Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Standing Committee on Infrastructure, Transport and Cities
22/03/2018
Australian government's role in the development of cities

BELL, Mr Ian, Director, Financial-Architects.Asia Pty Ltd

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 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 Bell : Thanks, Chair. I've got an opening statement here which hopefully won't be that long. I also brought some visual aids. I intended to provide you with a separate document with the opening statement in it and the visual aids, as well as some arguments to do with that. I can follow up with that subsequently. We've made a couple of previous submissions, so there may be questions from left field out of that. If not, if there are any questions from the graphics that I've given you or the nine pages, I'd be happy to answer in a more informal fashion as we go.

To begin, I will repeat the opening part of the committee's terms of reference. I'll then stress aspects we regard as most important. I quote:

With Australia’s population expected to double by 2075, it is important to consider how national policy can foster collaborative and flexible urban planning responses. While recognising the primacy of state, territory and local government in the areas of planning and service provision, the Committee will examine what spatial planning mix (compact city, satellite city, etc) makes best use of natural resources, brings jobs closer to where people live, and helps ensure a high quality natural and built environment.

That's straight out of your terms of reference. One thing I'd like to highlight is the population doubling by 2075. This is only a 1.1 to 1.2 per cent growth rate. There is an important principle for planning that the great John Bradfield obviously used and which Singapore today is a prime example of—namely: plan for your infrastructure capacity beyond and ahead of such benchmarks. Moreover, our historical growth rate in Australia is 1.6 per cent per annum. Maybe for long-term planning we should use benchmarks more like two per cent per annum, otherwise we are always coming from behind. City transport congestion certainly shows that.

I'm an actuary and did basic training in demography. In the old days, we used to do our own demographic projections, and I can tell you that there are faults in the way in which the ABS do those projections out to 2060, 2075 and 2100—not faults that they don't disclose, because they fully disclose their assumptions. For instance, on migration policy, which has become quite a topic in recent times, their approach is to get a five-year projection from the department responsible, put that into their numbers and then leave it flat for the rest of the century. Everything else grows at compound rates; that doesn't, so what that does is depress the impact of immigration on those numbers, which in turn doesn't pick up the fertility factor where a proportion of our immigration is from cultures that have larger families. And they're also conservative sometimes on family formation rates and on morbidity and mortality because they're concerned about those issues and there are other policies that deal with those issues. What I'm saying is: when we look at what Bradfield did in 1931, he actually allowed for, believe it or not, about 1.6 per cent per annum growth over 90 years. That's the basis of what we're saying on that point.

Secondly—and I hope I'm not being too controversial here—I say it is a great mistake to bow to any so-called primacy of state and local government when talking about infrastructure provision, basically because of the difficulties of our triple-layer governance system and the fact that those two layers do not have the resources which the Commonwealth can deploy for major city-shaping and nation-building tasks. I've selected two bullet points, one from each of the two parts of your terms of reference, to give you a very brief, frank opinion on it. There's a bullet point that says:

Identifying how the trajectories of existing cities can be directed towards a more sustainable urban form …

I say we are continuing to fail in this through dysfunction in our triple-layer government processes and through mistakes in selection of major transport infrastructure projects. That's where I've got quite a few graphics in my visual aids that seek to give our point of view there. The other bullet point, from the second part of your terms of reference, is:

Promoting the development of regional centres, including promoting master planning of regional communities;

I say, regrettably, we are virtually nowhere near where we need to be. Just ask anyone in the know in Newcastle or Wollongong regarding land use and its integration with transport infrastructure. These are the forgotten cities which got their rail links in the late 1800s and still have to cope with the now totally deficient alignments of steam era rail. I'll add to that—it's not in my notes—that RMS in New South Wales is notorious at taking control of spending out of government budgets and pushing ahead with motorways, where, in the case of the Illawarra, it makes a hell of a lot more sense to fix up the rail, and we've been involved in some detailed plans on that.

As we've tried to show with our submissions to the federal faster rail process, the strategic gateway cities of Newcastle and Wollongong could each be 45 minutes from Sydney city CBD if our governments, combined, recognised and invested in the most modern higher speed rail technology and stopped wasting so much money on road spending. There's another story on road spending I could go into in great detail. I've worked a little bit with a guy called John Austen, who is a former economist at Infrastructure Australia. He's dissected the data that's been presented, and it's so biased that it makes it look like road spending is falling short of roads revenue through fuel taxes et cetera. He's dissected the way in which it's prepared and it's completely misleading. It's totally the other way around.

In answer to your committee's most basic of propositions, this is where we think the Commonwealth's role in cities should be most emphasised—namely, fostering Australia's first steps into adopting higher speed rail and, with it, facilitating regional population, settlement and industry attraction policies which take pressure off the bigger cities of Sydney, Melbourne and Brisbane. Of course, in New South Wales's case, that's by building up Newcastle, Gosford and Wollongong—the Illawarra. In fact, high-speed rail is potentially like the Uber effect: quite disruptive of established travel norms and quite transformative of commuting and regional development potential, if intelligently implemented—and I stress that. The Singaporeans are going to institute it intelligently, but some of our previous work in this area hasn't been quite as professional.

It is not just city shaping but indeed whole-region shaping. I'm talking about the region around Newcastle, Gosford and Sydney; I'm talking about the region around the Illawarra and north, and also to the west to the Wilton area. I'm also talking about the Southern Highlands and eventually the extended Southern Highlands, which takes you down to Goulburn and Canberra.

As we pointed out during the federal faster rail EOI process—where, incidentally, in case you didn't know, the consortia we worked with lost to our own state government's less ambitious and possibly opportunity-wasting proposal—the Greater Sydney Commission's three-cities plan could actually be made to evolve into a five-, six-, or seven-cities plan. But we're saying that that would require the Commonwealth to boldly take the lead and maybe even build a high-speed rail line—that is, a passenger rail line not an inland freight line—itself. The Constitution allows it to do that with the consent of an affected state.

I've brought a map to show this. The map is straight out of Infrastructure NSW's latest 20-year infrastructure strategy and is repeated in the Transport for NSW's Future transport strategy 2056. I've overlaid what's possible with the latest rail technology, and I'll keep it to round numbers. It is 45 minutes from Newcastle; 30 minutes from Gosford; 45 minutes to Wollongong; 30 minutes out to Campbelltown-Macarthur. Imagine if you could put these regions within 45 minutes or so of not just the big city but a fair reach of the big city. It is not about taking it to central, which is a super costly way to do it. AECOM submitted that to the Commonwealth in 2013. It's the most expensive way to do your high-speed rail.

Over here we've got a red line, which is the big thing that's missing at the moment. That's because Western Sydney Airport's potential is being understated. It's actually got huge potential, but it's full potential is not being planned for. One of the reasons is that, in the original studies for the second Sydney Airport, when they compared Wilton, Richmond and Badgerys Creek—they had modelling of the sort of catchment this airport could absorb, relative to Kingsford Smith airport—their basic assumption was that there were no transport links. You tell me: can that come up with the right answer? No. What we've always said is that it should have been revisited. If you have a fast link, 25 minutes, between Badgerys Creek and the Sydney CBD, which is well and truly possible with current technologies, that airport becomes as competitive as Kingsford Smith airport. Ultimately Kingsford Smith may get redeveloped for property. It's not that well located, in a sense, and it's basically getting clogged. It won't be long before it's really struggling to work. So, that's that.

The problem with transport infrastructure project selection is that it is mostly dictated by state governments, with the Commonwealth only having influence where it commits major funding amounts and, even then, with little control over what eventuates. The Western Sydney rail needs study is a case in point. I have attached a series of pages, which you've got, where we opine on major government transport planning mistakes, largely concentrating on the New South Wales government sphere.

Maybe the only answer to the problems is for the Commonwealth to adopt a posture which is bold and assertive and doesn't accept the primacy of state governments. You do have rights under the Constitution to build a railway with the consent of the affected state. If they're not going to build the right railways, that is what should happen. It could lead to a move away from the tendency of state governments to engage in only incremental transport system enhancements, backed by significant inertia in population distribution and settlement patterns. To explain: if Transport for NSW evaluates their underambitious approach to Newcastle and Sydney, they'll just use standard population projections out of the Bureau of Transport Statistics. BTS is a New South Wales government agency. That embedded in the assumptions that the Sydney population will grow at 1.6 per cent per annum—remember those figures were mentioned earlier—and the Newcastle population will grow at 0.8 per cent per annum, and yet Newcastle has land all around it. That land is less than half the cost of the land in Western Sydney, let alone the average land value across Sydney. There is this inertia where people do not actually think about the assumptions that are going into their modelling, and they get the wrong answer.

The other thing is, because they haven't got the borrowing power and the taxing power of the Commonwealth, so many of the Transport for NSW bureaucrats say, 'The guys up top will never allocate the money for that. Cabinet will knock us on the head. We need to come up with some sort of minimalist spending strategy that will make some sort of improvement.' In their faster rail submission we believe—although it's not fully disclosed to the public, which is another problem with this whole set up—the saving of 40 minutes, and they say 'up to' 40 minutes, between Newcastle and Sydney will have very little impact on what is really needed. For this 45 minutes; so many people would move out of their cars, not just for commuting, but they'd move out if they were going to the Sydney Olympic Park for a football game or if they were coming down for a concert or if they were going to meet friends in Sydney.

There's a trigger point. You've got to get your rail link below a trigger point and then you'll get the mode switch where people swing over and say, 'This is not only comfortable but it's a great service, it saves me time and it's more convenient.' That's what you've got to get. We don't think that the plan that they've got will achieve that. What is the consequence of that? They're actually potentially wasting the money, because some time in the future somebody will realise Mr Bell—or whoever it was who came up with these sorts of propositions originally—was right and we need a fully dedicated new line that's straighter and that gets us faster transport, instead of putting money into little deviations and little curvature cutting exercises and new, little bridges here and there. That's an inefficient way of construction.

The Chinese have shown us the way. They've done so many high-speed rail lines. They churn them out like an automation process in a factory. People think they can build it cheaper because their labour is cheaper. No, they build smarter and they build everything in a grand fashion where they automate many processes. They put the economies of scale into repetitive use. Instead of putting a little bit of tunnel here and a small bridge there and another little bit of tunnel there—you get 13 of those, I think, in the plan between Ourimbah and Hornsby—they will go, 'We'll do one long bridge and we'll do one long tunnel and we'll do another long tunnel'—it's cheaper. It's economies of scale. Then it can be all done in one go instead of a lot of fiddly things.

To finish off: the Commonwealth has the ultimate tax-raising and borrowing powers and can readily fund mega projects, if it chooses to, even if, for fairness, it needs to get paid back by the given state. It could facilitate a change in the tax mix towards land taxes. It could catalyse the development of high-speed rail and new population policies. The answer that I have got down here is 'No-one else will, but it's what we need.'

People have been worried about changing the tax mix to all land taxes. State government is on a bit of a sugar high because with the boom in the Sydney property market they're getting lots of conveyancing duties in, which means the budget looks great, so they can look great by going out and building new stadiums or whatever. That's a short-term sugar hit.

What conveyancing duties do and what special infrastructure contributions do for developers who are developing new estates is put pressure right up the front on housing prices. Think about the developer. He's got to pay a special infrastructure contribution and he's got to load that into his equation, and as a result he's got to push up the price of the houses he's selling or the land he's selling. If you move to land taxes all of that is paid over a long period of time. You've released the pressure and you actually give the property development industry an ability to accelerate things, which again addresses your question of housing supply versus demand. People keep saying we've been rushing to try to catch up, but we're not catching up. There are some fundamental things that people have got wrong. That's the end of my opening statement.

CHAIR: Thank you very much, Mr Bell. One of your comments was that going to Central wasn't a good idea. Where would you think is a good location for the high-speed rail?

Mr Bell : In our submission we put forward on the faster rail EOI process we had five possible locations. It was all subject to land acquisition policies and what you could get. They were all central within the Greater Parramatta and Olympic Peninsula area—Olympic Park or slightly to the west of there or slightly to the south of there. In other words, it's close to the geographic centre of Sydney. You've got Metro West coming across between CBD and Parramatta by the time you do this. So people from the Central Coast who want to go to Parramatta come down on the high-speed rail and hop across the platform and out to Parramatta. Likewise, if they want to go to Sydney CBD they hop across the platform and go the other way.

CHAIR: Would you think the proposal of New South Wales infrastructure to upgrade some bridges on the Sydney to Newcastle rail compared to a high-speed rail alternative would be comparable to, say, putting a new set of tyres on a T-model Ford compared to having a super-charged Ferrari?

Mr Bell : I wouldn't call it a super-charged Ferrari; it's more like a smart Tesla if he gets it to work.

CHAIR: There's no such thing as a super-charged Ferrari, by the way, but I thought I'd throw that in!

Mr Bell : I haven't seen all the detail, but I've seen a map where there are umpteen deviations. I saw a past analysis they did which was actually a business case that didn't proceed a few years back. It was under-ambitious. That one was sort of trying to carve 25 minutes off the trip. What worries me is that you put that money in, you don't achieve the effect you want and then you've got to do it again later to do it properly.

CHAIR: In your opinion, what would those improvements do in regard to stimulating growth in the Wyong, Ourimbah and Gosford region and the Newcastle and Maitland region?

Mr Bell : Are we talking about what Transport for NSW are planning?

CHAIR: Yes.

Mr Bell : My impression is that they're mainly focusing on the Central Coast region. They won't do much for Newcastle. It's too slow.

CHAIR: If we had high-speed rail from Newcastle—say, 40 or 45 minutes or half that time—from the Gosford region, what would that likely do for growth and the value of the surrounding lands in those regions?

Mr Bell : There would be a massive potential shift in population. It would take pressure of Sydney. There's plenty of developable areas for estates. There are situations in which quite a lot of development could happen around high-speed rail stations if you design it right. You would finish up with commuting two ways. You would finish up with a lot of Newcastle businesspeople commuting down to Sydney for part of the week for meetings or whatever and vice versa. You'd finish up with Sydney based corporations having a branch office in Newcastle that they didn't have before. You will have people on the Central Coast that will commute down to Sydney. There will be more of them because they'll move from Blacktown or Penrith or wherever because it is faster—even Cronulla; it would be a lot faster than Cronulla and the beaches and bays are a lot nicer up on the Central Coast than in Cronulla. You could have the commuters going to Newcastle for jobs as well. There is a huge number of pay-offs. And land values are less than half of Sydney's south-west, which is the cheapest part of Sydney's land banking.

CHAIR: The lands between Newcastle and Maitland area are far less again. Would you agree?

Mr Bell : Yes.

CHAIR: They could be liberated by high-speed rail. Would you agree that there is an opportunity that Newcastle could become a city of comparable size of Sydney in time?

Mr Bell : No.

CHAIR: Why not? There is no geographic distinction.

Mr Bell : Why emulate Sydney? Sydney has got more to offer. It would require an extraordinary growth rate and an extraordinary number of incentives.

CHAIR: I said 'over a period of time', when there are no geographic restrictions. When you have got enormous advantage for the cost of living as it gets to a critical mass and attracts companies to relocate rather than using commuters, you would have two-way traffic.

Mr Bell : I think it takes a long while to overcome the distinction of history.

CHAIR: I said 'in time'.

Mr Bell : It could become quite large. I will tell you one another factor which I only discovered late in the peace in our processes—that is, I ran across a thing called the South Maitland Railways company. Believe it or not, in the early days of Maitland, there were so many potential little coalmines everywhere and they all had to transport their coal by railway wagons. Most of that rail network still exists either in physical rail that is still on the ground or in corridors that have not been resumed. When you look at a map of it, it went everywhere—out to Cessnock, Kurri Kurri, Maitland, further north. It was like fingers everywhere coming down with the Hunter line and then coming down to Hexham, which everybody knows about. It looked exactly like some of the places I saw in Japan, where there were feeder rail networks going into a hub, which then had a high-speed rail connection going through. I haven't seen anywhere in Australia that could anywhere near match that.

CHAIR: With the possibility of high-speed rail and therefore this incredible uplift of property specifically because of the taxpayer investment in high-speed rail, should there be a system of beneficiary pays to assist in funding?

Mr Bell : Absolutely. New South Wales is not doing it, and I can't understand why.

CHAIR: Could it be a federal beneficiary pays system so as to align the three levels of government? If the federal government was to collect an uplift because of the infrastructure on a condition that states met a master planning of infrastructure and, in turn, the councils met a master planning of land use, would that make sense to you?

Mr Bell : You are effectively talking about an Australian three tiers of government version of a City Deal, but we think a federal tax would have some negative connotations. We think federal government trying to totally overrule a state government—or push a state government around whatever you like to call it—on stamp duties versus value sharing type rates—land taxes or whatever—would be a hard go as well. The framework exists in the local councils because everybody pays land rates. So if you move to land taxing and you make it a land rate supplement, you've got the collection mechanism already in place. The federal government can finance the state government, which can, in turn, finance local government. The federal government can get paid back first and the state government can get paid back last, and then local government will be eventually left with all the framework of infrastructure with a rate base that's appropriate—and a long-term rate base. If your modelling said, 'Well, that's too generous to local government,' then you put more imposition on them. Either you feed some of it back to the state government or you put more imposition on them in terms of what they've got to do with local infrastructure provision, because there are plenty of other aspects of local infrastructure than just transport. So we say land rates supplement.

CHAIR: That's an interesting way of looking at it. But what we have previously looked at is that, if you are doing something that specifically creates an uplift in the value of the land, shouldn't that be captured to fund the capital cost of the infrastructure, and the rates or land taxes then support the ongoing maintenance and subsidy of the system?

Mr Bell : That's a bit of an artificial division. We think it's preferable—again, coming back to what we said about the property developer equation, if you've got something that's coming out, up-front, of the financing package for developing land or developing a building, they build it into the price; whereas, if it gets paid out of land rates or a land-rate supplement, it occurs over time. So the smart buyer builds it into the price that they're prepared to pay. But the thing is the developer doesn't have to load it into the price at which he's going to sell. So we think that's a better system. We got the idea from just observing what Deng Xiaoping did. Deng Xiaoping did amazing things for China by defining economic development zones that he put special rules on. We thought, 'Oh, nobody wants land taxing, but, if you do a special economic zone and it's all because you're putting special infrastructure in, you can probably get away with it.' As it turned out, when we went and talked to the Japanese, they said, 'That's what we do, basically.' We thought, 'Oh, okay.'

Ms BIRD: This is really interesting. I particularly want to thank you for the diagrams. I think they really help us visualise what it is that you're talking about. A lot of what you've talked about goes directly to our issues around the challenge we're having in our conversation with submitters about population settlement planning and the transport links, particularly links to major cities, that can make that happen. I just want to explore your other point around freight. Certainly, there's a challenge for us. We know—since this committee, in a former life, did The Great Freight Task report—that the freight task will massively increase. But we've had evidence in this hearing about the impacts of things like the massive number of people who now buy online and the fragmented nature of freight distribution, for example, in major cities, where small vans are having to get around to deliver to households and units and so forth. You make the point that there's just not enough regard being given to freight movements within this planning. I would like you to expand a bit on where you think there are some major opportunities that could change that and what a federal government could do in that space.

Mr Bell : I'm not an expert in freight. We've been involved in a couple of specific instances, which, I suppose, have given us our knowledge, but maybe our knowledge is too focused on those examples rather than being more general. The case of the Illawarra is an absolute classic. The Maldon to Dombarton rail link was stopped in 1988 or something, and they've made several attempts to get it going again. It's complicated by ARTC having a conflict of interest. Any time the Commonwealth deals with it, the ARTC says, 'No, we're against that.' And then New South Wales can't take it over, because the rest of the system is run by ARTC—although maybe if two governments got together and said: 'ARTC, get back in your box. We're going to do this.'

Now that the Commonwealth is going ahead with Western Sydney Airport and has gone further with the Western Sydney City Deal and said it has in mind an aerotropolis area to the south of Badgerys Creek, it is all the more important that there is a freight line that comes across from that area to Port Kembla. It is absolutely astounding how Transport for New South Wales has been able to ignore the problems of taking freight from the Western line—coalfields and whatever—through the western part of Sydney, through the suburban network, out to the Illawarra line and down the Illawarra line. Company after company has put in a claim. I was talking to a guy who was a manager for the Newcrest Cadia mine the other day and he said, 'You can't get a train path because it's clogged.' And yet they refuse to make the investment. Instead, they are prepared to throw $18 billion RMS's way to build an F6 extension. It is in the wrong place and it is the wrong set of priorities. We know about that.

In terms of the vans that are going everywhere—the online buying thing—there is the speed of delivery and the timeliness of pick-up. That's different than bulk commodities going through the freight system. There are lots of situations where trucking is outcompeting rail freight for the wrong reasons, and it is all because of policy. If the policies were fixed up, a lot of that truck freight would transfer onto rail. The van freight is a different matter. If you build new high-speed rail lines, you free up existing 1880s-era rail lines that can transfer as much freight as you like. So, all of a sudden, they have the capacity to start undercutting the trucks, so you get trucks off the road.

Ms BIRD: Am I right in assuming that you would be an advocate for the untangling of freight and passenger wherever possible?

Mr Bell : Absolutely.

Ms BIRD: It seems to me that, to make the cities viable, they have to match how people want to live. We have had some conversations about this. The national water body, for example, spoke about green spaces and the need to provide water for those sorts of facilities. But, as you say, when people order something online they expect that it will arrive within five working days. One would think a fair bit of that would come in as air freight. So it strikes me that the new airport is going to have a big role in dispersing a whole lot of stuff that is coming in as air freight. I wonder whether there is planning and thinking going into how to make it possible for the customer to get what they expect but not have a community that is under assault in terms of the amount of stuff on the roads.

Mr Bell : We have plans, for want of a better word, that the Commonwealth and the states are trying to work through, through COAG, in terms of heavy vehicle charging. But there are charging issues for light vehicles as well. And in 15 years time there will be road charging issues for car drivers as well because we are going to run out of fuel tax. Already, fuel tax receipts are below the level of spending on roads. The numbers have been rigged so that you can't see that. As they fall further, we will need road charging. We don't just need road charging by putting on a WestConnex and putting tolls on motorways and then trying to lever up the tolls that we get on those motorways by charging tolls on previously untolled roads to make the thing work. What we need is a more general approach. People drive on the roads. It is a free asset. Nineteen per cent of land in Melbourne has been shown to be dedicated to road space. Sydney may be the same; I don't know. There has only been a study done in Melbourne. That is a staggering free resource that is being provided to drivers. Most of us are drivers, but it is pretty unfair to those who aren't drivers or don't drive much.

Ms McBRIDE: Hi Ian, it's good to hear from you again. As the representative of an electorate on the Central Coast, I am interested in your comments about looking at regional compacts rather than City Deals. You have highlighted the lack of master planning. You talk about Newcastle and Wollongong and the alignment to steam-era rail. Could you expand on what you mean about regional compacts and perhaps how that might be applied to a place like the Central Coast?

Mr Bell : I saw it is important that the Central Coast—and this is for specific purposes of transport infrastructure and, to a degree, population settlement policies—be in a regional compact with Newcastle and what people might call 'Hunter City', which is the broader area of Newcastle, Maitland, Cessnock, Lake Macquarie et cetera. The reason for that is twofold. If, as we believe Transport for New South Wales are now doing, you just concentrate on improving the rail mainly for people from Ourimbah down, then you are not addressing the relative scale of Newcastle and its relative potential. As John referred to earlier, it could be a lot larger. You are not addressing that.

On the Central Coast, there is a lot more ecologically sensitive land and there is a lot more lifestyle protection needed for people who want beach suburbs with a bit of leafy stuff around. There are not as many broad acres that are easy to develop—there is the escarpment and the hills and mountains—whereas the lower Hunter is mainly a river flat. It has been flattened out over hundreds of years. The floods—other than in the last couple of days maybe; I don't know; I haven't kept up with that—are largely under control. That builds a better business case for major investment if the regional compact is for Newcastle and the Central Coast. That is essentially it.

Sorry, there is another factor. Everybody on the Central Coast and people who live in Newcastle know what we used to call the F3—our lifeblood for driving to and from Sydney. If we don't invest in the right sort of rail, that motorway will need to be duplicated in, say, 15 years time. We have estimated the cost of duplication of that motorway, in current-day terms, at about $15 billion. That is only a few billion dollars less than doing a proper high-speed rail link. Yet a proper high-speed rail link, on Japanese standards, is equivalent to a nine-lane highway each way—that is, 18 lanes of F3. Rail would have the capacity to last that region for 100 years whereas each upgrade to the F3 corridor will last 15, 20 or 25 years and then you'll have to reinvest. The problem is that, at the moment, we're in a cleft stick. If there is a bushfire somewhere south of Mount White, your transport down to Sydney gets cut off. So people will then say we need it duplicated. That is a pretty expensive decision for the sake of just a day or two. When an oil tanker rolled over down near Berowra, the F3 was blocked for most of the day and everybody screamed.

I notice that in the Transport for New South Wales Future Transport Strategy the outer Sydney orbital has cropped up. The RMS people will be on to that. That will be their opportunity to build another big roadway out around the west of Sydney—it is not needed for quite a while yet, by the way—and then take it over the Hawkesbury and Spencer and up to Kariong. That way, we'll just be duplicating the F3 corridor only halfway north. Later on, they can build up the pressure and say we need to double it further north to Newcastle.

All of those decisions are likely to crowd out high-speed rail unless the Commonwealth government says it is a bad long-term strategy and we need to get the rail sorted out.

Mr GEE: Thank you for your very interesting submission and especially your thinking on the specially declared zones. I understand that it is all about the high-speed rail and developing certain regional areas. What you are proposing is very east coast centric. You mentioned rail movements from, for example, Newcrest. What about the rest of New South Wales and Australia? What do we do there in terms of development?

Mr Bell : We haven't been focusing on that. We haven't had any assignments in that regard, although we did get involved earlier on in deliberations on the inland rail. And we came up with a concept which nobody seemed to appreciate—an inland rail and road corporation which basically owns both the railway and the Newell Highway and manages the optimisation of transport flows on both. That is a bit anti-competitive. But freight is so dictated by regulation and policy anyway that we thought: that's okay, we can ignore the ACCC; it can be optimised in the interests of the country—and later on, in 50 years time, maybe it will have seen its day and you would want something more competitive. But my point would be that, if you start with a big rail project and develop or import railway technology and railway engineering technology, it has spin-off benefits everywhere around the state and around the country. What you then find is that situations in Adelaide might get a little bit more attention, a little bit more innovation, a little bit more ingenuity, and something there might work better. There are spin-off benefits.

If you look at the Brits, they started their railroads and then they brought their engineers out here and started ours. They are now doing HS2 and they are thinking of Crossrail 2. They are well and truly into rail, and they have a very deep engineering profession that is thoroughly adept at those sorts of things whereas we have narrowed our engineering profession in rail. We have plenty of road engineers and we have lots and lots of labourers that are prepared to do work on roads. But those labourers could work on a rail link as well; that is not exclusive to there. And a lot of our road engineers could switch back to rail because they have done the basic training. It is just that the investment has been going into roads rather than rail. So as soon as we start to switch all of that back to a more productive arrangement, lots and lots of flow-on effects will occur.

Mr GEE: What has been the response to the taxation aspects of your specially declared zones? It is essentially a zonal taxation proposal.

Mr Bell : It is. It is a zonal experiment, which is designed to be structured such that it would work for that zone—and you don't have to adopt it in the next zone if you don't want to.

Mr GEE: I noticed that, at the back of your submission, there was an interesting concept about expanding payroll tax in those zones.

Mr Bell : Yes—following the French method.

Mr GEE: Yes. What's been the state government's response to this zonal taxation proposal, if there's been any response?

Mr Bell : Do you see from some of these things that I don't get on with the state government?

Mr GEE: Okay.

Mr Bell : The answer is: we're independent and we happen to be largely old independents—we're all people who have been around for 30 or 40 years. We call ourselves mature, experienced professionals.

CHAIR: Approaching your peak.

Mr Bell : Yes. The state government is set up for EY or PwC, and I started the group at PwC in infrastructure advisory. I'm now too old to be one of them and I'm too small. You have to be in the big firms that get the big contracts, otherwise you don't get listened to. A number of times I've sent something to Gladys Berejiklian, Andrew Constance or Tim Reardon and it has come around some circle and somebody who doesn't know what they are talking about replied to me in spin. That's why I've got a little bit of a negative attitude towards the state government. That said, the asset recycling thing is working pretty well for them. It's just that they're not always choosing the best projects to put the recycled money into in my view.

Mr GEE: I appreciated the lateral thought that went into your submission. I thought it was very interesting.

Mr Bell : Well, the Chinese and the Singaporeans lead the way. They think intelligently about these problems and they don't get hung up on constraints like, 'This is the way we always do things, so why should we do it differently?' They think intelligently and they say, 'If this is the right thing to do, we'll do it.' Australia needs more of that.

Mr GEE: Thank you.

CHAIR: Ian, do you have anything more to offer?

Mr Bell : Only if you want to look at some of these graphics.

Ms BIRD: I've just been flicking through them.

Mr Bell : I think they make interesting pictures. Overlaid on the options for the Western Sydney rail needs study, in the green and the red is the path of WestConnex. The Greater Sydney Commission, the feds and the state are looking at the Western Sydney rail needs and Western Sydney Airport, and where's all the money being spent? Way over here. This one has the beaches link and the F6 extension added to it, which takes you further to the east. Spatially it's nowhere near the centre of Sydney. The centre of Sydney is closer to the A6, yet RMS has never investigated upgrading the A6. We've been told by engineers that sections of the A6, which are three lanes either side, don't have to be turned into a motorway. You can have a slip lane off each side where local traffic deals with it and it frees up the two lanes in the middle and things flow better. Then if you've a really difficult area, you tunnel under—like Kissing Point Road and Victoria Road. NorthConnex points straight down to this. It's amazing. NorthConnex comes down to the middle, but nobody has thought to say, 'Let's take it through to Padstow.'

CHAIR: Would you characterise that as a lack of real planning?

Mr Bell : It is a lack of real planning. The Greater Sydney Commission has done the spatial stuff, but the other authorities up until now haven't looked at things spatially. It's in your terms of reference—what spatial planning mix. Spatial planning is vitally important if you are planning 40 years and 50 years ahead.

CHAIR: Yes, so the concept of having master planning of infrastructure and having it attached to land use to move forward and not repeat the sins of the past, where we're forever going back and trying to retrofit infrastructure that should have been done previously—

Mr Bell : Yes. And to help Sharon—that one is quite interesting.

Ms BIRD: Yes.

Mr Bell : If you come from Waterfall and Heathcote, you can come up straight to the river city area through the centre on the A6. And what are they doing? They're going to spend $18 billion on the F6. This corridor suits rail better—

Ms BIRD: Yes.

Mr Bell : and with two tunnels they can cut the travel time from Wollongong to Sydney Central from 90 minutes down to 45. Why wouldn't that take pressure off the existing F6, so why wouldn't it be a good way to go?

Ms BIRD: Thank you.

CHAIR: I think you have a lot of agreement in this room and a lot of admirers. Thank you so much for your presence again today and your contribution. It really is appreciated. We will make sure that we listen to you, if those state people—so thank you.

Mr Bell : They did give us a ring and ask for our free ideas on the faster rail, by the way. We were both through to the last stage of the decision-making process, and they rang us and asked if we would come in and tell them what we were proposing. I said, 'Why would we do that if we're not going to be paid anything, if you're going to take our ideas?'

CHAIR: It's because they paid all those young people at PwC! Okay, thank you again for your appearance here today.

Mr Bell : It's a pleasure.

CHAIR: If you've been asked to provide any additional information, would you please forward it, and any information that you might like to now provide us with, to the secretary by Friday, 6 April. You'll be sent a copy of the transcript of your evidence and will have the opportunity to request corrections to transcription errors. Again, thank you for attending.

Mr Bell : Thanks very much and good luck, John. You have stuck at this three times now—fantastic.

CHAIR: We don't give up easily here.