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Standing Committee on Infrastructure, Transport and Cities
28/10/2016
Role of transport connectivity in stimulating development and economic activity

CLEARY, Mr Nicholas, Chairman, Consolidated Land and Rail Australia

DAVIS, Mr Clayton, Director, Legal Counsel, Consolidated Land and Rail Australia

GALLAGHER, Mr John, Partner, DLA Piper

SCHERMAN, Mr Theo, Director, Solutions Architect, Hitachi Consulting Australia

Committee met at 09:42

CHAIR ( Mr Alexander ): Welcome. I declare open the public hearing of the Standing Committee on Infrastructure, Transport and Cities for the transport connectivity inquiry in Sydney. In accordance with the committee's resolutions of 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.

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 contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. Do you have any comments to make on the capacity in which you appear?

Mr Gallagher : I provide external legal counsel to CLARA.

CHAIR: I now invite you to make an open statement before we proceed to discussion.

Mr Cleary : I appreciate the opportunity to present the CLARA plan to the federal committee for infrastructure, transport and cities. I look forward to answering any questions you may have with regard to the CLARA plan and our current situation and moving forward.

If it is okay, I was wondering if I could hand out a couple of fliers to the committee members. What you are looking at is the CLARA plan. What we must first accept, and move forward on the premise of, is that there is a problem that we are trying to solve. CLARA is traditionally, or often, referred to as the high-speed rail plan. We would prefer to be looked at as the cities plan and as a population strategy, or part of a population strategy, for our nation. We are looking to rebalance the Australian settlement. We are keen to do that because the congestion, overcrowding and unaffordability are affecting liveability within our major capital cities—Sydney and Melbourne.

The problem is significant. This week we have seen the median house price in Sydney tick over $1,070,000. In Melbourne we are well over the $750,000 mark. That is affecting people's lives and the ability to attain a residential dwelling. What we see is an opportunity to offset some of these problems. Those problems are significant. They are going to get worse, given that our traditional strategy for dealing with population growth is very reactionary. As our population grows, we take the view that we should be cutting up more land on the urban fringes of our capitals; although that has somewhat changed in more recent times in New South Wales and Victoria with the idea of a planning strategy change to adopt more higher density dwellings such as terrace houses and apartments closer to transport hubs and to other opportunities.

The CLARA plan is to build eight new, smart, sustainable greenfield cities in between Sydney and Melbourne. These cities will be home to approximately 250,000 to 400,000 people in each of those cities. They will ultimately accommodate around about 2.8 million to 3.2 million people over 35 to 50 years of buildout. There is a wonderful opportunity here for us to harness the great inland and open up the opportunity that exists in our regional areas—and the potential that exists within those regional areas—but also, more importantly, to create urban environments that enhance the liveability, accessibility and affordability for our citizens and our growing population.

Even at full capacity, over the time frames we are talking about, CLARA will only accommodate around about 22 per cent of the anticipated population growth of our nation and, therefore, will leave plenty of growth for Sydney and Melbourne still. We are not looking to empty any current cities. We are looking to promote, enhance and rebalance the Australian settlement.

We have settled in an interesting way in Australia. We have settled on the coast. We have built out Sydney and Melbourne to almost five million people each, and they are certainly heading northwards of that figure. It is a tremendous opportunity for us, though, to pause and put a pause on those cities. As Mr Barry O'Farrell often comments, Sydney needs the opportunity to pause and to allow the city to get the planning strategy right. What the CLARA plan does is provide an alternative method, which will add to the solution in this area.

We are looking to build smart cities. But smart cities are not just about technology, as is commonly referred. Smart cities are all about the opportunity for a city to be the most connected city in the world. The reason why we are focused on the connectivity is that that is what creates a sense of community. It is connectivity not only on a technology basis; it is also what we refer to as the off-line network. So we have an online network, of course, and what we are trying to create is the off-line network, which enhances people's lifestyles and enhances their opportunity to socialise together in common spaces—both commercial and non-commercial spaces—within a short, 10-minute commute by way of pedestrian access or cycleways.

Along our corridor, though, obviously, is where the high-speed rail comes in. Our cities are spanned in between Sydney and Melbourne, which is a great expanse of area of approximately 920 kilometres. What we are looking to do is connect those communities with world-class high-speed rail. So our plan is not a high-speed rail plan; however, high-speed rail does enable the city strategy that we are looking to implement and to roll out.

Building a high-speed rail, depending on the technology we use and ultimately decide to roll out, will place our cities—by that I mean our first two cities out of Sydney and our first two cities out of Melbourne—within a short commute of 22 to 35 minutes out of the CBDs of both Melbourne and Sydney. Ultimately, even our farthest away city, being in the Henty area in New South Wales, in between Albury and Wagga, would still be no further than one hour from Sydney or Melbourne. If we were to use the Japanese technology of magnetic levitation and the world's fastest train, with a commercial speed of 504 kilometres per hour, it would place Sydney to Melbourne no further than 1 hr 59 m apart. We think that is a game-changer and it is a definite conversation-changer as to where people will choose to live.

I have included in your pack a visual on where people are choosing to live now in Sydney, and the effect on house prices that obviously has. A lot of people choose to go to the inner ring indicated in lighter blue on the diagram you have and then get pushed out further and further away from the CBD, which is what we believe is creating—and certainly what we want to avoid creating—what we call vampire cities. Vampire cities are cities that people evacuate during daylight hours, only to return at night. It is not something we want to encourage. People need to have an environment where there is accessibility to jobs, to transport and to lifestyle. That will create a sense of community and a sense of social interaction that has not been seen in new cities and new developments from long time, especially here in Australia.

The part that is relevant to the committee's inquiry is our funding model. We are seeking no capital from state or federal governments, or from our cities, to build the high-speed rail. Ours is a value-uplift model, I suppose, rather than a value-capture model. Value-capture is a very common expression now. It probably needs a little bit of defining at times, but the value-capture that has been referenced up until now has certainly been value-capture in which the government puts in place the infrastructure and the development gets the up-side. Tax revenue is increased and the government has to find a mechanism to capture that. Our value-uplift model is about vacant farmland and turning it into residential allotments, getting a significant up-lift from those residential allotments, which, as you will see on the rear of the document in front of you, is adequate enough to provide for the civil infrastructure, the major infrastructure and the high-speed rail infrastructure, as well as giving a commercial return back to CLARA and its investors.

That is a brief overview. We will endeavour to answer any questions you have. Recently, we have formed a tremendous alliance with Hitachi, in particular Hitachi Consulting Australia, who certainly bring a great deal of knowledge and opportunities for us. We are always happy to answer any questions in regard to their involvement with CLARA.

CHAIR: Could you tell us what your involvement is and what you contribute?

Mr Scherman : Hitachi globally is looking for large infrastructure partnerships. Five years ago Hitachi changed its vision. I am not sure if committee members are aware of Hitachi; it is a Japanese company—a $100 billion company. We are looking for large long-term partnerships. Five years ago Hitachi set out a 50-year vision, and it is all around social innovation. The key for us is that we are looking for opportunities globally. We are looking at addressing the bigger issues globally. We are looking at projects in agriculture, smart cities and transportation, and at key drivers that will change our society.

Of the 21 corridors that will be developed by 2030, Sydney-Melbourne is one of the large corridors that Hitachi has identified. We think the CLARA opportunity is really significant from a decentralisation point of view but also from a long-term infrastructure point of view. That is why we are excited about this and we are looking at becoming the program integrator, basically helping formalise the consortium from a funding and partnership point of view to deliver the project over the period.

CHAIR: Previous efforts at decentralisation have not been successful. Do you think the component of strategic decentralisation—and you are looking at linking a corridor through high-speed connectivity—is going to make the difference? Will this effort at strategic decentralisation be successful?

Mr Scherman : We believe so. If you look at key smart cities globally that we have been involved in and that we are involved in, there are themes around these cities. We think you can look at this high-speed corridor as one major city with different themes and different focuses, from a job creation point of view and a focus point of view. High-speed rail basically makes the entire network or corridor accessible, and that is the exciting thing. So you are not building eight individual cities; you are building them as one city with different, specialised components. That makes it very exciting and it changes the focus of how you can develop them from an infrastructure point of view—whether it has a focus on health care or aged care. You can really have a focus around different components within these eight cities, and that makes a big difference.

CHAIR: As an international company, do you know of anywhere else in the world where high-speed rail could link new cities? Given that Sydney and Melbourne are two of the most expensive cities in the world and the relative very, very low cost of land in this corridor, is there any greater opportunity anywhere else in the world that you know of?

Mr Scherman : No, just because the value capture has been a result of infrastructure that has taken place over years of planning it on the front side, which is phenomenal. If you look at Europe or any of these other places where we have high-speed rail, they do not have the opportunity we have in Australia on the front side, having the land available to actually do that. That is what makes it significant. We have done a lot of high-speed rail in Japan, but they are pretty populated areas. That is what makes us unique.

CHAIR: When we are talking about high-speed rail, it can be Hyperloop, maglev or—

Mr Cleary : We have not settled on a technology at this stage. We have obviously investigated the fastest train in the world, but there are also great opportunities with TGV in Europe. Hyperloop is certainly coming online. There is obviously some proof of concept that needs to come out of that yet, but the ones that we have looked at that are in operation will be able to deliver the CLARA plans in their current form. But, given that we have not settled on a technology provider, we are open to that discussion.

The exciting thing is that the trains are getting faster and safer each day. Japan has an impeccable safety record, which certainly draws us close to them, I suppose. They currently have the technology of the magnetic levitation—which they have been working on since 1960, by the way, so it is not like they have just come up with this thing and said, 'Hey, let's do it!' They have been working on it for a long time. It is very exciting technology. I have ridden it. You stand there with a bottle of water on the seat, travelling at 504 kilometres an hour, and you can walk around. It is very exciting technology and it is there.

It is also a little bit of futureproofing as well. We could go back to steel on wheels, which is still available to us and it may be that that is the best option for us, but at this point in time steel on wheels probably does not give us the next 100 years or the next stage of the technology uplift. But magnetic levitation, whether it be within the tube, as Hyperloop is suggesting, or in the open form technology that Central Japan Railway has, it certainly puts us in a position to look to the next generation as well. Given the alignment that we are suggesting, there is certainly opportunity there.

We have spoken to the creator and designer of the SCMaglev and he believes that with our alignment it comes down to the cost of power. We could even get it faster, if power costs come down. Obviously, the opportunity is there to be commercially viable at a higher speed. The capacity is there already but the commercial opportunity would not exist past that sort of 500 kays an hour at this point in time. There is potential to get up to 700 to 750 in the future.

CHAIR: I understand that your company has been securing options on land at strategic locations. Could you tell us where you are at with that.

Mr Cleary : We are well advanced with regard to getting legal control over a certain amount of land. We are just sitting under 30,000 acres at the moment, which is secure. We have got a further 16,000 acres under negotiation at the moment and are looking to forward those in the next few months. The idea is that legal control over that land will put us in a position where, given the political will, we can implement our plan. Those sites or that acreage is around our city sites; it is not the corridor itself—I just wanted to make that clear. The 30,000 acres would account for around 40 per cent of the total land area that we would need to build out our city sites, although when we talk to—

Mr ZIMMERMAN: Could you just repeat that last point.

Mr Cleary : The land we have secured will equate to about 40 per cent of the total land required under our assumptions to build out our cities, although our discussions with other smart city providers around the world and the CSIRO is that we have probably overestimated the amount of land that we would require to do that. Obviously, if we needed 10,000 acres and that was to come back to 5,000 acres, the percentage of land that we have already got under our legal control goes up.

Mr GILES: On the other side of your land acquisition, can you tell me a little about your route planning with a couple of jump-off points. One, obviously, you are looking at Melbourne to somewhere near Shepparton as the priority leg and perhaps if you could take us through your thinking around that but also provide some reflections on the corridor planning, environmental considerations and the things that we might need to be mindful of in assessing this plan.

Mr Cleary : I can detail that by how we started, which was to look at the initial HSR 2013 study. The study was comprehensive—I think there are varying degrees of endorsement as to the conclusion of that report, but the study itself was thorough. We took the corridor alignment that they had as our starting point. To a large extent, we have actually stuck within that corridor alignment. Where we have varied it is around Canberra—and I have got a picture of the alignment in the brochure that you are looking at. Usually, under the HSR 2013 study and previous studies, where you see city 2, that is Goulburn. From there, traditionally, they would go up the Federal Highway into Canberra and then do what Tim Fischer always referred to as the 'Yass kink' to avoid the Brindabella Mountains and head back out to where we have got city 3, which is Yass. What we have done here is, rather than go down the Federal Highway, continue straight to Yass and then have a line that also continued into Canberra. This isn't a spur line—and I want to make that very clear, because Andrew Barr said the other day that he did not want to support a plan that had a spur line to Canberra. I just want to make the point: it is not a spur line; it is a direct line. You hop on in Sydney; you will get off in Canberra without having to change. What our timetabling would do is enable a train to have a Melbourne to Canberra express, a Sydney to Canberra express; however, not all trains would go to Canberra. We think that is a crucial point, because it allows us to not have those trains slowing down every time they go into the Yass kink, so to speak, but enable us to continue on. So, if you are going from Melbourne to Sydney, or from Sydney to Melbourne direct, you certainly do not have to go in via Canberra. So that is important.

The other issues is that, if we are going to build cities to pay for the construction of the rail and the construction of the cities, this is, to a large extent, a real estate investment plan and a development plan. We needed to be able to provide an opportunity to build eight new smart sustainable cities, because we did not want bigger cities; we wanted more cities. We think that creates the economic activity that this country needs and deserves. Therefore 360,000 to 400,000 people is really our target for our city sites, because research has shown that that is the most effective size to create an ecosystem and an environment where a city can actually have organic growth and grow within itself and be sustainable within itself. Any bigger than that and you end up getting that urban sprawl again and destroying the productivity of those cities.

Then, a change to our route from the HSR 2013 study is where we get to city 4, which is Gundagai. Traditionally, the route then goes out to Wagga, then back down to Albury, and then back across to either Seymour or Shepparton. As you can see, we have actually taken a more direct route. That is for two reasons. It allows us to get great speeds along there because it is a nice straight route; the environmental impacts are less taking that route; and we do not have to go into Wagga and Albury, which are already substantial cities. But what we are proposing under our model is that we have a spur line—so a separate line with separate technology—which would run along the existing Olympic Highway corridor. The Great Southern railway is there as well. So we will be able to deliver accessibility to the high-speed train to the people of Albury and Wagga, and still put them only an hour and 10 minutes out of Sydney or Melbourne—which we think is certainly a viable option. What it will do—which really excites us—is create a tri-city region with Wagga, Albury and our city 5, right in the centre of New South Wales, which could be the agricultural hub. As you guys are very well aware, the Riverina still produces over 70 per cent of our national food product. By basing a tri-city network there, it could act as one economic powerhouse. We think it really changes the potential and opportunity that exists within those regions and also within that new tri-city network.

We then go across to city 6, which is Tocumwal, which is a bit further west than other proposals have suggested. This minimises the environmental impacts. We had a community meeting down there recently and 180 people turned up. If you know regional communities like I do, when 180 people turn up they are usually not there to throw accolades—but this one was different. We had one person speak against it, and everyone else was very much in favour of it and very excited by the prospect.

We head down, then, to north of Shepparton. That is where city 7 would be located. It has been brought to our attention that this differs a little bit with the ARTC's inland rail route, which we acknowledge. However, we think that our route opens up the opportunity for further development of Shepparton and the Greater Shepparton shire. The inland rail route does try to pick up those existing regional centres of Albury, Wagga and others, which would traditionally slow down a passenger train—there is no doubt about it. What we are doing is creating an opportunity in nice close proximity but also along the existing rail corridors.

As you can see, from city 6 through to Melbourne, we have a relatively straight run, and that is obviously a consideration, but it also allows us to open up development in that area to a shire council that is very excited by the prospects. They understand the challenges, the compromise and the disadvantages but still feel that the advantages far outweigh the disadvantages and are excited by that. Then, it is down to Strathbogie Shire Council in the area of Nagambie at city 8, and then into Melbourne—hopefully by way of the airport, if we can work that out with the government. We think it is a tremendous opportunity to provide that very sought after, wanted and desired Melbourne airport link.

Mr ZIMMERMAN: Why the Melbourne to Shepparton link first?

Mr Cleary : At the moment, the Victorian government are showing us much more excitement about the prospect. The Greater Shepparton City Council are very engaged by the prospect, and it enables us to do a two-city model to pay for that whole corridor, which we think is in high demand. That is stage 1. We have said stage 2 is Sydney to Goulburn and stage 3 is Yass to Canberra, but maybe the naming is wrong there, because any of those stages could come first at any time, depending on the progress we make. What we are looking to do is move forward with all three of those stages in the planning framework. That is probably our key ask of the federal government, because there is not much of a role for the federal government to play under ours, because we are not asking for money and the federal government has limited opportunity to rezone land or acquire land for a corridor.

So our key ask of the federal government would probably be to look to work with us to avoid duplication of an environmental impact statement, to perhaps work with us to create a terms of reference that we can then place across the three jurisdictions and to work with us to progress either stage of that. Obviously stage 1 and stage 2 are going to take longer—there is significant tunnelling and there are significant access issues that we would need to discuss and talk about. We have been urged by a number of people to move stage 3—which is Yass to Canberra—to the first stage, being that it is a really great proof-of-concept stage: it is only 60 kilometres from Yass to Canberra. There is a tremendous opportunity there to build out one city within eight to 10 minutes of the Canberra international airport.

Mr ZIMMERMAN: Firstly, I will go to your consortium. CLARA have got Hitachi involved. You and your other Australian colleagues: what is their background and experience in terms of infrastructure and city planning?

Mr Cleary : To be honest, we are using external consultants to be able to roll this out. We are not under any misapprehension—we do not want you to be either—that I am here to say, 'Hey, I can build a train line and I can build a city.' What we do have is the vision, the land and the opportunity to do this with the external consultants that we are working with. We are forming that consortium as we speak—so I cannot sit here today and announce that to you—but, obviously, we are putting people around the table, as Mr Scherman has indicated, to be able to deliver this project and have the capacity, the financial strength and the experience to do so.

Mr ZIMMERMAN: You mentioned that you have acquired rights, or are in negotiation, for 46,000 acres to date. Is there a particular focus on where you have been doing that?

Mr Cleary : Yes, on the eight different city sites.

Mr ZIMMERMAN: So you have been doing it on all eight, or are you just focusing on one?

Mr Cleary : All eight is what we are doing. We want to have an acre parcel in each of those areas. We have not necessarily got all the land—and some have more than others, to be honest—but, at the end of the day, we want to have a significant holding in each of those eight city sites so that we can roll out from there.

Mr ZIMMERMAN: You mentioned you had not started working on the corridor. Is it your expectation that the consortium would acquire the corridor or that the government would do that?

Mr Cleary : Our expectation is that we would like to work with the state governments to acquire the corridor, but we would pay for it.

Mr ZIMMERMAN: So it would be a compulsory acquisition, if required?

Mr Cleary : If required, absolutely. The premise that we are working on is that, at some stage, a high-speed rail will be needed, required and wanted to be built in Australia. There is no time like right now to start securing it; I think that is the premise that we all need to work on. Now, whether our alignment is the alignment that we want to go with, that is up for debate, no doubt. But the thing that should not be up for debate is that now is the time to secure the corridor. It is never going to get cheaper, it is always going to be more difficult and it is going to be built out. I think now is the time to do that, and that is the premise we are working on. The advantage of going with the CLARA alignment and the CLARA plan is that we would compensate the government for that.

Mr ZIMMERMAN: In terms of alignment, what are your proposals in relation to when you hit the Melbourne metropolitan area and the Sydney metropolitan area? Is it CBD to CBD or is it an external—

Mr Cleary : Our preference, no doubt about it, is to go, what we call, heart to heart: CBD Central to Southern Cross Station in Melbourne. That has significant challenges, and we have to be open to that, if we are realists. There are a number of different ideas there. The plan we are looking at right now is to tunnel from Eastern Creek all the way to Sydney Central—perhaps pick up a prospect before we even get to the end of the tunnel, then into Homebush and into the city. To Melbourne from Craigieburn, we would be tunnelling in from there and maybe having a spur line to the airport, or going via the airport—there are two routes that we are looking at there. The other alternative is to go just to, let's say, Melbourne airport and work with the government and the owners of the airport and Southern Cross Station to the airport link. It may be the case that our high-speed rail passengers would stop and change, walk across the platform and get on the airport express and drive in. That is not our preference, obviously, but that might be the reality when we have to negotiate Melbourne Metro and the accessibility to a station like Southern Cross, which is already congested. Sydney is exactly the same.

Sydney has another opportunity with Badgerys Creek. Our proposal does go west. It does not take the east route. We head west and pick up Badgerys Creek. There is so much discussion at the moment with regard to Badgerys Creek. We are talking to a number of—I would not call them 'competitors'—industry experts who are looking at creating that express line between Badgerys Creek and Sydney CBD. There is an opportunity there to look at maybe having a change at Badgerys Creek, which takes into account the significant vision of three cities in the Sydney Basin being Greater Western Sydney, Parramatta and then into the CBD.

The other option that we have even been considering is out at Epping. It is the second biggest station to central. There could potentially be an opportunity in that region because it links to every other aspect, and it would also provide an opportunity at a later stage to head north from there. Our preference is to go heart to heart.

Mr ZIMMERMAN: Your economic modelling has incorporated costs of tunnelling into the CBD.

Mr Cleary : That's right.

Mr ZIMMERMAN: Just on your economic modelling in relation to the eight new cities: you mentioned that you do not want them to be vampire or dormitory cities, in effect. What type of modelling have you done to ascertain what the economic foundation for those cities could be?

Mr Cleary : What modelling have we done?

Mr ZIMMERMAN: Yes.

Mr Cleary : We have looked at the uptake of the population growth and what percentage of people would look to or consider a change. A recent study which was done in Melbourne showed 39 per cent of Melburnians would look to a regional alternative if it were an urbanised environment. In Sydney—

Mr ZIMMERMAN: Let me clarify: do you see these regional cities as being dormitory cities to Sydney and Melbourne?

Mr Cleary : No, I don't. To clarify: we see only 15 per cent being commuters.

Mr ZIMMERMAN: So each city of the size that you are talking about would obviously need an economic driver.

Mr Cleary : Absolutely.

Mr ZIMMERMAN: I am just wondering what you see as some economic drivers.

Mr Cleary : We have been in discussion with some global technology companies, as well as some other companies. To start with, as our cities come on line, we need a significant anchor tenant, which we agree with. That anchor tenant has to provide 5,000 to 10,000 jobs. Once we have 10,000 jobs in the heart of the our city, that means a population of around 25,000 people. That population of 25,000 people will be enough for a Coles; a Woolies; an Aldi; a 50-bed hospital; a school, both primary and secondary; and the potential for a university. Given the smart city technology, there is the capacity for the research opportunity. We think the educational institutions will absolutely go there—and straightaway we have got that heart. But it does come down to those first 10,000 jobs. We have no doubt about that. All the studies with the players we have been talking to across the world show that the key is to have that job driver at the heart.

What that does not include and where we see the extra boom is in construction. There is a significant railway that is being constructed in very close proximity to our cities and there is also the major infrastructure that will be laid out within our smart cities—and that is important to note.

Mr ZIMMERMAN: I have just two more questions. In terms of the staging and the financing, effectively stage 1 is Melbourne to Shepparton. So you build the line but the city is obviously not going to appear overnight. It is going to need the line to be there first and people to know that is there before they are prepared to invest.

Mr Cleary : We think they would come online together.

Mr ZIMMERMAN: But you obviously have to have people and business and residential confidence that the city is a place to be, so to speak, so it is not going to be possible to populate that city as soon as the railway line begins its first train service.

Mr Cleary : No. We disagree a little bit on that, because that comes down with that anchor tenant. That anchor tenant is only going to come there if they feel they have enough workers who will also relocate. We have built into our economic modelling the opportunity to incentivise those workers as well. When that anchor tenant comes in—

Mr ZIMMERMAN: Bu assuming there is a lag time between foundation of city and city reaching maximum capacity, if I can put it that way.

Mr Scherman : The key is the type of companies that you want to put in the consortium and they are companies that are thinking longer term—the vision of the Sydney Harbour Bridge. The key is looking at that infrastructure and what it can deliver over the next 50 to 100 years, so the investment on that infrastructure is done around the longer term and not around short term, immediate return.

Mr ZIMMERMAN: We are seeing Hyperloop after you. In terms of the new potential of technology, obviously the difference between Hyperloop and existing technology is a quantum leap. You are talking about an hour travel time becoming 10 minutes travel time. How much should a government be prepared to wait to assess whether a technology like Hyperloop is actually viable before it commits to any particular technology option?

Mr Cleary : I will have to let Hyperloop answer questions about their technology, except to say that my understanding is that it still runs on a magnetic levitation track within a vacuum tube. That technology has been around for a long time. Whether it has been used for passenger transport is not the case. I think the question is always could there be something better? Could there be something in the future that is better than what we have now? And the answer is always yes. Do we delay and wait for that? The answer is inevitably no, because, back in 1984, when we could have built the Very Fast Train under the CSIRO model, it would have been $2.5 billion, and I think that is a tremendous example of what delay could cost us. I think the economic productivity, the congestion, the overcrowding and the problems we are trying to solve under the CLARA planned population strategy far outweigh the delay that could come from waiting for a new technology.

Earlier I was talking to the guys from Hyperloop, and they said that they have brought the test forward to, hopefully, 2017. We are still talking about a significant time before we can get our track up and running, but what we are looking at doing is building it in two stages. There will be the superstructure, which is the elevated line for our high-speed rail, and then there will be the technology that sits on top of that. There is a significant cost, but there is always the opportunity to change the technology on the top. It could be steel on wheels, it could be magnetic levitation and it could ultimately be Hyperloop that sits on top of those rails.

Mr ZIMMERMAN: But presumably Hitachi would want to roll out its own technology rather than—

Mr Cleary : I will have to let Theo talk to that, but that is not the case at this stage.

Mr Scherman : Hitachi spends about $3½ billion a year on research. In the western world, things are not coming out quick enough and that is part of the frustration. But that is the exciting thing: we are always looking at what is next and what is the best technology to go forward with. Nick's point is that there is always that balance between how long you wait, what the return is and what it would be to get up. So for Hitachi what is important is to deliver technology that works on time, is of absolute quality and is the best at that time. Whatever would be best we will—

Mr Cleary : I will just qualify that: Hitachi are not coming to us with a specific technology; they are coming to us with a specific set of skills to bring that technology together. They have tremendous experience in utilising their technology and their product in numerous other vehicles and branded product. Here, they are helping us in the social innovation, in the smart city space as well with their experience in rail, but it is more to secure the best technology as opposed to provide the best technology.

Mr LLEW O'BRIEN: I live in Queensland in a regional area north of Brisbane and there is a lot of talk about high-speed rail. The concept that you are putting forward interests me, but it makes me wonder about the nature of the train, or the connectivity, being a passenger train. But also, if you were to create a whole new city with industry and product, that product needs to get to market, and there is all the associated extra requirements of a transport system. There is a lot of competition out there as it is, for little places like Wide Bay, for government funding for roads. What sort of pressure would your plan put on the existing road system? First of all, is it your plan for the train to carry freight as well? And have you considered how that will work, and can you expand on that?

Mr Cleary : The plan is not a that the train would carry freight at this point in time. But where we think we add tremendous value to the freight system is by removing the burden of the passenger priority that is given under the existing great southern railway line. At the moment the XPT goes through, and freight trains are sitting on the siding waiting, for hours at times, for an XPT passenger train to go past. We think we remove that obligation from the freight line, making it instantly more productive—and that is significant. All of our cities are also sitting in close proximity to the existing great southern railway line or the alternative railway lines down in Victoria. So there is a tremendous opportunity to put existing railway lines to greater use and achieve greater productivity.

I just do not think that I could sit here and agree, though, that creating new cities with new hubs and new consumers outside of those existing major capitals could somehow add to the congestion. I think it will remove the congestion. Now, will there need to be spend on roads? Absolutely. But we will be part of the overall congestion and the truck movements and the road spend. Will it be a net benefit? I believe it will—100 per cent. I think that that is what we get out of proper planned decentralisation. I think we have not had that to date because we have not given proximity to those residents who live within those communities and the opportunity that exists with it. But my opinion would definitely be that we would not be burdening them beyond what the existing per-capita spend would be on roads.

Mr LLEW O'BRIEN: Do you believe that with these start-up cities that are going to be established with a minimum of 10,000 jobs that there are not going to be any extra cars freighted in? I understand reasonably well how the current rail transport works, and it is very ineffective; it does not come anywhere near road transport. So do you believe that this immediate increase in population will not put any strain on the road network?

Mr Cleary : I do not say that it will not put any strain on it. I just think there is a net benefit. If a state government is looking to spend a certain amount on roads per capita, transporting some of that capital off the existing capital cities would actually have a net benefit to the state budget. That is my point. Yes, we would have to upgrade some roads—no doubt about it. However, I would like to just point out that our cities are smart cities, and they are based on pedestrian and cycleway access. They have got a high-speed rail link. I think the car usage per capita is going to be significantly decreased from the averages we are looking at at the moment and, certainly, going into the future.

CHAIR: My last question follows on from what Llew was just pursuing. It occurs to me that your project will generate enormous revenue for federal and state governments in terms of capital gains taxes and stamp duties. The whole basic principle of value capture is that anybody who has an unearned benefit should be contributing to the infrastructure. Therefore, when we are looking at Llew's question, would it not be reasonable that, in the agreement that you reach with various levels of government, their windfall in revenues should not be captured, quarantined and hypothecated to any additional infrastructure regarding freight rail or roads?

Mr Cleary : I think that would be a very fair assessment. Far be it from CLARA to determine where government spends its money. But we believe that there is going to be a significant windfall. There is going to be a significant value capture, if you will, but without the burden of the government having to put in that infrastructure to start with. This means that the tremendous benefit from that value capture can be used, hypothecated, not only within those regions but, more importantly, in other regions that may not have that accessibility or be along our corridor. We think that is very important, obviously, to push forward on.

CHAIR: Many commentators—and it is fascinating to me that when people know very little about a subject they can hold such strong views—see this as pie in the sky, high risk. But we have heard from Mr Scherman that this is the best opportunity that he knows of in the world in regard to our variance of property values that value capture, or your private value capture, can actually fund this. What could the government do to de-risk this and secure this opportunity of strategic decentralisation that could go a long way to providing affordable housing for generations? And we would have a plan of growth. We have never had a plan of settlement, so we would be rebalancing the settlement. But it is also a plan of growth for decades and decades to come, as these other corridors open up. What would you want from the government to make certain this opportunity?

Mr Cleary : There are a couple things. But mainly what we are looking for from the federal government is an opportunity to work with them to create a terms of reference for our environmental impact statement, which will avoid duplication across the three jurisdictions. We think that is really crucial to the federal government having a significant stake and say in the route and in the opportunity that exists within that route and a say in population strategy.

I think, when we are looking at a population strategy for our nation, it should be led by the federal government. I think this is a wonderful opportunity for the federal government to play that leadership role and not have to be the ATM for these projects, as has been referred to by the Prime Minister and others. I think this is an opportunity to provide leadership through a method of looking at avoiding duplication, which is a natural thing that I think the government should want to achieve, and also to look at the reality that, if the status quo continues and we do nothing, we will only have what we have already got—and, to be frank, that is not good enough. I think that is something that we really need to look at.

Mr Scherman : If I could address that from a commercial point of view as well: as Australians we are competing globally with these large companies for their dollars, for true PPP partnerships. The fewer obstacles we can put in the way of these companies the more money will get into Australia and will not go into other countries, which is key, as far as I am concerned, as an Australian. We are competing on a global market.

CHAIR: How does this government best proceed to engage with interested parties? We have many interested parties. It has far-reaching effects. Do we call for expressions of interest? How do we corral everybody together to work to create a successful public-private partnership to deliver this?

Mr Scherman : From our side we would love to spend time to see how we can do that—to get advice from government on how we can go through that process.

Mr Cleary : I think there is a risk though. If we open that up so much to every idea that is out there, the risk is that we do not get started. I think that is a risk that we do not want to take. There are opportunities there. There are mechanisms in which the government can look at things, especially if there is not a procurement to be had. We are not looking for money. We are not looking for any legislative changes. We are looking for the existing planning framework to be placed on top of our sites. We think there is a significant argument to be made that this should happen sooner rather than later.

We do have a unique opportunity, a unique idea and a tremendous vision that can be implemented with the land we have and with the opportunity that exists. What we would be looking for is to work with government to show leadership with CLARA to be able to progress it further forward, as opposed to a tender scenario. That may drag the whole thing out over a number of years and, given that our net effect is plenty of value capture back to the government, we do not believe that that is an opportunity that should be missed.

CHAIR: So, innovative leadership, wouldn't you say?

Mr Cleary : I would say that—and you never know: it could lead to jobs and growth.

CHAIR: Thank you very much for your attendance here today. If you have been asked to provide any additional information, would you please forward it to the secretary by 3 November. You will be sent a copy of the transcript of your evidence and will have the opportunity to request corrections to transcription errors. Thank you very much for your attendance today.