Melbourne’s current long-term strategic land use plan, set out in Melbourne Plan 2017-2050, is based on two fundamental ideas.
These are that Melbourne would become a polycentric city based on a series of activity clusters, mainly in the middle suburbs (called National Employment and Innovation Clusters – or NEICs) and Melbourne would be organized into a set of 20-minute neighborhoods.
NEICs aim to promote productivity growth through agglomeration and develop a more equitable city, including increasing employment opportunities closer to the city’s outer urban growth corridors.
The idea of improving access to public transport for medium-sized urban activity centers is appealing, as a means of supporting their growth potential.
And the Victorian government’s Suburban Rail Loop (SRL), part of its Big Build scheme, is set to play that role.
But this solution is probably too big for its purpose.
Highly developed global cities that have circumferential rail services – i.e. trains running around an urban area rather than radially towards its center – generally have much higher densities than Melbourne and their circular rail loops are quite short.
Most are also located in the higher density inner parts of cities where demand is greatest, while more distant circumferential public transport usually requires transfers between services.
In 2022 Melbourne’s built-up area has a population density of 1,746 people per square kilometer and the SRL has a proposed length of 90 kilometres, from Cheltenham to Werribee.
Compare that to London, whose data tells us a population density of 6,504 people per square kilometer – the city’s Circle Line is 27 kilometers long. Tokyo-Yokohama has a density of 4,584 people per square kilometer, with its Yamanote line at 34.5 kilometers, and Berlin has 2,934 people per square kilometer and the 37.5 km long Ringbahn.
In short, Melbourne’s SRL is about three times longer than these circular lines, in a city with a much lower population density and lower ridership potential.
The economy is against the operation of the SRL.
The SRL of August 2021 Business and Investment Cases for SRL’s Cheltenham to Melbourne Airport segment (SRL East plus SRL North) showed a positive outcome, with an expected benefit-cost ratio between 1.0 and 1.7.
However, there are two serious problems with this result.
First, benefit-cost analysis was undertaken with a low discount rate (four percent) to convert future benefits and costs over the lifetime of the project to present values (this is needed to derive benefit ratios -costs). The usual Australian discount rate for valuing major infrastructure projects – seven per cent – would have produced much lower returns for the SRL.
A good argument can be made for using a four per cent discount rate for a long life project, such as SRL, but this is not the usual public policy approach in Australia (unlike the UK). United).
The choice of this discount rate should be the subject of wide debate, including consideration of the implications for the valuation of alternative investment opportunities whose impacts accumulate over shorter periods.
Second, as is well documented in the media, the expected cost of the project has increased significantly. The cost was estimated at around A$50 billion for the entire project when initially announced in 2018, rising to A$35-57 billion for SRL East plus North in the Business and Investment Case.
The figure now stands again at A$125 billion for SRL East plus North, according to estimates from Victoria’s Parliamentary Budget Office.
This would bring the capital cost of the full SRL to around A$200 billion, around four times the original estimate made just a few years ago.
Unfortunately, the expected benefits do not grow as quickly as this rate of cost inflation. If valued today with a more usual discount rate, the SRL would struggle to generate even 50 Australian cents of profit per dollar of capital cost.
This should be cause for concern.
Medium-Capacity Transit (MCT) solutions, as proposed by the Rail Futures Institute, are likely to be a more cost-effective and flexible solution to meet the circumferential public transport accessibility needs of medium-sized urban clusters of Melbourne in a faster time frame.
This type of cluster development could then be bolstered by direct investments in the clusters’ competitive strengths – such as supporting the growth of their universities and hospitals or medical research facilities – as well as investments in place creation.
These plus MCT investments would be a more integrated way to promote polycentric growth in Melbourne than relying so much on SRL.
The savings made by not pursuing the expensive development of the SRL could also be used to promote a much faster roll-out of the Melbourne Plan’s distinctive and highly innovative idea of 20-Minute Neighborhoods; this concept has been taken up by many European cities as well as others in Asia, Canada, South America and recently in Singapore.
A neighborhood 20 minutes away has most of the services that most people need most of the time, including shopping, schools, health services, parks and recreation.
This form of land use reduces urban sprawl through higher density housing, strengthens community and promotes social capital, improves accessibility and provides a greener environment.
As a result, the likely results are improved health and well-being, increased social inclusion and increased economic productivity, and a reduced need to travel, which also helps reduce transport emissions.
The Victorian government is testing 20-minute quarters in Melbourne. However, these trials neglected the public transport component, relying instead on walking and cycling.
A catchment area of 800 meters, as used in the trials, and considered an acceptable walking distance, is unlikely to provide access to many service needs. This reliance on active transportation does not provide an equal opportunity for all, potentially excluding many older people, those who commute or carry heavier loads, people with disabilities, and people with multitasking needs – such as work, childcare and school. deposits, purchases and the list goes on.
A larger neighborhood is needed to provide essential services, supported by frequent local transit service.
Improving circumferential access to public transport to serve Melbourne’s intermediate urban hubs is an important requirement to ensure the planned development of the city’s land use. But the commuter rail loop is an expensive solution to this challenge.
This comes at the cost of other significant infrastructure and service improvements that are likely to be effective in reducing inequality and facilitating growth with lower emissions.
Mid-capacity transit options and direct investment in cluster development provide a more cost-effective route, complemented by a significantly accelerated rollout of 20-minute neighborhoods in Melbourne’s midtown and outlying urban areas at increased densities.
It would give Melbourne big advantages without such a big bet.