The tram was a ‘solution’ looking for a problem

JON STANHOPE and KHALID AHMED explain how Stage 1 of the light rail project is an economic failure and that Stage 2 is certain to be a greater failure, with serious questions about procurement without a competitive process. 

OF the “problems” identified in the business case for ACT Light Rail – Stage 1, that the project was designed to address, Problem 1 was specified as “the need to build future alternative transport capacity”.

The discussion of the problem in Section 4.2.2.1 of the business case referred to:

• Traffic congestion and slow travel times, in particular along the Northbourne Avenue and Federal Highway corridor; and

• Reduced accessibility by individuals who do not own a car, which in turn carries with it social equity issues. 

Travel time savings are typically the largest component of the economic benefits of a transport infrastructure project. Time saved in travel is available for productive economic activity, or for leisure activities with quantifiable social and wellbeing benefits. 

Transport infrastructure has a long life, and any such project should involve an assessment of evolving needs and an eye on emerging technologies. While it is unclear what is meant by “alternative transport capacity” in the problem definition included in the business case, reference to future needs may be a reasonable starting point. 

However, we have not been able to find in the business case a single reference to electric vehicles, autonomous guidance or trackless trams – technologies that were emerging at the time the business case was prepared.

The total exclusion of future alternative technologies in the business case is, we think, best explained by the terms of the Labor/Greens Parliamentary Agreement for the 8th Legislative Assembly signed on  November 2, 2012. Clause 2.2 (Appendix 1) of the agreement provides:

2.2 Progress a light rail network for Canberra by:

1. a) Establishing a statutory independent authority to implement the light rail project and associated development in the corridor;
2. b) undertaking the necessary design studies, preparatory works, financing, procurement and tendering arrangements, with a target date for the laying of tracks for the first route commencing in 2016;
3. c) Creating a Canberra wide light rail network master plan.

The “solution” was therefore “locked-in” well before the business case for light rail was developed. In other words, light rail became a “solution” looking for a “problem”.

Early lock-in and exclusion of alternatives is not the only concern with the process employed in advancing this project. 

Clause 9 in Appendix 4 of the agreement stipulated that a Public Private Partnership would be created for the procurement and financing of the project. A commitment such as this to the expenditure of unspecified funds without testing the market for procurement and financing, and without any prior public scrutiny of the delivery mechanisms, raises serious questions about both governance arrangements and the probity of the expenditure of public monies.

The extent to which the project has addressed “transport problems”, and in particular reduced car use, can be assessed through the travel mode data published by the Australian Bureau of Statistics (ABS).

The illustrated table is drawn from the Census data for 2016 and 2021 and shows that of the approximately 43,000 additional employed people, more than 16,000 used cars as their main method of travel.

The use of public transport, bus and tram combined, remained unchanged as measured by the number of people (a mere increase of 285), with tram patronage being largely offset by a decrease in bus use.

Measuring by share, public transport use dropped from 6.9 per cent in 2016 to 5.9 per cent in 2021 despite the more than $1.7 billion expenditure commitment on tram infrastructure and services. 

Car use declined from 69.6 per cent to 64 per cent largely as a result of an increase in the proportion of people working from home, up from 3.1 per cent in 2016 to 10.9 per cent in 2021. The largest change (increase) in proportionate terms as well as in actual numbers was in people working from home, increasing from 3.1 per cent in 2016 to 10.9 per cent in 2021.

Although the lockdowns during the COVID-19 pandemic were a catalyst for such a significant change, there has been a trend of flexible working arrangements being offered to workers supported by increasing bandwidth and improvements in technology platforms. Along with this trend, at least in some part the steep increase in the proportion of people working from home, is likely to continue.

The transport benefits of the project, assessed by the auditor-general as returning just 49 cents for every dollar spent, are almost certain to be much less in view of the above patronage figures and the additional costs that were not included in the original business case. 

Social equity and access benefits envisaged could hardly have been delivered when public housing households were dislocated to meet the densification and financing objectives.

Although an ex-post cost-benefit analysis has not been performed, it is clear that Stage 1 of the project is an economic failure. 

Stage 2 is certain to be a greater failure due to (a) the technical complexities of the route, which will significantly increase costs, (b) potentially negative transport benefits due to increase (rather than decrease) in journey times; (c) trend increase in flexible work arrangements; (d) any densification benefits along the route being strongly contested by the community, and in any event, not dependent on the project; and (e) alternative technologies maturing further and being much more cost-effective.

The ACT government is apparently locked into a provider for Stage 2, and indeed for further stages should it continue to pursue the network across the city. This raises serious questions about the efficacy and appropriateness of procurement without a competitive process.