Balanced perspective required on the Suburban Rail Loop

Posted September 23, 2019

  • State government
SGS Economics and Planning suburban rail loop

This paper was first published in ‘Planning News’ April 2019 edition, circulated by the Planning Institute of Australia in Victoria and Tasmania.

Economics and planning go together like toast and vegemite (or whatever your preferred spread is) – neither is much good without the other.

Marion Terrill’s critique of the proposed Suburban Rail Loop underlines the need to apply both economics and planning in the successful prosecution of infrastructure policy.

Economists look at the world and try to explain why it is as it is. Planners look at the world and consider how it should or could be. Public policy suffers whenever one perspective trumps the other.

Terrill bemoans the fact that ‘the 15 suburbs that will get a new (Suburban Rail Loop) station have only 9 per cent of Melbourne’s jobs between them’, and that the ‘$50 billion, or whatever the cost of the loop turns out to be…. could fund an awful lot of timetabling improvements, high-capacity signalling, station and interchange upgrades, electrification of the Melton, Clyde and Wallan lines, and other improvements – in other words, the important but less glamorous projects that Infrastructure Victoria advises will actually keep this city moving over the next 30 years’. But this misses the point of the project, which is to change the trajectory of metropolitan development.

SGS Economics and Planning has developed a typology of infrastructure projects which comprises three categories – ‘city shaping’, ‘structural’ and ‘follower’. City shaping projects comprise the peak investments in transport infrastructure which profoundly shift accessibility contours across the metropolis. In turn, these shift the locational preferences of households and businesses alike to build a different pattern of settlement to what might otherwise prevail. Meanwhile, structural and follower projects fill in the detail within the frame set by these key transport links.

Even though the influence of major transport investments on the pattern of jobs and housing has been observed for as long as urbanization has been part of humanity, modern urban planning has struggled to harness this force for better city building. For the most part, transport planners have been gripped by a ‘predict and provide’ modus operando. This sees infrastructure investment reacting to the congestion generated by trend growth, as opposed to being used to proactively reshape the pattern of development. In other words, transport investment is inadvertently deployed to reinforce and perpetuate current urban structures, regardless of their merits.

Conventional cost benefit analysis (CBA) works reasonably well with ‘structural’ and ‘follower’ infrastructure, because the focus is on immediate user benefits – notably savings in travel time, emissions and accident costs. CBA in its traditional forms is less appropriate to the evaluation of city shaping transport projects because many of the benefits are indirect and long term. Reportedly, Melbourne’s existing Underground Rail Loop delivered a benefit cost ratio of less than 1 when assessed by economists during its planning phase. Would central Melbourne have achieved its resurgence over the past three decades had this project never been built due to the hegemony of a predict and provide paradigm?

The question for the Suburban Rail Loop is not whether it serves the principal employment centres in Melbourne, but whether it will be effective in re-shaping the metropolis in a favourable way. That is, will it redistribute jobs and housing to produce a Melbourne that is significantly more prosperous, inclusive and sustainable compared to trend growth?

The perplexing issue with the Suburban Rail Loop is that it ‘dropped from the sky’ immediately before the 2018 State Election. Here I agree with Terrill. The Loop was not foreshadowed in Plan Melbourne, nor in the priorities of Infrastructure Victoria and Infrastructure Australia. It may still prove to be consistent with the vision and principles of Plan Melbourne, but the fact that it was devised under a veil of secrecy without due scrutiny of its city shaping implications and other economic impacts betrays a failure in metropolitan governance. But that is another story.

Like to know more about the Suburban Rail Loop? Read this article:Will the $50 billion Suburban Rail Loop shape the Melbourne we want?

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SGS Economics Planning Marcus Spiller
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