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ACT government releases review of Capital Metro light rail business case

A government commissioned review of the business case for a $783 million light rail line to Gungahlin has found the project's accurate benefit-cost ratio won't be confirmed until bids are received from two private consortiums. 

The independent report by former South Australian Transport Authority chief Derek Scrafton, now a transport planning expert at the University of South Australia, finds the business case is "fit for purpose" and makes realistic conclusions about the project. 

Prepared before the business case was released on October 31, the report was distributed only after a news story critical of the project appeared in the The Australian Financial Review this week.  

It also emerged on Friday that the government had possession of a second review of the business case completed by an overseas expert, but Capital Metro Minister Simon Corbell refused to release the document.

In a statement, Mr Corbell would not explain why the second report was being withheld, saying only that it would be released "in due course". 


Professor Scrafton's report did not consider the assumptions or other data used to prepare the business case but found sufficient detail had contributed to its preparation. The cost of the project has been calculated using sound methodology but is subject to change based on the final design. 

The report backed the government's 75 per confidence level for the total cost and said the government's 1.2 benefit-cost ratio was accurate only with so-called wider economic impacts. 

It found sufficient scope existed for debate to continue about the planning and transport implications of the 12-kilometre tram line.

The report welcomed a clause allowing the government to ditch the project if the costs blew out in the private proposals but called for data to be included on total public transport trips in the light rail corridor. 

The business case included thorough analysis of the need for better public transport in Canberra "but contains some assertions that are aspirations and are difficult to quantify or justify," the report said.  

"Whether the analysis is realistic will only be determined later, when it can be compared with responses to the [expressions of interest from business consortiums] and the [request for proposal phase], particularly the latter."

"The financial impact on the bus system is uncertain," the report said. "So long as the bus system continues to be owned and operated by a government agency, any issues can be internalised.

"However, if the bus system was to be privatised or contracted out, there could be problems, particularly if the light rail [public-private partnership] included protection clauses that limited competition."

The government has flagged the possible introduction of private operators on some of the ACTION Bus network. 

Professor Scrafton said the inclusion of wider economic impact to reach a 1.2 benefit-cost ratio was standard international practice. 

"Even if you ignore that, even if you take away 1.2 and work with 1.0, my comment was that if you can get a public transport project that really comes out at 1.0, you're doing pretty well. 

"I worked in the business for 40 years and I've seen plenty of benefit-cost ratios in excess of 1.0 but I don't particularly believe them. In any case, one the best projects that we ever delivered had a benefit-cost of 0.7 and in public transport terms, it is still a good project," he said. 

"You spend a lot of money, and you have low fares, where do you think you are going to get these returns from to get a high benefit-cost?"

He said the 1.2 figure was realistic if associated benefits to the Northbourne Avenue corridor, including increased property values, could be achieved. 

Mr Corbell said the second government-commissioned review of the business case, which he would not release, "concurred with the overall conclusions of Professor Scrafton".

"It stated that the overall benefits of the project could be higher than what was presented in the business case," Mr Corbell said.