What will high speed rail do for regional development?Posted: August 2, 2010
Yesterday I looked at the carbon reduction justification for high speed rail between Sydney and Melbourne. Today I want to discuss another argument – that high speed rail will promote the development of regional centres. It is argued that this could in turn relieve capital cities of much of the burden of projected population growth.
I have no doubt that improving connection times between regional centres like Albury-Wodonga and Melbourne will benefit both.
But if regional centres are to be a serious alternative for growth, they will need to provide new arrivals with jobs. The question I ask is: where are those jobs going to come from?
One way could be that regional centres provide a “dormitory” for workers who can live in the country but commute to work in capital cities like Melbourne by high speed rail.
There are all sorts of complications with this. Most importantly, high speed rail is very expensive to build and operate, so this would be a high cost option for the government compared to locating these settlers within Melbourne where they could travel by less technically demanding and cheaper-to-operate conventional modes.
Using high speed rail for commuting long distances raises other problems too. Frequent stops slow the average speed of trains and consume more energy due to frequent accelerations. Because some seats are vacant as a result of passengers getting on or off at intermediate stations, the occupancy rate is lower (some rail systems are regarded as “sold out” at 65% occupancy). Slower trains also limit flexibility to timetable truly high speed express services on longer routes (like Sydney-Melbourne).
Not that it’s likely that many regional residents could avail themselves of this option anyway. The stereotype of suburban workers commuting to the city centre by rail is outdated. Only 14.5% of Melbourne’s jobs are now in the CBD, so the proportion of jobs accessible from regional centres without a transfer to a (relatively slow) local service is unlikely to be very large.
It would be much better if new settlers in regional centres could live and work locally. The problem here is to show how high speed rail would contribute to creating local jobs. Any new population induces some jobs growth to serve its own needs (e.g. hairdresser, doctors, retailers) but it isn’t sustainable unless some workers bring income in to the region.
In earlier eras like the decentralisation push of the Whitlam Government, it was hoped new jobs would be created by inducing major manufacturers to locate in growth centres. This was plausible because the low cost of transporting goods (as distinct from transporting people) meant that many manufacturers were relatively location-independent. Thus the centrepiece of the Whitlam initiative, Albury-Wodonga, was able with some inducements to attract firms of national stature like Borg Warner and Uncle Bens.
But employment in manufacturing has declined precipitously in Australia since the 1970s. It was expected that Albury-Wodonga would grow to 300,000 but in the absence of a minerals or tourism boom, its population today is only around 105,000.
Even today is has very good air and highway connections with Sydney and Melbourne (for example, there are ten flights to Sydney from Albury this Wednesday and nine to Melbourne) but these advantages have not delivered the sort of growth that suggests it could be a serious alternative to Melbourne.
While Melbourne’s population is currently around four million, the largest regional centre in the State, Geelong, has a population of 175,000. Ballarat and Bendigo both have less than 100,000 residents.
Some back-office functions like call centres and financial processing centres have located in regional centres but the great bulk prefer the capital cities – often in the suburbs – or overseas locations.
The modern economy has increasingly evolved toward jobs (firms) that want to be in large cities. This reflects the increasing human capital intensity of jobs in all sectors, including manufacturing, and the benefits of agglomeration economies.
Another issue with growth in regional centres is that no matter where new settlers work, it would be that much harder to persuade local government and existing residents that all new housing should be medium density or on 300 sq m lots, or that they should use public transport, when the periphery might be only five kilometres from the centre of town.
Those who argue that high speed rail can promote regional development as a real alternative to metropolitan growth need to show how it will create jobs in those centres. On the other hand, I think our capital cities have ample scope to grow – governments just need to provide the necessary infrastructure and regulatory regimes so that Australia’s growing population can share the benefits of scale.
P.S. At one time I spent four months full-time living in Albury working as a consultant to the Albury Wodonga Development Corporation