Making back the cost of grade separations

 
  Myrtone Chief Commissioner

Location: North Carlton, Melbourne, Victoria
How do we make back the cost of a grade separation? There are a lot going on right now, and even before, a handful of level crossings were grade separated over the years.
Since the major grade separation project between Caulfield and Dandenong will allow more frequent train services, will Metro and VLine be able to make back the cost multiple times?

Sponsored advertisement

  theanimal Chief Commissioner

I would have thought that any savings would be to road users rather than rail users.

How would you see Metro or Vline making back the cost?

I remember in NSW until about 1980 there was a special levy of 0.02c placed on every journey over the Harbour Bridge to help pay the poms for the bridge.  Are you proposing something similar here?'
  Lad_Porter Chief Commissioner

Location: Yarra Glen
Can't be done, because most if not all of the benefits of a grade separation are either intangible or impossible to calculate.  For example, how do you measure the benefits of an emergency vehicle, or a tram/bus full of passengers, not having to wait at a level crossing?  How do you measure the fact that a collision between a train and a road vehicle (possibly resulting in serious injury or even death) is no longer possible?
  Myrtone Chief Commissioner

Location: North Carlton, Melbourne, Victoria
I would have thought that any savings would be to road users rather than rail users.
theanimal
But remember that cyclists, pedestrians and street transit users do count as road users.

How would you see Metro or Vline making back the cost?
theanimal
As noted, grade separations may allow higher train frequencies, as with the Caufield-to-Dandenong example, and so that may well make back the cost, possibly multiple times.

A lot of our grade separations are of level crossings next to stations and the grade separation is an opportunity to upgrade the station. In this case, the grade separation also benefits station users, never having to wait at the pedestrian gates for a train heading in their direction.
  Pressman Spirit of the Vine

Location: Wherever the Tin Chook or Qantas takes me
A lot of our grade separations are of level crossings next to stations and the grade separation is an opportunity to upgrade the station. In this case, the grade separation also benefits station users, never having to wait at the pedestrian gates for a train heading in their direction.
Myrtone

So how do you put a commuter arriving at the platform 2 minutes earlier for their train into a Dollar value?

Savings for road users can be calculated by factoring the cost of fuel against the traffic delays at a level crossing, and a separation would save the road user some $, but how do you put that into the terms of an overaall cost saving?
  Myrtone Chief Commissioner

Location: North Carlton, Melbourne, Victoria
So how do you put a commuter arriving at the platform 2 minutes earlier for their train into a Dollar value?
Pressman

Well, maybe train travel will be more attractive, so more ridership and more revenue can be generated.

And what if a grade separation increases property values? This seems likely as residents no longer have to hear level crossing bells and because it improves area amenity. And consider who covers the cost.
  Pressman Spirit of the Vine

Location: Wherever the Tin Chook or Qantas takes me
So how do you put a commuter arriving at the platform 2 minutes earlier for their train into a Dollar value?

Well, maybe train travel will be more attractive, so more ridership and more revenue can be generated.

And what if a grade separation increases property values? This seems likely as residents no longer have to hear level crossing bells and because it improves area amenity. And consider who covers the cost.
Myrtone
Still didn't answer the question I posed
  justapassenger Minister for Railways

The answer is simple - the project will be paid for out of general revenue (i.e. taxes).

Can't be done, because most if not all of the benefits of a grade separation are either intangible or impossible to calculate.  For example, how do you measure the benefits of an emergency vehicle, or a tram/bus full of passengers, not having to wait at a level crossing?  How do you measure the fact that a collision between a train and a road vehicle (possibly resulting in serious injury or even death) is no longer possible?
Lad_Porter
It can be done, and is done, done by approximating the value of each non-monetary benefit.

Add everything together and you can work out the total worth of the project's benefits, the total worth of the project's costs and the ratio of the two which is called the Benefit-Cost Ratio (BCR). A BCR greater than 1.0 means it is a good project that will generate more benefits than it costs, BCR less than 1.0 means it is a poor project which is a waste of money.

A big part of the skill of developing a business case for an infrastructure project is massaging and manipulating the business case analysis to ensure the desired outcome is reached at the end of the analysis. If a government wants to support a politically acceptable project which has little actual merit, they can overstate the benefits and leave out certain detriments from the analysis.

That all the massaging and manipulation in the world could only get this project a BCR of 0.78 is proof enough that this was a political project and would not have proceeded if it was judged on merit.

How would you see Metro or Vline making back the cost?
As noted, grade separations may allow higher train frequencies, as with the Caufield-to-Dandenong example, and so that may well make back the cost, possibly multiple times.
Myrtone
Before any money from potential increased patronage* from running extra services goes back into the pot which paid for the level crossing project (i.e. general taxpayer revenue) any increased income from increased patronage will first have to pay for the capex and opex associated with the extra services.

That means paying for buying/leasing extra rolling stock, staffing the extra services, extra depot tracks for stabling the extra trains, maintenance of the extra rolling stock, and maintenance to cover the increased wear and tear on the infrastructure.

Even if the increased patronage is enough to completely pay for the extra services, it will still only allow a tiny reduction in the amount of the lavish subsidies required to run the public transport system - farebox recovery for the whole PTV system was about 22% last time I looked. The Victorian Government is in debt, so interest needs to be deducted too.

* This is far from guaranteed. Since this is 100% a Road Priority Project designed with the primary aim of improving road traffic flow and pushed through by one of the most pro-road governments in Victorian history, the improvements to road traffic flow could actually see some train passengers switch to enjoying the newly improved road network and a small reduction in train patronage.
  simstrain Chief Commissioner

Can't be done, because most if not all of the benefits of a grade separation are either intangible or impossible to calculate.  For example, how do you measure the benefits of an emergency vehicle, or a tram/bus full of passengers, not having to wait at a level crossing?  How do you measure the fact that a collision between a train and a road vehicle (possibly resulting in serious injury or even death) is no longer possible?
Lad_Porter

No longer probable I would say rather then possible. It is highly unlikely but one must take into account failures such as derailments or infrastructure failure which could happen. A collapsing bridge is something that Victoria has seen before after all.
  simstrain Chief Commissioner

I think justapassenger is completely wrong in his thoughts. For sure it removes the level crossing impediment for cars but those are just as much an impediment for trains as well. To suggest the grade separation would reduce train travel is completely ludicrous, inflammatory and 100% wrong. Extra car parking and an increase of bus services near the newly elevated stations will easily see an increase in patronage. Even more so once the new metro tunnel is built through the Melbourne cbd.

I won't go into his rant on the current government being so pro road and ask instead what did the previous liberal government achieve for rail?
  RustyRick Chief Commissioner

Location: South West Vic
LOL - I read the heading as "What can the Government do to make some money for the works" Eg sell air space over cuttings, billboards on bridges, trolls under the bridge to collect tolls...

The theory is that, as this pretty sensible discussion has covered, all the vague costs like improved travel time, reducing the potential for collisions, etc would have been considered when compiling the initial list of works.

Rick
  Radioman Chief Train Controller

Hello All,

Parliaments around Australia long since gave up on funding formulae to recover capital expenditures . Remember the Cain Labour Government's "Hollow Logs " argument about using monies set aside in Depreciation style Sinking Funds could be better used ? This argument originates from Business Accountants and Tax Law changes whereby such funds were essentially paid out as higher dividends , or senior executive bonuses, and future replacement became a Tax Deduction, so why do you need a Sinking Fund ?

However, Government is NOT A BUSINESS with Tax Deductions , and running and financing Government as if it were a business completely misses the point. The pre Neo Liberal Economics Ideology Parliaments understood this , for all their differences they did understand that Parliament and Government was meant to supply agreed services to and for the community , these days the likes of the IPA and others has convinced Parliaments that Government's role is to service the community through the business sector , and the business sector's role is to provide the minimum possible service to Government at the maximum cost , and for that the Government can blame the contractor and not themselves. As a result they are happy and the taxpayer is not.

Parliaments all around the country loved this idea, and doubly so , because the chickens would not come home to roost for years into the future , and a previous Administration could be blamed for the problem , and subsequently were ! MURLA / Melbourne Underground Rail Loop Authority was funded by a Annual Rates Levy on nearby properties. I am unaware if this is still in place, or if it has already been paid back , but I suspect that was the last major infrastructure project so financed.

Perhaps we need to rethink how and why Government should work , as opposed to how it currently does.

Best wishes and regards, Radioman
  Lockspike Chief Commissioner

However, Government is NOT A BUSINESS with Tax Deductions , and running and financing Government as if it were a business completely misses the point. The pre Neo Liberal Economics Ideology Parliaments understood this , for all their differences they did understand that Parliament and Government was meant to supply agreed services to and for the community , these days the likes of the IPA and others has convinced Parliaments that Government's role is to service the community through the business sector , and the business sector's role is to provide the minimum possible service to Government at the maximum cost , and for that the Government can blame the contractor and not themselves. As a result they are happy and the taxpayer is not.

Parliaments all around the country loved this idea, and doubly so , because the chickens would not come home to roost for years into the future , and a previous Administration could be blamed for the problem , and subsequently were !
Radioman
Well put Radioman, couldn't agree more.
The reasons you mention are why government services are declining, but government costs are increasing. Meanwhile politicians do their best to avoid accountability.
  HardWorkingMan Chief Commissioner

Location: Echuca
If you were looking at cost paybacks then rail would have died totally about 50 years ago as it was making a loss and being supported by government. We wouldn't have the Underground Rail Loop in Melbourne or other things either

Infrastructure projects are about setting stuff up so things can happen. There are also intangibles in that reduced fuel use also reduces pollution which impacts health in a beneficial way. It enables tradespeople, parcels and other things to move around more efficiently.  Transport costs have been increasing due to congestion and this impacts the price you pay for things or maybe whether the business owner (or transport driver) can feed their family that week.
I still have yet to see the costings for the new rail tunnel through the CBD that shows it's business case in a way that makes sense financially but as a project to reduce congestion and assist people to get around it makes sense (except for renaming the existing North Melbourne and making a new location North Melbourne. If they were worried about the name of the old station being wrong they should have given both new, not previously used, names).
  Myrtone Chief Commissioner

Location: North Carlton, Melbourne, Victoria
Here's an idea, how about a Patreon campaign for the level crossing removal authority?
  Radioman Chief Train Controller

Hello All,

with reference to the old VR Department "running at a loss" this again depends on how you account for the loss. For example , contrary to popular opinion , freight services actually made a profit , as exemplified when National Rail's first full year of operation it made a profit in excess of $1m , at a time when $1m was a lot of money , and when Toorak mansions rarely reached that as a sale figure.

It also needs to be clearly understood that any revenue any State Government Department received was paid into the State Treasury as required under the State Constitution ( which you can download from the State Government website ) , so although the VR Department had a Budget , it did NOT have the ability to keep the revenue it collected.

When you look at train passenger fares , these were fixed by Parliament, and all Concession fares came out of the VR Budget without a top up from Treasury, effectively Parliament was quite happy to keep fares down , which in many instances did not cover basic operating costs, but then complained about the losses.

As an aside , I remember being told by a senior VR Officer who was on hand for the last passenger train out of Wonthaggi about an elderly lady decrying the loss of the passenger train . When asked how often she actually used the service provided , she responded never since she acquired a motor vehicle years earlier . She got a bit upset when he replied that this was one of the reasons that the service was closed.

The VR's revenue was ( like NSWGR ) severally affected by the grain harvest , in a good year the VR "made" a lot of money, conversely , in a bad year , loss of revenue had a severe impact on the State Budget.

Then , as a State Instrumentality , like the SEC , MMBW, SRWSC etc, the Government would direct those Instrumentalities to supply certain goods and services or staff to assist the community during periods of crises such as a bush fire , flood or drought. Compensation MAY be made for this unforeseen expenditure in the NEXT Budget , but in the meantime it showed up as a "loss".

As many older readers would know, the various State Instrumentalities had CMF / Citizens Military Forces members which , as a Government Instrumentality , were released for Army Training Exercises . The VR had a Unit within the RAEME / Royal Australian Electrical and Mechanical Engineers ( Army ) as did the SEC and the MMBW , as well as staff in various other military units. Staff were very rarely refused Military Leave , yet the Private Sector complained long and loud over having to release their employees for CMF duty , and eventually got it stopped. The VR and other Government Instrumentalities also released staff for the CFA duties. All of these "temporary staff shortages" ( for a good cause by the way ) were usually covered , expensively , by other staff doing overtime. This additional expense was also not budgeted for.

One should also not forget the Voluntary First Aid classes which were effectively compulsory for station staff , a requirement which NONE of the privatised operators were or are required to provide , these days the public is reliant on an Ambulance to turn up pronto , as the staff are quite deliberately NOT trained in First Aid , thereby eliminating another "risk" to the business.

( When I was young " the commies under the bed " were a threat , these days we pay Beijing to run the railway ! ) ( PS I the commies were all under the bed , how come their populations increased ? )

These are just some of the services that the VR and other Departments provided over and above their set budgets , hence their "losses".

Best wishes and regards to all , Radioman.

Sponsored advertisement

Display from:   

Quick Reply

We've disabled Quick Reply for this thread as it was last updated more than six months ago.