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Transport experts have dismissed the latest plan to build a fast rail system between Melbourne and Sydney as a potential "financial trainwreck" that fails the economics test because of high costs.
The plan from Consolidated Land and Rail Australia would be funded by speculative land deals aimed at turning rural land worth $1.2 billion into residential lots worth $180 billion.
"It appears that this latest fast train proposal is driven by funding opportunities from higher land prices which can be highly speculative and unreliable," said Garry Bowditch, head of the Better Infrastructure Initiative at Sydney University.
Nick Cleary, chairman of Consolidated Land and Rail Australia, the company pushing the $200 billion plan to build eight new "smart cities" along the fast rail route, said it would be funded entirely from land deals and not need public funding.
Mr Cleary said rural land along the route, which runs via Shepparton, Victoria – the first stage – and Gundagai and Goulburn in NSW to Sydney, could be bought for about $1000 per block and sold for about $150,000 a lot.
"That uplift gives you the capacity to fund the rail and civil infrastructure," Mr Cleary, a former dairy farmer and NSW Nationals vice-chairman, told reporters in Melbourne.
"It's a cities and sustainable development plan. It's not a high-speed-rail plan, but high-speed rail is essential."
Consolidated Land and Rail Australia (CLARA) has attracted former NSW premier Barry O'Farrell, former Victorian premier Steve Bracks and former US transport secretary Ray LaHood to its board.
But the company did not release findings of a pre-feasibility study or likely fares, saying this was "commercial in confidence".
Fast rail has foundered on the challenges of funding expensive infrastructure to compete against a highly efficient, privately funded air transport system.
"The airlines will protect their market share aggressively and exercise their ability to price a fair proportion of seats at their marginal costs," Professor Bowditch said.
"This could make a Melbourne-Sydney fast train look more like a financial train wreck very quickly. "
The last federal Labor government costed a Melbourne-Sydney-Brisbane fast rail at $114 billion but federal Major Projects Minister Paul Fletcher told The Australian Financial Review's National Infrastructure Summit last month this was "optimistically low" and the project wasn't a sensible priority.
Transport experts are sceptical of the plan. "You'd have to say it doesn't look like anything more than a property development idea," one expert said.
"It's very hard to see it being at no cost to the government. They [fast rail proposals] have required massive public subsidies and even if they don't, someone has to buy the property."
Brendan Lyon, chief executive of Infrastructure Partnerships Australia, a lobby group, said, "High-speed rail has been on the table many times since the mid-'80s, but has always failed because of high costs and the complexity of getting the long, straight corridors needed for high-speed operations.
"High-speed rail is uniformly popular in the community but the economics make it hard."
Victorian Public Transport Minister Jacinta Allan said she hadn't been briefed on the plan and the government would have to look at it along with others. She said faster rail services had previously led to "a boom" in regional public transport but rail was expensive and financing it was challenging.
The Greens, which took a publicly funded fast rail plan to the election, said a cross-generational project like the fast rail should be built in the nation's interests, "not to suit the profits of private property developers", and be led by federal and state governments.
This article first appeared on www.afr.com
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