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Gungahlin light rail line is a mistake, says former Treasury heavyhitter David Hughes

A former senior official says the line won't transform Canberra in the way the government would like.

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Former senior Treasury official David Hughes has dismissed the light rail line as a "folly" that is highly unlikely to deliver the benefits claimed and will not transform the city or change transport habits.

"From the work the government's done, it appears to be a poor project," he said. "It's costly and even the government figures seem to suggest that it won't make much difference to patronage. They really haven't established a case for doing it.

"They've clouded the issue with a lot of discussion of things like creating jobs which are really irrelevant to this project - the government can spend money on anything and it will create jobs in that activity at the expense of jobs elsewhere in the economy.

"The question is will $80 million [a year] spent on light rail from Gungahlin to Civic create improvements in the transport system enough to justify the costs? And that just hasn't been established."

Mr Hughes, an economist and former academic, was manager of major project analysis for ACT Treasury (a job that would have had him analysing the tram line for Treasury if he had still been in it) and director of the economics branch. He has also been a political adviser on both sides of politics, including to Tony Abbott in opposition.


Mr Hughes has analysed the publicly available material in an article in today's Canberra Times. He said he had nothing personally vested in the project, but wanted sensible use of public money and a realistic assessment.

For the project to stack up, the government would need to present a serious argument that trams were dramatically superior to buses. But ultimately they were pretty similar, he said.

"It's still fundamentally the same proposition. You've got to get to a station or stop, you board, and then you get off and you walk to where you're going … so it has all the same characteristics." he said. "Very simply, the light rail is not transformative at all, it's just more of the same in a somewhat different form."

But a spokesman for Capital Metro Minister Simon Corbell rejected the assertion, saying light rail had its own laneway so was more reliable, had higher capacity, greater accessibility and lower emissions, and was more appealing.

"Simply putting more buses into increased congestion will not fix Canberra's ... traffic problems, especially as the population of the capital is projected to increase to 600,000 in about 30 years," he said.

Mr Hughes said Canberra had failed for decades to increase bus patronage, and there was no evidence switching to a tram would help. High rates of female participation in the workforce, school drop-offs, after-work sports and the like all steered people into cars instead. 

Talk of transforming the city and creating jobs distracted from the fact that, at its heart, the tram was a transport project and it must stack up as transport project. To be justified, it would have to increase patronage significantly, given the government would pay the private operator perhaps $80 million a year. Experience elsewhere showed light rail projects had two things in common: they typically over-estimated patronage and under-estimated cost, he said.

The government has promised to release the full business case on October 31. Mr Hughes said it was important it did not double count benefits such as increases in land values and improvements in travel time, and that it was based on accurate information about patronage and claimed changes in transport behaviour.

The government's 2012 cost-benefit analysis had wrongly included the effects of higher density and higher parking fees as benefits of the project. When they were removed from the equations, costs significantly outweighed benefits.

"To be able to show a positive result on this they're going to have to include benefits that are speculative or vague and difficult to measure," he said.

"For me, it's just a matter of is it a sensible idea or not? And I just don't think it is. I don't think it's going to work. They're going to spend an inordinate amount of money for a marginal change of patronage and the city will carry on as much as it has in the past."

But Mr Corbell's spokesman said it was accepted practice for transport projects to consider land use and other economic benefits. Infrastructure Australia acknowledged the consideration of wider benefits in cost-benefit cost analyses, he said.

Capital Metro was projected to have more than 20,000 boardings a day by 2031, he said, and the two most recent light rail projects, Gold Coast and Sydney's Dulwich Hill extension, had exceeded patronage forecasts within months of opening.