and the government's made a choice on where it wants to go, that's when we form the PPP and that's when we get off and design and construct a project. That's what's going on in Abu Dhabi at the moment.

CHAIR: Very good. Sharon, do you have more questions?

Ms BIRD: No, that's fine.

CHAIR: So you are just very happy with it? Wollongong was mentioned.

Ms BIRD: I'm always happy when Wollongong is mentioned.

CHAIR: We would prefer it to come from Nowra—because there's more area to be developed around the Nowra region—and stop in Wollongong, of course. Witnesses, is there anything more that you'd like to comment on?

Mr Heron : No, thank you.

Mr Gresta : No.

CHAIR: And I think there are a couple of things that you could get to us. You could put in writing what you require of us to investigate this and then to move to a phased step by step.

Mr Heron : Yes, Chair.

CHAIR: Again, thank you very much. Welcome to Australia, and thank you again for appearing before us, Wesley. If you'd been asked—which you have—to provide additional information, would you please forward it to the secretary by Wednesday, 6 March. You'll be sent a copy of the transcript of your evidence and will have an opportunity to request corrections to transcription errors. Thank you very much again for attending and good luck.