Page 1206 - Week 04 - Wednesday, 7 May 2014
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one route is extraordinary. That brings into question the whole PPP. If, in the full operating costs, you have got $20 million a year in financing expense, who is going to take this on? Who is going to take this on?
We have some very big problems to overcome, and I am concerned that the government has not properly considered all of them. Everyone likes the idea of hopping on a tram, but is this tram actually going to live up to what the government is promising? The operational cost is not yet known. How much is it going to cost to operate? It is a simple question. The government has given me some indicative advice of around $7 million. I have doubts that it is going to cost just $7 million. And who knows whether that $7 million includes fare revenues, so whether it is a net figure, or whether it is simply the outlays? But one way or another, when you put in the operational costs and the cost of finance, we are up to a huge amount. Therefore a PPP is looking very dicey.
I believe that land in the light rail corridor could be developed independent of light rail. I believe the government want to bring density to Northbourne Avenue. They can do that right now. We have already seen that in several projects. We have seen it with Space and Space 2. We have seen it with the Axis apartments. We have seen it with IQ, which is being constructed at the moment; the Avenue apartments; and numerous hotel developments and commercial buildings up and down Northbourne Avenue. There is already a mood for investing in Northbourne; we do not need to spend $614 million to spark that.
The government talks about uplift a lot—the uplift we are going to get from Northbourne Avenue. For the purpose of the scenario, let us choose a round figure of $50 million. Let us say that you can get a block of land, one of those public housing blocks of land, that is worth $50 million at present. With light rail, let us say it is worth $60 million. What the government is doing is saying, “The uplift is $60 million.” No, it is not. The uplift is the just the difference. It is the marginal benefit the light rail brings. It would be $10 million in that scenario. The Canberra community and this chamber have to be very careful that we do not get fooled into thinking that every single dollar that comes in uplift is a dollar which could only come as a result of light rail.
Northbourne Avenue and the broader corridor can be developed without light rail, and we have already seen that at Flemington Road. The government’s own economic analysis suggests that bus rapid transit will offer a better economic return. In a submission they put to Infrastructure Australia, they said that light rail will deliver $2.34 per dollar but bus rapid transit will deliver $4.78. By their own analysis, bus rapid transit would deliver double the economic benefit. And, in addition to that, they may well have inflated the cost of bus rapid transit to well over $300 million, which I am somewhat doubtful about.
We believe that Northbourne Avenue should be preserved as a potential light rail corridor at some point down the track. But, especially in this economic climate, we do not think it stacks up to spend $614 million on this project. We should be preserving transit corridors across the city. We should be looking to the future with regard to preserving corridors so that at some point in the future we can build and upgrade
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