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Australia the 'big loser' in Speedrail dumping

01 Jan 2001

FURY ERUPTED in Australia in the wake of the federal government's decision on December 11 that it would not provide financial support for the Sydney - Canberra Speedrail project. A formal announcement the following day attempted to disguise the abandonment of the A$4·5bn scheme by calling for a feasibility study for a high speed line linking Melbourne with Sydney and Brisbane, provoking a feeling of déjà-vu among high speed train watchers.

The first Sydney - Melbourne high speed line proposal was put forward in 1984 by Dr Paul Wild of the Commonwealth Scientific & Industrial Research Organisation, and this evolved rapidly into the Very Fast Train concept. This eventually fell at a government hurdle in March 1991 when the cabinet failed to agree to proposed tax concessions that would have moved the project beyond the stage of lines on maps. Out of the ashes of VFT grew Speedrail, which emerged in 1993 as a Sydney - Canberra line that could be opened in time for the 2000 Olympic Games. The enthusiasm with which state and federal governments embraced the idea ensured that progress was made with all the speed we have become accustomed to see for similar schemes elsewhere, and in December 1996 Prime Minister John Howard announced 'a competitive tender process' for the line on the understanding that any state involvement would be on the basis of 'no net cost to the taxpayer'.

Speedrail, a consortium of Alstom Transport and local construction company Leighton Contractors, was chosen in August 1998 from four submissions as preferred bidder to build and operate the 270 km line, but the grouping eventually concluded that a contribution from state funds would be needed to make the project fly. In its final submission in 1999 Speedrail had asked for A$1·55bn in tax breaks and help with land acquisition.

The Olympics are now long gone and so are Speedrail's hopes. Leighton Chief Executive Wal King said that 'it's been a bad experience ... but the big loser is not Leighton. The big loser is the country.' The partners had spent A$25m on developing their proposals, which included Alstom supplying nine eight-car TGV trainsets. Executive Director of the Australian Infrastructure Development Council Dennis O'Neill said that the abandonment sent 'very negative signals to the private sector' about the risk of public-private partnerships in infrastructure projects, a view echoed by Executive Director of the Australasian Railways Association John Kirk.

One reason for the government's action may be the forthcoming sale of Sydney's two airports. With early estimates putting Sydney - Canberra traffic at around 5·8 million trips a year, Speedrail was not in the same league as other high speed railways, with exceptions such as the Madrid - Sevilla AVE line in Spain. It would nonetheless have attracted a significant slice of domestic air business, something that is hardly calculated to bolster the airport sale price.

The end of Speedrail followed another public-private partnership debacle in New South Wales. On November 30 the New Southern Railway serving Sydney airport went into receivership after Airport Link Corp was found to have defaulted on a A$200m loan. ALC is now seeking damages on the grounds that passenger loadings have fallen far short of forecasts (RG 12.00 p787). KPMG has been appointed as manager-receiver, and it is now working with State Rail Authority to try and boost traffic through better marketing. Criticism of the CityRail suburban service that forms the airport link had begun as soon as the line opened in May last year. n