Long-suffering supporters of an east coast high-speed rail line were given unexpected cause for hope last week.
On Thursday Prime Minister Malcolm Turnbull met a Melbourne-based group, Consolidated Land and Rail Australia, to discuss an unsolicited offer to link Sydney, Melbourne and Canberra via a very fast train. On Friday Mr Turnbull further fuelled that speculation when he told a Sydney gathering that the government was considering using long-term bonds to fund massive infrastructure spending.
Numerous plans for high-speed rail linking Brisbane to Melbourne via Sydney and Canberra have been floated and ultimately abandoned since the early 1990s, and with good reason. The most recent estimates put the construction cost of the project at an eye-watering $114 billion, and then there is the issue of land aquisitions and the likely need to build tunnels on the approach into Sydney which could blow that cost out even further. There is also the lingering question of whether such a massive investment could ever be viable for a country of 24 million.
But there are good reasons why the project may finally have found its time. First is the continuing inability to confirm a start date for Sydney's second airport. The government is yet to present a proposed development plan for the new Badgerys Creek airport, which, even if approved and opened by 2025, will still only add a single runway to the existing capacity. With the Sydney to Melbourne route currently the fifth busiest flight path in the world and the populations of both cities predicted to continue growing, a high-speed rail link could provide much-needed extra capacity on the route.
But more importantly, the world's financial markets are awash at the moment with cheap, easy finance. If it wanted to, the Australian government could borrow money at rates almost on par with the current inflation rate of 2.5 per cent. Even if the economics are unlikely to stack up for another decade, we are unlikely to be able to finance it this cheaply in the future, by which time the need for extra transport options may go from marginal to essential.
As former trade minister Andrew Robb recently told Fairfax Media, Australia should grab the opportunity presented by low interest rates to build the very fast train along the east coast. Torkel Patterson, vice-chairman of the International High Speed Rail Association, has pointed to the increased land prices along new planned high speed rail routes in Japan, and substantial profit over and above normal growth rates as a result of that investment, saying the same thing could happen here.
As Mr Turnbull pointed out in his speech on Friday, the mining boom was facilitated by substantial investments in infrastructure such as ports, rail and mines. The next boom will also require a similar investment in national infrastructure.
The Turnbull government will be using the upcoming federal budget as much as an election statement as a financial plan for the next 12 months. Assuming it can finally sort out the kinks in the national broadband network, the government could do worse than dusting off the plans for a very fast train and making them a reality.