Tram-rich Prahran, Melbourne

John Legge won the hearts and minds of Fairfax readers this week with his proposal for a massive increase in investment in public transport. The praise from commenters for his opinion piece was fulsome – some reckon he’s so visionary he should be PM!

Although his proposal is intended for Melbourne, it’s relevant to the pressing need to improve public transport in all of Australia’s cities.

He starts out by arguing Melbourne is facing a crisis of “looming economic stagnation” due to its outdated public transport system. The city needs to take the sort of decisive action it took back in the 1880s when it faced “another crisis” – from typhoid.

Following a Royal Commission in 1888, he says, decisive action was taken. A Board of Works funded by property rates was set up in 1891 to handle the sanitary removal and treatment of sewage. Melburnians have never looked back.

Mr Legge’s idea for dealing with the current public transport crisis is to extend to the rest of urbanised Melbourne the same level of service as rail and tram-rich inner city Prahran now enjoys. His vision is that 95% of households would be within 800 metres of a fixed-rail station or stop.

He envisages building three new rail lines, an extra 100 km of dual track rail line, 100 km of additional express track, 1,200 km of new tram/light rail lines, and eliminating 10 level crossings. He says it would cost $35 billion over 20 years and could be funded by a (median) $572 p.a. rate on the unimproved value of residential properties.

Prahran is an appealing benchmark. Because it developed prior to mass car access, Melbourne’s inner east has a very dense tram network.

For example, there are nine parallel east-west tram lines between Victoria Rd and Glenhuntly Rd, a distance of just 8 km. The tram line on High St in Prahran is paralleled by another route just 560 metres to the north on Malvern Rd and one 650 metres to the south on Dandenong Rd.

It’s no surprise this would go down especially well with the Fairfax demographic. Many live and/or work in the inner city and are familiar with Melbourne’s high-frequency (during the day) tram system.

The Greens also know talking up big possibilities has popular appeal. The party made a promise along similar lines at the 2010 Victorian State election.

Their infrastructure list was at least as big (it included 10 new rail lines), but the party costed it at a mere $13 billion. Even better, the Greens insisted half the money was already available – it just needed to be reallocated from possible (but unfunded!) freeway projects.

It would be fantastic, of course, if funding for public transport were increased on the scale envisaged by Mr Legge. But as always, it’s better to understand the real story, so I want to discuss some questionable aspects of his proposition.

First, he underestimates the costs. He doesn’t include any of the incremental operating or financing costs associated with his proposed $35 billion spend.

It’s instructive to consider the report of the Independent Public Inquiry into a Long Term Public Transport Plan for Sydney, which proposes a similar level of capital expenditure ($35.9 billion), albeit over 30 years.

The funding and financing plan prepared for the Inquiry by The Allen Consulting Group estimates revenue of $71.1 billion will be required to support that spend. The additional amounts are necessary to cover incremental operating costs ($23.7 billion) and financing costs ($11.5 billion).

Second, Mr Legge’s financing plan is problematic. The proposed median rate of $572 p.a. to raise $1.7 billion p.a. might sound affordable to many Fairfax readers, but implies an average tax in excess of $1,000 per year.

That’s approaching what the average Melbourne household currently pays in local government rates, so serious opposition would be very likely.

The authors of Sydney’s Independent Inquiry don’t put all their eggs in one basket. They envisage a range of funding sources, including an average $0.38 real public transport fare increase, CBD congestion charges, parking fees, and property levies on all businesses and households.

Based on a “willingness to pay” study, the Inquiry concludes the average levy on households would need to be limited to $157 per annum. These sorts of hypothetical studies are ropey at the best of times, but they tend to over-estimate willingness to pay, so the figure is likely to be at the upper bound.

Third, $35 billion will buy a lot less at present than Mr Legge assumes. While it’s unquestionably a large number and could fund a lot of new public transport infrastructure, the cost of construction in Australian cities is very expensive.

Melbourne Metro is likely to cost in the order of $7-$10 billion (depending on whose estimate you accept). New rail lines to Doncaster and the airport could cost in the order of $3 billion each. Add in another $3 billion for the proposed Rowville line and there’s around half the funds gone already.

The larger part of the proposed 100 km of new dual track rail line will need to go through urban areas if it’s going to be useful, so much of it will need to be underground or elevated.

Even at a conservative $250 million per kilometre, the remaining money isn’t going to fund it all, much less the 1,200 km of light rail line and 100 km of express rail track proposed by Mr Legge.

He doesn’t say how he arrived at his $35 billion figure, but it’s implausible it would be anywhere near enough to extend “Prahran-class” heavy and light rail to the rest of urbanised Melbourne.

Fourth, even if funding on the required scale were available to make all of Melbourne like Prahran, it would be a very questionable investment. The middle and outer suburbs developed in the era of mass car ownership – public transport would struggle there to support inner city levels of service in competition with cars, at least over Mr Legge’s 20 year time frame.

Notwithstanding these issues, it’s essential that strategically important rail projects like Melbourne Metro are constructed. However the main priority should be to improve the operations of the existing system and “connect it up”.

For example, one of the key constraints on increasing train frequencies is Melbourne’s 170 level crossings. Just eliminating them is estimated to cost circa $17 billion.

I like the idea of a long term vision for public transport and it’s something that should be debated and discussed publicly. However I don’t think glib and populist proposals like this one are helpful. They gloss over the difficulty and complexity of what’s involved in improving public transport.

Mr Legge’s reference to the decisive collective action taken in the 1880s to address typhoid is a brilliant rhetorical tactic. But the less gullible might be aware that back then people were actually dying from typhoid.

Moreover, everyone living in or visiting Melbourne was at risk of catching the disease, irrespective of their station in life. It’s no small matter either that the citizens of Melbourne could afford to take decisive action – they lived in the richest city in the world at the time.