What will high speed rail do for regional development?


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 The stereotype of suburban workers commuting to the city centre by rail is outdated.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

12 Comments on “What will high speed rail do for regional development?”

  1. TomD says:

    Alan, what has been the experience of other similarly contexted western nations in terms of regional jobs and industry development and regional development growth (or otherwise), once a high speed link includes any stops at smaller scale cities along the way?

    Surely there must be some clear indicators out there on this which might possess lessons and relevance to the Australian context that is now in question.

    • Alan Davies says:

      Tom, this piece by Jonah Freemark is relevant and interesting (although it’s important to appreciate the differences in the geography of Australia compared to the US and Europe -search my earlier posts for Zipf’s Law). See also this one from Wired. In terms of regional development as we think of it in Australia, it should also be borne in mind that most HSRs are pretty young and significant land use changes take time.

  2. TomD says:

    Very interesting piece and seemingly relevant. Thanks Alan.

  3. Russ says:

    “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.”

    This doesn’t necessarily strike me as true Alan. The upgrade costs of infrastructure of a large metropolitan area are significant, not just in transport. How many billions has Melbourne needed to spend on water infrastructure because it has expanded beyond its catchment; or will need to spend on inner city tunnels (for roads and rail). IF (big if) regional areas served as an outlet for a significant proportion of current capital city growth, the potential for large infrastructure savings exists as well.

    Similarly, the need for agglomeration is balanced against costs (transport time, land cost, employee wages etc.), which is why the suburbs are preferred to the central city for many businesses. If transport times to regional areas with significantly lower land/living costs (or arguably better amenities), then some businesses might (big might) prefer regional areas to the suburbs. The point being that if a regional centre is within reasonable commuting distance, then it is effectively no different to a suburb, from an agglomeration perspective. The current inability of regional areas to attract significant investment (in comparison to the suburbs) is not really relevant to the changed circumstances.

    Finally, the Melbourne-Sydney trains only need be affected by frequent stopping if the designers are insane. Putting stops on the main-line is the equivalent of abutting destinations to a freeway. It shouldn’t ever happen. The French TGV has numerous connecting points that allow it to slow and stop at regional areas without slowing express trains between major cities. I quite agree that a dedicated HSR that serves a single trip type is a questionable investment. But nowhere in Europe builds those types of lines as far as I can see; they are all built as pieces of a network, with the aim of achieving the best time savings on each new segment.

    • Alan Davies says:

      Russ, these are big but interesting questions! Not sure when I will find time to respond but I definitely will. Only thing I’ll say now is that I conceptualise the issue as: what would it “cost” to accommodate (say) 100,000 extra people in Melbourne compared to building an HSR in order to accommodate them in Albury-Wodonga (say) or Ballarat or Bendigo.

      Update 1: Re your last para, my purpose was to highlight that there are trade-offs. Proponents tend to list the benefits of HSR without noting that you’re unlikely to get from Sydney to Melbourne in three hours if you also want to have intermediate stops with a service regular enough to foster (possibly) regional development. You can have both, but that raises the cost of providing and operating the infrastructure.

      Update 2: Re your second para, most jobs in Melbourne’s suburbs support the local population – education, health, retail and personal services, government administration, etc, so they’re not going to shift to regional centres. There is a (much) smaller group of jobs in manufacturing and warehousing that might be contenders but wouldn’t benefit much from an HSR. Jobs in finance, insurance, property, business services, etc tend to be concentrated within five kilometres of the centre, especially in the CBD, so they aren’t candidates either.

      The inability of centres like Albury-Wodonga, or Ballarat or Bendigo, to attract jobs on the sort of scale we’re discussing is relevant because they already have very good connections to capital cities. All three of these centres are connected by continuous high standard freeway to Melbourne. Ballarat and Bendigo have the new “fast regional train” connections. As mentioned, Albury-Wodonga has good air connections to Melbourne and Sydney. They’re all pretty close to Melbourne actually, yet they remain relatively small by comparison.

      Update 3: Re your first para, I was discussing transport infrastructure but water etc would be an interesting issue to examine in terms of Melbourne vs regional centres. BTW water might not be such a good example as many regional centres in Vic went on harsher water restrictions that Melbourne (incl Ballarat and Bendigo IIRC).

      • Russ says:

        Alan, 100,000 is a curiously low number that would tend towards incrementalism, and shot time horizons (only a couple of years, at present growth rates). If we followed projections outwards to 2050, what does your intuition say about an extra 3million in Melbourne 1m in the regions, versus 2m in Melbourne, 2m in the regions? Keeping in mind too that an HSR program on the French model would take ~30 years to build.

        Re: added costs for a network, I agree. But adding nodes to the network is, in essence, the same as adding an extra acreage to a city. Providing you don’t exceed the capacity you get a polynomial increase in capabilities for linear cost. If you do exceed capacity, entailing a rebuild of key infrastructure, your costs are much higher. The devil is in the details.

        Re: jobs. Jobs that support population will follow population, no? If the population moved to the regional centres those jobs would follow. But otherwise I don’t disagree. The value-added (for want of a better word) jobs that attract population are mostly in the inner suburbs. But not entirely, as numerous suburban business parks attest, and it is those business parks, a 30-40min drive from the CBD, that could conceivably be in regional areas. Time wise, and it is time that matters for transport, there is currently a significant difference between the accessibility of the suburban centres and the regional ones (1.5-2 hours), even taking into account the freeways and regional train services. If a HSR pulled them into the 30-40min orbit of Melbourne, then they’d be more competitive. Equally, there is no point discussing a HSR as a regional growth option unless it can provide 30-40min travel times to Geelong/Bendigo/Ballarat (and I’m not sure it could).

        Finally, I agree with Michael below, regarding an international airport between Goulburn and Albury. An airport attached to the HSR would serve Melbourne and Sydney almost as well as the existing airports in those cities (taking into account the extra flying time and landing delays, the time to reach the CBD would be similar), but allow international carriers to simplify routes. A couple of million international travellers a year would make a big difference to the financial viability of the HSR line.

  4. Michael R. James says:

    I am a big fan of fast trains and the way they transform a country, from living in France. So excuse me for pointing you to my article earlier this year.

    Albury-Wodonga failed because the Libs dropped the idea totally. There is no country for Australia to use as a model, unless you consider far eastern Siberia! Well, not entirely silly in that Irkutsk was made into the Paris of the East by an infusion (forced at pain of execution) of highly trained soldiers who made universities, hospitals, Opera houses, churches etc. In Australia universities, training colleges, hospitals and devolved government departments would have to be used as the carrot. In France (30% all jobs being gov.) they made many permanent positions contingent on going to the provinces (hence the term TurboProf–work in provinces, still retain their Paris home). NSW could make Goulburn (en route to Canberra) the state capital. Canberra airport or in fact Goulburn could become Sydney’s second airport, another big job creator and nucleus for town creation. etc

  5. Alan Davies says:

    Russ, my approach is deliberately incremental so I can compare the relative cost of locating the marginal person in Melbourne versus a regional centre served by HSR.

    If an extra two million growth in the regions was driven organically (e.g. truly local jobs) then I wouldn’t really have a problem. However if they’re effectively commuting to Melbourne then I would as I’ve argued before here and here.

  6. Michael R. James says:

    Huge news. Anthony Albanese on Lateline a few minutes ago just announced Labor will support a VFT Briz-Syd-Mel (spur to Canberra). First “pilot” leg Newcastle-Sydney could be built in as little as 18 months. One really wonders about this. It seems slightly peculiar to announce as part of electioneering. Though it might appeal fairly widely and perhaps especially NSW.
    Of course the Newcastle link has been kicking around for a long time and as part of the elusive second Sydney airport (expand Newcastles airport I think, though Richmond is on the route too?

    • Alan Davies says:

      Didn’t know Newcastle was in the frame for a SSA but it does associate the Government with something that’s immensely appealing politically across the entire country.

      Although it’s being sold as part of an entire east-coast route, the only solid commitment is apparently $20 million for a “high level study” of a Sydney-Newcastle link. Albanese says he’ll have more detail tomorrow.

      Short route makes most sense because HSR can displace car travel. Ground travel is also a much bigger proportion of total travel time on short air trips (are they still smallish aircraft on that route?). A northern route would permit North Shore business travellers who travel directly from home to board at an intermediate stop like Chatswood.

      Lot’s of steep terrain and water between Sydney and Newcastle, so lots of tunnels and bridges.

      Update: The context is a Brisbane-Sydney route. Looks like Qld’s vulnerable seats haven’t been forgotten.

  7. […] previously concluded (here, here, here and here) that the prospects for diverting growth from our cities to regional centres on a […]

  8. […] reiterate the many and varied problems I see with HSR, since I’ve covered them before (see here, here, and here, ). What I do want to address however is the way the planned feasibility study will be […]

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