On further reflection, may I make three points:
- High Speed Rail interstate travel between Melbourne and Sydney CBDs must be within three hours. It is the key factor for success. It is the strategy to be competitive with air. If it is more than three hours, or if it is not a non-stop express right into CBDs, that is, without an inconvenient change of trains outside the CBDs at either or both ends, business passengers will not use HSR. They will fly. HSR will lose its most valuable customers and will be unprofitable and uneconomic. It would be in danger of becoming in effect just a Government subsidised domestic and foreign tourist attraction and commuter train.
- There is an alternative, lower cost entry instead of tunnelling into Central terminus in Sydney under regional train platforms at great cost: trenching in with housing built above and then steel bridges into Central above regional train platforms. Similarly, in Melbourne: on the east/west route steel bridges built above a sunken Wurundjeri Way next to Southern Cross terminus’s suburban platforms. Inspirational, imaginative, innovative, practical railway engineering solutions are required to create value and satisfy customers’ needs. Cost can be lowered. If necessary, higher capital costs can be covered by higher value capture. Cost should not be allowed to damage the strategy or customers’ best interests. Greater value would be created by high rise buildings for sale by the project around terminuses expanding further the CBD envelope. Increasing road congestion makes CBDs more desirable than air.
- It is in the Government’s best interest to do its utmost to increase the value capture of the HSR/FFR project consortium. Any shortfall of value capture below project total capital cost may have to be made up by the Government. Enormous extra value would be created by the consortium by building housing for 10 million people over 40-50 years. It would be both above the tracks in trenches in major cities and in new cities around HSR stations in the regions. The Government should instigate now some speculative uncertainty about location of the corridor to keep land prices stable. The HSR/FFR consortium should not publically publish or privately leak the location of its chosen commercial, customer friendly route and stations until it has purchased the land and captured the most value before prices rise. The consortium would buy enough land for new cities at each station. Most price uplift would occur by the end of the first year of operation and costs would be known. Prices of the various classes and locations of property sold by the consortium during the first year would enable recording the base value of all relevant property at that time. Thereafter, price increases over base value would be capital gains subject to capital gains tax. Whenever the consortium sold property whether in 1 year, 10, 20, 30, 40, or 50 years, the initial base value creation/ value capture in the first year part of the price should not be taxed. There is a case for not applying CGT to the consortium on its first sales. All subsequent sales would attract CGT from the base price, ie, the second and later sales after the consortium’s first sale.
PJK ©22.4.16
