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

ARTIS, Mr Steve, Director, Ultraspeed Australia

DUGGAN, Mr Sean, Director, Ultraspeed Australia

JAMES, Dr Alan, Vice-President, Worldwide Business Development, Hyperloop One

[10:37]

Evidence was taken via teleconference—

CHAIR: I now welcome representatives of Ultraspeed Australia and Hyperloop One to give evidence today. Although the committee does not require you to give evidence under oath, I should advise you that this 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.

Dr James : First of all, thank you for the opportunity to give evidence to the committee. I am going to give an overview of Hyperloop One, our technology and our corporate progress, and then Steve and Sean will speak to the potential application of Hyperloop One's technology in the Australian context.

It has come up in the discussion already that we are moving very fast on Hyperloop. The concept was initially published by Elon Musk, in August 2013, as effectively an advanced napkin sketch. I think Elon then decided he was too busy with rockets and the Tesla supercars to himself progress it, and open-sourced the concept. It was basically a challenge to the brains and the money to go and make it happen, and there were various responses to that, including academic and crowd-sourced. We took the route at Hyperloop One that we would form a company, recruit the best brains in the business and actually physically build Hyperloop, because, in the infrastructure business, there is nothing like the 'show me' moment.

Hyperloop is currently in physical development at our development site, the dev loop site in the Nevada desert, and our design work is largely done at our innovation campus in downtown Los Angeles. We are aiming to demonstrate a fully functional Hyperloop, not in 10 years or five years, but in the first quarter of 2017, within months from now.

When I say 'demonstrate a fully functional Hyperloop', I mean it will comprise the following main features. There will be a transport vehicle, which we call a pod, and that vehicle travels in the tube. The tube has two fundamental advantages. It creates a totally controlled environment, which enables us to do fully autonomous control. We do not get the external factors that we would in, for example, autonomous driving on public roads. We do not get fog; we do not get snow or rain; we do not get people trying to cross, and we do not have cross traffic of any sort. The second major advantage of the tube is that it enables us to vastly reduce the air pressure. This overcomes aerodynamic drag, which is the single greatest factor prohibiting ground transport travelling at aviation-like speeds. The third principle is that we levitate the vehicle rather than using wheels, and that practically eliminates friction. A major difference between our system and previously existing maglev systems is that we use a passive maglev, that requires no power to create levitation. The fourth major element is a linear motor, which we use to accelerate the vehicle.

When we put all of those things together we can do some things that conventional high-speed rail systems cannot. We can accelerate the vehicle from zero to our design speed of 300 metres per second, which is 1080 kilometres per hour. We do that at a pretty gentle g-rate, pretty similar to what you would experience in a 777 at take-off, for passenger use. Once we have attained cruising speed, because we have essentially zero friction and drag, the pod just coasts for tens of kilometres. Typically, in a passenger application, it coasts for about 60 kilometres before we need to give it any more power. That means we are using power, on the typical route, for only 10 percent of the total journey. This is significantly different to conventional high-speed rail.

Another major difference, and it is probably extremely applicable in the Australian context, and I know Steve and Sean will talk more about this, is that we can use the same infrastructure to transport passengers and freight. This means, in railway terms, that you do not need a high-speed rail and a heavy haul freight system. Neither do you need to be concerned, if demographic patterns change and people move to new places to live, that the freight required to service those new places will clog up the roads. We can carry both those traffics on a single system.

When you put it all together, over a typical corridor like Melbourne to Sydney, we can offer a city centre to city centre journey time that is around 2 to 3 hours quicker than from a city centre, out to an airport, landing at another airport and then getting back into a city centre at the other end. It is actually faster gate to gate than flying. Those two cities we could put together in between 55 and 58 minutes, depending on the precise route selection.

I mentioned at the beginning that my job is worldwide business development—and it is genuinely worldwide. What we are seeking to do in parallel with developing the technology at an extraordinary pace is to identify and work with corridors around the world on which our technology would deliver not just a good transport fit but significant macro-economic benefits, as well. However we cut that cake, the Australian east coast, particularly initially the Sydney-to-Melbourne sector, but also up to Brisbane, is always in the top five priority list. We intend to put in significant effort in Australia to progress the project. That is the overview, if you like, from the tech and the company. I am sure Sean and Steve would like to say something about the Australian context.

Mr Duggan : Thanks, Alan. I represent Ultraspeed Australia. We are representing Hyperloop One in an Australian context. Our proposition is to use the Hyperloop One technology in Australia with an initial focus on a very similar high-speed route along the Sydney-Melbourne corridor. We are not demurring from that at all. The key difference from our perspective is that we can bring connectivity between existing capital cities and existing regional centres along that route in minutes, not hours. This, in our view, has been one of the key reasons that a lot of regional development has not really taken off. It is because it is isolated; it is not connected; it is not accessible to existing centres.

We believe that Hyperloop One can then deliver three fundamental things. One is social and economic transformation. We recently heard of that kind of at-speed connectivity within a Sydney context with a 30-minute city. Here we are talking about 30-minute cities—plural. We think that linking existing regional centres in that way with capitals means that we can ease capital city growth pressure and, at the same time, stimulate existing regional centres to grow in the way that they were originally thought of. We are not thinking about new centres. In fact, evidence internationally says if you are going to integrate high-speed rail into an existing system, you make sure that it happens. You actually build into existing infrastructure; you do not build new infrastructure.

The other key advantage which Alan also identified was the ability to carry freight. If you are going to develop the regional centres in the way that we envisage the Hyperloop can deliver, then inevitably freight will follow. And we agree with the earlier question that there will be a freight issue. We intend to deal with that by using Hyperloop as a freight system. That will bring enormous transport efficiencies and productivity gains within transport itself. It will also provide opportunities for short-haul distribution with new intermodal centres within regional centres. And that, we see, is an incredibly substantive industrial development opportunity.

Overall, we think Hyperloop One technology brings connectivity in an Australian context that is simply faster, better, cheaper and greener than any other high-speed alternative. That is one of the reasons that we are here this morning. We are happy to respond to and discuss any questions or queries you might have.

CHAIR: Thank you for that. Your technology is under development. What is your best estimate as to when you will be ready to roll this technology out?

Mr Duggan : Alan, do you want to answer that, specifically?

Dr James : Perhaps I could take that. What we are demonstrating in the first quarter of next calendar year 2017 is proof of technology. It is putting the fundamental bits together so that the world will be able to see and touch a full-scale functional Hyperloop. Let's be clear: that is at the research and development site. What we then need to do is what we call proof of operations. That is the difficult stuff. It is multiple pods operating bi-directionally in double tubes, real-time dynamic separation, switching and fail-safe redundancy. It is everything we need to prove in order to get regulatory approval and a safety case. We have teams working on that. One of the opportunities that we look to is to partner with a smart location to develop the proof-of-operations facility. It carries forward the momentum from the proof of tech in the Nevada desert—and it is essentially a full-scale Hyperloop—initially over a 50-kilometre scale, which then enrols to become part of the full-scale route.

We would look to have that operational on the following timescale. We would look to plan it in 2017, have the first 10 kilometres on the ground in 2018 and incrementally extend it to a 50-kilometre scale over the 2018-19 period. We are targeting regulatory approval in 2020 and looking to have our first commercial ones operational around 2020-2021 initially for freight, with passengers following soon thereafter.

CHAIR: What is the delay for passengers over freight? What is the reason?

Dr James : To clarify, it is a very tight timescale. We are looking at 2020 for freight and 2021 for passengers. We have a dedicated regulatory and safety case team whose full-time job is to work on these issues.

CHAIR: Do you see value capture as a viable way of funding Hyperloop?

Dr James : We are looking at it internationally. I would have to say across the world there is a variety of potential funding models that have been put forward from straight state funding in some territories to a mix of public-private partnerships, often using an availability payment structure. That would be typical in the [inaudible].

It is inevitable that something that shrinks hours into minutes will have a fundamental effect on where people live and work. To give an example from the Nordics—where we have conducted a detailed business case on Helsinki to Stockholm—we do expect a major growth of region. We expect economic concentration in the existing cities but we expect dispersal of population to remote cities. More people want to live in nicer places is the basic driver there.

We do expect greater commuter traffic. We also expect new traffics to be generated, because of the level of transformation that Hyperloop-style journey times bring about. Somebody put it quite well the other day: if you connect A and B with a railway, you get A plus B. If you connect A and B with a Hyperloop, you get 'AB-ville'; effectively, a single economy where it does not really matter where you live or work.

To address the value capture question, to pick up on the new answer that Sean introduced in his comments, it is best served in existing locations that have already sunk investment in the urban overhead: the hospital, the schools, the roads, et cetera—the infrastructure that is already there. That enables growth in those locations and it would be critical also to be clever and creative in how we bring the public interest and the private interest together around the development that occurs at those locations that suddenly become accessible to the major urban cause. That could be, for instance, creating a special purpose vehicle which controls the development rights and ensures that some of the value uplift is captured for the public good as well as for the private profit of the developers who benefit from the scheme.

Mr Artis : There is another element to the funding model, which is not obvious. The proof of operations facility actually brings an industry to Australia. It represents an inward investment by Hyperloop One and its backers and it represents an investment, no doubt, by Australian governments at federal, state and territory level. It also creates a manufacturing, fabrication and design industry in high-tech manufacturing that will live on for years, as we become an export centre for hyperloop technology across the Southern Hemisphere. There is an income stream that will come from that in the licensing of the IP. We will pay a perpetual licence fee to Hyperloop One for the technology as the designers and builders. As we licence that technology down the supply chain, we will earn a licence fee on that. Some of that licence fee can be redirected back into the capital requirements for building the Australian corridor.

We see that as being able to fund the first stage between Sydney and Melbourne, or Geelong and Newcastle, which would be stage 1 and stage 1A, to bring the most direct benefits to the economy very quickly with the removal of freight congestion on the Hume Highway and the connectivity of Geelong to Melbourne, and Newcastle to Sydney. But we also see the opportunity in future phases to go from Sydney to Brisbane, not via the coast route—which is always talked about in consequential high-speed language—but inland via Orange, Dubbo, Armidale, Tamworth and down to Toowoomba that way. The ongoing opportunities for income from the industry are self-generating and the revenue from the system that we expect could carry between seven and 10 million passengers per annum is quite significant.

We also, at this stage, are not looking for substantial government capital input into this project. We are looking for access to the corridor, which is also very substantially less than a conventional high-speed rail corridor. Our land take is minimal compared to conventional high-speed rail or any other form of heavy rail.

Mr ZIMMERMAN: Why is that?

Mr Artis : Because we operate in a 6.8-metre tube. We can operate at grade. We can operate underground. We can do cut and cover. We can tunnel. We can go up to 30 metres in the air on pylons, and our land take at ground level is 4.5 metres per linear metre. If it is above grade, if it is on pylons, the land use is available to farmers and others, so we are very flexible in terms of our corridor requirements.

Mr LLEW O'BRIEN: Obviously, there is a fair way to go for the technology, but I have not got any burning questions to ask.

Mr ZIMMERMAN: So what do you assess the risks during the testing stage to be? I assume you are at the stage where you have proved the technology but, from what I read into Dr James's remarks, you operate that technology with multiple rolling stock, timetabling and all that type of thing. What do you assess the risks to be when you get to the operational stage that it may not prove itself?

Mr Artis : We do not see the risks as being significant at all in an operational sense. We see the challenge as being regulation and certification of the safety case, and of course how do you regulate? It is not a train; it is not a plane. How do you assess the safety certification? So we would be seeking the assistance of respective bodies within government to provide that certification. Hyperloop have already engaged with some of the best safety brains in the world to look at those issues. Fundamentally, it is a closed loop system that is controlled by transponics, which is the control layer. It provides an opportunity for further industry development in open technology for interaction with it, but nothing to interfere with the actual controller. It is a defence-aviation system level system of integrity. We would work with the regulators and work on the best possible safety case, but, as I think somebody pointed out earlier, this is not new technology—this is technology that is being integrated in a much better way. Maglev has been around for 40 or 50 years, vacuum tubes been around 100 years, and linear motors have been around for a long time.

Mr ZIMMERMAN: Sounds like those old things they used to have in department stores.

Mr Artis : Cash transfer is always our reference point, although a member of the ACT government did point out that there is a vacuum tube system from Parliament House in Canberra through to the old government print works in Kingston, which used to transfer Hansard for printing and things like that. It has evidently been disconnected—

Dr James : Can I make further comments on risk and risk mitigation?

Mr ZIMMERMAN: Dr James, please proceed.

Dr James : On risk, as Steve has just commented, many of the technologies that we are integrating here—and that is the active word—have been around for some while in various forms. What we are doing is refining them and fundamentally digitalising them. Hyperloop is a thing, and it is connected to the internet. It is a fundamental part of the economy of the internet of things. Think of Hyperloop in the way that you would think of routers and switches in the digital informatics internet. We are the backbone. What people do with the apps that are integrated onto that backbone is another massive opportunity to create value. But, as various people have commented, it needs to be proven, it needs to be regulated and it needs to have a safety case. As Steve said, we have the best brains in the world, pretty much, working on that.

There is a fundamental difference in engineering the complex integration in the mid-2010 decade—2015, 2016—compared to doing this 20 years ago. Effectively, we have massive computational resources at our disposal. We can simulate stuff that you could only do by trial and error 20 years ago, or even 10 years ago, and we can bring it to a nearly optimal state very much more quickly than our predecessors could when, for instance, building space rockets in the 1960s. This enables us to incrementally take out large parts of risk earlier in the process than we could have done without those resources being available. This gives us, by extension, greater confidence in our technology earlier in the process. So, what we would propose to do is work with regulators, safety agencies and testing and evaluation companies from the outset to collaboratively develop a safety case for an entirely new mode of transport, which is what Hyperloop is. That, in itself, is a potential competitive advantage for the host location—for the early movers—because that regulatory framework can then be exported to other territories seeking to expand to well-liked hyperlink routes.

Mr ZIMMERMAN: In terms of costs and financing, what is your early estimate of how costs of constructing this type of system would compare with, say, traditional high-speed rail? I notice in the papers that the proposal for Helsinki to Stockholm was a cost of around A$30 billion for 500 kays. That is probably not entirely analogous. Following that, you mentioned that you were not necessarily seeing a significant contribution from government for that 50-kilometre test stage. Have you given any thought as to where you think the 50-kilometre route would ideally be placed for that testing stage?

Mr Duggan : In terms of cost, as soon as you put a figure in place, particularly if it is out of context, it can be taken as reality when it is clearly not. So we are being very careful in terms of the numbers that we potentially bandy around. The exercise we have done internally was to take as a starting point an agreed known number in terms of the cost of construction of the high-speed rail route in Australia, and we inflated those to 2016 prices so that at least we could have comparability with the information that was coming out of the Helsinki-Stockholm assessment. So, on a like-for-like basis, not risk assessed—it is a basic cost—we consider that we are looking at at least 20 per cent cheaper, in capital cost terms, over a very similar route.

There are big differences compared with the Helsinki-Stockholm route, part of which is under water. None of the route in Australia is under water. Plus, we know that Hyperloop has considerable advantages in terms of land take over high-speed rail. It also has considerable advantages in terms of its flexibility of routing over high-speed rail. We can do a multiplicity of things that high-speed rail cannot do in terms of tunnelling, acceleration, curves et cetera.

Mr ZIMMERMAN: Environmentally as well

Mr Duggan : Potentially, you can put it out of harm's way if you need to, because the speed does not detract from the route. So distance and time become a completely different equation. The idea within the Hyperloop system is to have, in effect, linked branches into existing centres, not run the main line route through them. So the issue of clogging up that tube route does not enter into the equation. It is more a question of managing tubes off and tubes on to the main system.

In that kind of context, talking about the comparison with high-speed rail costs is challenging. But our minimum position at the moment, in terms of capital, is that we are at least looking at 20 per cent lower costs. The interesting thing from our perspective is that the operating costs on top of that are likely to be in the order of 60 per cent less than for high-speed rail.

Mr ZIMMERMAN: Power savings?

Mr Duggan : Power saving and the fact that the pods move through tubes—there is no friction, so there is no heavy wheel on heavy steel rail to think about. So, from a complete cost perspective, I think it would be reasonable to assume that the total cost relative to high-speed rail would be in the order of 40 to 50 per cent cheaper. But you get twice the benefit.

Dr James : I can validate that from the Nordic work, which has now been taken on to a next stage of scrutiny by both the Finnish and the Swedish governments. Although it is preliminary, it is looking like whole-life cost of a Hyperloop system compared to a proposed high-speed rail system in the Swedish context—by whole-life I mean over a typical project finance term of 30 to 50 years—we are looking at costs of around 50 per cent of those of high-speed rail. That, as Sean has said, is largely due to three factors: (1) automation, which eliminates many of our staff costs; (2) zero friction design, thus eliminating heavy maintenance—because we simply do not touch the track, therefore we cannot wear it out; and, critically, very significant energy savings versus high-speed rail, given the reduction of atmospheric pressure.

CHAIR: How vulnerable is the tube to damage or, in this day and age, intentional damage through a terrorism act?

Dr James : You ask a very pertinent question, and of course it is those kinds of questions that are exactly at the heart of the safety case for any new mode of transport or indeed any critical infrastructure or facility. In designing the safety case, one looks at events that can be tolerated on a one-in-1,000-years basis up to a one-in-10-million-years basis, and identified risks are then categorised and mitigated appropriately. In our day and age, clearly it would be unrealistic to state that we could be immune to terrorist attack, for instance. What we can do, as a new mode of transport, not battling with the legacy issues which prevent effective security at, say, railway stations or underground stations is that we can design a great deal of active and passive security into our pods and into our Hyperloop portals—we call them portals, not stations. And, in the event of a tube failure, we are of course working on the mitigation—on both tube-side and pod-side measures, to pressure-seal the accident area or the incident area, to minimise damage to the system as a whole and to enable the bulk of the system to continue to operate during the disturbance. So, yes, we are aware of it and we know we need to address it, but it takes just a couple of minutes to give the context of that. If you board a hyperlink pod, you are making essentially the same bargain with technology as you would make when you board an aircraft. It is a pressure vessel constructed from metal, operating in a low-pressure environment. The difference is, of course, that hyperlink is fundamentally safer. You are not 12 kilometres up in the sky; you are in a controlled environment which is monitored; and of course you are not strapped to a tank of kerosene.

CHAIR: When you put it like that, we should ban flights!

Mr GILES: I have a couple of questions. Most of what I was interested in has been covered. I read with interest the Helsinki-Stockholm proposal. Did KPMG do that for you or for another body?

Dr James : We worked with local partners.

Mr Artis : They were engaged by local partners similar to Ultraspeed Australia. They are a company known as FS links.

Dr James : We worked with local partners. That project was initiated by a company called FS Links, which stands for—no surprise—Finland to Sweden Links. They approached us in the sense of: would we be prepared to supply the technology into that system? We said yes. We contributed to that exercise. We invested into that company. What is happening now in that territory is that FS Links are currently fundraising from both the private sector and in Europe from EU funds to take the project onto the next stage, which we call detailed project development, which effectively takes the project to the point of readiness for procurement, defining it in technical and financial detail, putting a project finance mechanism in place and the procurement regulation.

Mr GILES: Thank you. You anticipated my next question. That was all I had, Chair.

CHAIR: You established earlier that it is quicker than and more reliable than air travel. That is particularly pertinent this morning because two of our members were late because of delays in flights and then ground transport.

Dr James : Irony.

CHAIR: And it is cheaper than traditional high-speed rail. How will it stack up commercially, just as a transport system, in competing with air travel? How much will the ticket be compared to air travel?

Dr James : Exactly as Sean said in relation to putting a capex number out, obviously one needs to be guarded until the details work has been done. But the way we would price this system, as we would in any territory, would be to do a demand, ridership and revenue analysis based on people's willingness to pay. There are clearly all kinds of fares that you can pay to get you from Melbourne to Sydney or vice versa. You can be the super-time-critical person who wants to sit at the front of the aircraft and not book in advance or you can be the time-rich person who takes the road coach and does not mind spending 12 hours doing the journey. What comes out at the end of the analysis is an average fare which will be in the tens of dollars rather than hundreds of dollars. It will be priced to be a public transport system not a fat cat means of getting about the country in superpremium luxury. But, above all, it will deliver capacity that will enable us to reduce pricing because we will attract greater ridership. Let me just address that for a minute.

One of the fundamental problems with a high-speed rail system is that you have to wait for 1,000 people to show up before your TGV or Shinkansen is viable. Then you have to propel that vehicle through some dreadfully resistant stuff called air—and that takes a load of energy. We get rid of those problems. Pods are much smaller: they take 24 people in a superluxe configuration; 50 in a rough equivalent to business class; and around about 90 in an all-economy configuration. And because they are levitating in effectively zero friction—because they are in a pressure-reduced environment with effectively zero drag—it costs us next to nothing to move them. We can move a pod with, say, five, 10, 15 per cent occupancy—which would bankrupt a high-speed rail system if you tried to move trains at that level. So we can offer greater frequency from smaller and better dispersed terminals—on the branch network that Sean described earlier—connecting more places, more origins, to more destinations, enabling more people to connect more places of work and more places of residence and, ditto, freight to get from more points of entry at ports and airports to more destinations and distribution hubs. All of that gives us an economic order of magnitude that is a next generation on from what you can do with high-speed rail—and I know: I have banged my head against the economics of high-speed rail, in my professional capacity, for the last 15 years.

CHAIR: While your testimony today has mainly been on the advantages of the transport, one of our primary concerns is the rebalancing of our settlement, because of the very high cost of land in Sydney and Melbourne and the relatively low cost in the corridor between. Do you have some comment to make regarding the opportunity of value capture to fund and further subsidise this type of transport?

Mr Duggan : There is an obvious opportunity for value capture. The intention with the Hyperloop system is to ensure that any stops are fully integrated into existing centres, not to build new ones. All the evidence internationally says that if you want to maximise the use and value of the existing infrastructure and land—to maximise the land-value uplift in terms of property values—that is what you do. That is the intention of our proposition in the first instance. There is the opportunity for land uplift. We believe that transit times of minutes, not hours, between the places where people want to live and want to work, and where businesses want to put their investment, will allow that land up-lift to occur. The critical question is how to best capture it to make full use of it either to support the costs of the construction or to support the cost of the ongoing development of those centres as they continue to grow. Potentially, that could mean building more and better hospitals, schools and universities. From our perspective, that mechanism is indeterminate. It is one of the things that we would seriously want to look at in a project-scoping study exercise, because I do not think we have the answer up-front. As Alan suggested earlier on, a variety of mechanisms could potentially be put in place to ensure the best value distribution of any up-lift in value.

Steve has also mentioned the fact that Hyperloop One has no real intention itself of building this. It wants to license it. So there will be licensing revenues that could potentially operate in the same way in terms of funding part or all of the system. So we would actually want to look at all of those possibilities in a project-scoping exercise, because we do not believe at this stage that we have a definitive answer to that question.

Dr James : And for us, as Hyperloop One this is the critical move: an early-stage project-scoping study to define the potential for hyperloop on a given corridor. That cannot be done by us as a Californian company coming in and saying, 'Hey, we have this great idea and this is how it is going to work.' It has to be done in dialogue and partnership with on-the-ground public sector authorities and businesses to maximise both the public benefit and the economic impact, the economic benefit, of putting the system in. It would need to look at, for instance, where terminals are located to maximise demand, and also to support sustainable development in the value-capture scenario; how the system interfaces with the existing transport hubs, including existing rail, metro, light rail and, critically, airports; and, differently to high-speed rail, how the system works with freight as well as passengers, given the existing geographic realities and the intended future development distribution. All of that effectively designs the system as a transport proposition and as an investable package, including initial thoughts on how this would be procured and what kind of project finance mechanisms would be appropriate.

For us, working with our colleagues at Ultraspeed Australia, we would very much welcome the opportunity to get into a detailed scoping study exercise on some or all of the Melbourne to Sydney route, because this is one of the top five corridors in the world. We are prepared to put in a serious amount of effort in Australia. We are prepared to build partnerships and we are prepared to work with regulatory, safety and government authorities to make this thing happen, because when it does its transformational impact will be unmistakable.

CHAIR: Given that the Sydney to Melbourne air corridor is the third busiest in the world, from what you have said the obvious link must include Melbourne airport to Sydney Airport, which would then transform them largely to international airports and negate almost entirely the Sydney-Melbourne air corridor. Similarly, the Sydney to Brisbane to Gold Coast to Sunshine Coast air corridor in total is one of the busiest air corridors in the world, meaning it would do the same for that corridor in time.

Mr Artis : That would be part of our forward plan—in 10 years' time. Sydney-Brisbane rates as number seven in the world and Sydney-Melbourne is number three, in terms of capacity on the route. We would look at capturing 90 per cent or more of that market in the first three years of operation on both passenger systems. But of course the other element, the clear differentiator in our offering, is our freight capacity and the ability to dramatically reduce the 1½ million freight movements annually on the Hume Highway. It is a phenomenal cost to the government in terms of highway maintenance, social disruption from accidents and the congestion that it causes.

I am regularly stuck in the M5 tunnel, because I live in Canberra and I commute to Sydney for a week each month. I am sure members here are similarly familiar with the insides of the M5 tunnel. If we move the freight off the roads, it will deliver benefits this country has not seen. There was a New South Wales economic study that showed for every one per cent improvement in freight efficiency you get a $1 billion boost to the economy. We are talking about a very substantial boost to the economy in this equation.

CHAIR: How would you like to see the government proceed from this point to engage with you?

Mr Duggan : We have been very clear about talking about two separate things, but they are potentially linked. One is, as Alan has suggested, a very detailed project scoping study to see whether a Hyperloop system can be used in Australia and whether it would generate the benefits that we are anticipating at a lower cost. That is the first thing that we have been talking about.

The second thing that we have been discussing at the federal, state, territory and local levels is the question of the proof-of-operations facility, to test it in a real world environment. Our discussions with Hyperloop One suggest that Australia would be a very good candidate for that proof-of-operations facility, because there is an obvious route into which a test facility could be integrated. For example, a proof-of-operations test for both freight and rail between Melbourne and Shepparton could and would be sensible, and there have been positive responses to that possibility.

On that ground, in terms of what we have been requesting from government, initially we have simply been asking whether there is a potential interest, so a letter of intent to say that the government would want to continue this conversation about the proof-of-operations facility, with a view to discussing whether it is possible to ensure that Hyperloop One could invest in that facility. The value of the Hyperloop One proposition that we have been discussing so far is of the order of A$2.8 billion over a three- to five-year period, but that in itself requires planning. That proof-of-operations facility cannot just be plonked down at a location. There needs to be some serious conversation about whether it is a viable thing to put in place; about whether state, federal and local authorities can corral themselves together to speak with one voice; about whether there is land available for that operations facility and whether rights of way can be procured; and about whether the most appropriate location is next to existing research universities which can be integrated into a Hyperloop academy, which is part of the proposal.

We have started this conversation here, but from the perspective of the proof-of-operations facility—and Alan can reinforce or dismiss this as wild speculation on my part—Hyperloop One is in the first instance simply looking for a letter of intent from government to continue that work and that conversation.

Dr James : Yes, I would validate what Sean said. Effectively, Hyperloop provides smart networking for intelligent locations. We are looking for a joined up response from an intelligent location—and Australia is absolutely, definitely in that category—that can offer us a number of things. It can offer us world-class IP protection, because Hyperloop is basically IP in the digital age that happens to be built of metal and move particularly fast. We need that protected. It can also focus its inward investment and economic development programs onto this project, because this project has an epoch-defining potential to deliver economic benefit to its host location. It can also focus its skills, its innovation and its transport agendas onto the project, bringing resources which can be both financial and, as Sean alluded to, some in kind as well, such as rights of way and clustering facilities at an appropriate location.

Putting all that together and expressing that to us would be the kind of response that we would be looking for that would enable us to move our conversations and discussions up to the next level of specificity, which is basically discussing where this thing is going to go and how we are going to pay for it.

CHAIR: Could we just have the approximate times that it would take to go from Shepparton to Melbourne, from Goulburn to Sydney and from Newcastle-Hunter to Sydney.

Mr Duggan : Shepparton to Melbourne, including start and stop, would be approximately five minutes. We are not likely to stop in Goulburn, but it is a potential route. The nearest approximation to that would be Shepparton to Albury, and, again, we are looking there at six minutes.

CHAIR: And the Newcastle region to—?

Mr Duggan : Newcastle into Parramatta, Sydney would be10 minutes.

CHAIR: That is a long one!

Mr Duggan : Yes. It is a long one!

CHAIR: Thank you very much, and thank you very much for giving us that glimpse into the future—the near future.

Dr James : Thank you for the opportunity.

CHAIR: Thank you, Dr James, for your hook-up and thank you all for your attendance here today. If you have been asked to provide any additional information, would you please forward it to the secretariat by 3 November. You will 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 your attendance.