Canberra Autonomous Car Simulation FAQ

As noted above, the proposed light-rail does almost nothing to address Canberra's general transport problems and in particular, will not improve mobility for typical citizens. Hence, the debate on its economic merits and whether they are marginally positive, marginally negative, or so bad as to saddle future generations with crippling "availability payments" (jargon for an arrangement that previous generations might accurately characterise as "hire purchase", or "the never-never") is largely irrelevant from a transport perspective (and perhaps better considered, as Dr Carleton Christensen argues, as part of a discussion about Canberra's future urban form).

But not totally irrelevant because:

• The light-rail project diverts attention from the issue of effective and affordable public transport. It is possible that light-rail is perceived by politicians and the public as "doing something" for transport, when the reality as summarised by David Hughes is:

  To put this in perspective, at a cost of about $90 million a year under a public private partnership agreement, the project will change the commuting habits of 750 Canberrans by 2031. About 200,000 Canberrans travel to work each day.

• The light-rail project diverts resources from an exploration of alternatives.

• It is very likely that if construction of the light-rail proceeds, it will begin operation around the same time as trials in other cities of fleets of autonomous cars providing vastly cheaper and higher utility public transport options.

  Commercial interests (and their bankers) will have foreseen this competitive threat and will have transferred the associated risk to Canberra rate-payers during the PPP ("public private partnership") contract negotiation. As Richard Denniss from The Australia Institute has pointed out in relation to the proposed light-rail PPP:

  "..you pay someone to hide the debt for you. That is what a public-private partnership really is.
  ... Put simply, if the private partner knows more about running a light rail project it will use that knowledge to line the pockets of its owners, not to lower the cost to taxpayers. And if it does not possess such superior knowledge, then why would the taxpayer pay it a profit margin for doing the same job that public sector workers could do?"

  If nothing else, these notes may help prepare the representatives of Canberra rate-payers for this process, although by then the politicised context is likely to severely constrain their will and ability to negotiate, and so the "sunk-costs" in the light-rail are likely to construct a barrier to the entry of competitors, regardless of merit.

Demand forecasts made by transport projects are notoriously inaccurate, and those made by rail projects are the worst. Bent Flyvbjerg's frequently-cited study of the field in 2005, How (In)accurate Are Demand Forecasts in Public Works Projects? The Case of Transportation, noted:

The sample used is the largest of its kind, covering 210 projects in 14 nations worth U.S. $59 billion. The study shows with very high statistical significance that forecasters generally do a poor job of estimating the demand for transportation infrastructure projects. For 9 out of 10 rail projects, passenger forecasts are overestimated; the average overestimation is 106% ... Our data also show that forecasts have not become more accurate over the 30-year period studied, despite claims to the contrary by forecasters. The causes of inaccuracy in forecasts are different for rail and road projects, with political causes playing a larger role for rail than for road.

Hence it seems prudent to approach any rail business case with healthy skepticism.

1. Failure to keep "Rapid Service" commitment
2. Economic justification is based on an assertion of unusually high non-transport benefits compared with other transport infrastructure projects
3. Lack of clarity regarding the calculation of the agglomeration benefit
4. Lack of consideration of technological impacts on transport and reliance on dubious congestion costs
5. Lack of clarity regarding the calculation of travel-time savings, errors in hourly wage rate figures and optimistic forecasts for real wage growth
6. Travel-time inconsistencies within the business case and with other ACT Government publications (current ACTION timetable, AECOM 2012 Transit Lane Warrants Study)
7. Internal inconsistency of population growth estimate
8. Community support for implicit population growth assumptions
9. No error/uncertainty estimates for value of benefits
10. Lack of evidence for the dependency of land use and wider economic impacts with this specific transport option, rather than population growth in general
11. Double-counting of benefits because land value increases are primarily caused by travel-time savings
12. Reliance on subjective and unsubstantiated argument

    Framing the contract to fairly reward the developers and operators if the Business Case is accurate, and to protect the community if it is not

    Summary and conclusion

Appendix 1: Capital Metro light-rail travel-time calculations
Appendix 2: Capital Metro's EIS shows tram increases congestion and slows travel - but it is much worse than they admit
Appendix 3: Comparative emergency stopping distances and kinetic energy of car, semi-trailer and light-rail tram
Appendix 4: Capital Metro - Green or Greenwash?
Examples of how light-rail changed the Gold Coast street-scape

Capital Metro Stage 1 and 2 Development Applications (DA), a submission to both DAs, ACT Government assessment of both DAs and a commentary on those assessments

Analysis of Canberra Light Rail (Stage 1) Traffic Assessment report, February 2016

Simulation of traffic at the Northbourne/Mouat Intersection with and without light rail, 2021 and 2031

1. Failure to keep "Rapid Service" commitment

   The Capital Metro website's FAQ page in March 2014 (courtesy of the Internet Archive, also in April 2014 version courtesy of NLA's Pandora) contained this commitment:

   How long will the journey/s take?

   The service will be a Rapid Service as defined in the Government's transport policy Transport for Canberra. An average speed of 40 km/hr (including stops) is required for this service.

   The ACT Government's document specifying its "foundation for transport planning for the next 20 years", Transport for Canberra: Transport for a sustainable city, defines four service types. At the top of the pyramid is "Rapid Service", defined as:

   Public transport corridors for all day, high speed travel across the city along dense corridors. Analogous to a metro or rapid public transport system, and location for future light rail or bus rapid transit. Rapid services carry the majority of passengers, and can help achieve mode shift goals for work trips and associated emissions reductions.
   [Transport for Canberra, Table 2, page 19]

   The speed standard for "Rapid Service" is specified as ~40km/hr including stops.

   Action item 17 of Transport for Canberra plan is:

   Adopt an operating speed standard of 40km/hr for the rapid service to guide the infrastructure investment program [within 2 years]

   Capital Metro adopted and publicised this goal in 2104, explicitly recognising the need to deliver rapid transport with an average speed, including stops, of at least 40km/hr. Yet the Business Case specifies a proposal delivering a 25 minute trip over the 12 km route, at an average speed of 28.8km/hr.

   The proposed system hence falls far short of the ACT Government's own requirement for the "Rapid Service" it asserts is needed. Capital Metro's assertion that light-rail would meet this requirement was silently removed from their web-site by the time the business case was released.

   Travel-time estimates (below and in Appendix 1) based on modern track, rolling-stock and service frequencies, and comparisons with Capital Metro's exemplar light-rail system, Gold Coast's G:link, strongly suggest the actual achieved average speed will be around 22km/hr.

   Even with its extremely optimistic speed forecasts, Capital Metro will not be delivering the "Rapid Service" required by the ACT Government's transport planning strategy.

2. Economic justification is based on an assertion of unusually high non-transport benefits compared with other transport infrastructure projects

   Cost-benefit studies for transport projects typically count as benefits more than just direct transport-related efficiencies (such as time, fuel and cost savings). So-called "Wider Economic Benefits" are focussed primarily on "agglomeration benefits", which are net economic benefits thought to arise from greater efficiencies and hence productivity associated with increasing population and work-force density. The magnitude of agglomeration benefits are hard to quantify, and are a contested area in transport economics. It seems reasonable that greater physical proximity may allow businesses to communicate and operate more efficiently, particularly in the pre-internet era. It seems reasonable that larger co-located pools of employees and employers will increase the chances of the right person being in the right job, again, particularly in the pre-internet era. These benefits may outweigh possible disadvantages of greater density, such as less open space and parkland, greater noise pollution, congestion and increased spending per capita on law enforcement, and even higher rents resulting from increased competition for scarce land, for at least for some range of density increases, particularly in the pre-internet era.

   A frequently-cited Australian study, Productivity and the Density of Economic Activity: Preliminary Estimates of Agglomeration Benefits in Australian Cities by Roman Trubka in 2005, used income as a proxy for productivity and attempted to correlate income (and through it, productivity) with employment densities for ABS statistical local areas (SLAs). Whether it is reasonable to correlate income within an area with productivity, and further, whether it is reasonable to assume that increasing income is caused by increasing employment densities is arguable - perhaps greater employment density in an area causes land to be so highly valued that the housing built on that land is necessarily higher-cost which is only affordable by high-income people. Trubka reported:

   The results of the analysis varied significantly among the major cities, producing elasticities and rsquared values that did not reveal uniform relations between productivity and employment size and density across the nation. This to some degree was expected because of a number of urban form characteristics that greatly differentiate the cities and because of the multitude of other contributors to urban productivity that cannot be captured in the dependent variables used. The inconsistency of the results among cities tells us that it is unlikely that we can generalise agglomeration benefits for infrastructure project appraisal across all Australian cities.

   Nevertheless, the figures he derived are widely cited and used. His result for Melbourne was that elasticity of productivity with regards employment density was 7.4%: that is, a doubling of employment density would increase productivity by 7.4%, and hence increasing employment density by 10% would increase productivity by 0.74%. According to Trubka "The results for the rest of Australia's capital cities were more confounding and speculative, giving rise to some challenging questions."

   Not surprisingly, agglomeration benefits have been eagerly included by proponents of transport infrastructure projects despite a rigorous understanding of how they can be reliably used and how they are affected by the increasing virtualisation of the economy. Infrastructure Australia, recognising the temptation to add wider economic benefits to a project's benefits, require a cautious and rigourous approach in their transport infrastructure investment framework template:

   While it is recognised that the calculation of these wider benefits is still in its infancy, both in Australia and internationally, Infrastructure Australia believes the correct interpretation and accurate calculation of WEBs (using the most suitable data available) can add texture to the decision making process for certain initiatives. However, it is crucial to acknowledge that:

   • Only certain initiatives, addressing a specific set of economic fundamentals, will generate WEBs;
   • Significant WEBs will only be found in initiatives with strong traditional benefits, since WEBs require high levels of behaviour change, e.g. strong demand for the new asset WEBs may be negative for some initiatives; and
   • the availability of Australian specific data needed to calculated WEBs is currently sub-optimal.

   Therefore, Infrastructure Australia will treat WEBs separately to the traditional CBA. It is recommended that any proponent seeking to calculate WEBs consults with Infrastructure Australia before proceeding with the analysis. Any subsequent study should base the justification for inclusion of WEBs on the economic theory and applicability of this to the initiative's strategic objectives and impacts upon the transport and labour market. The quantitative analysis should follow the latest guidance and use well informed assumptions about the most appropriate, initiative specific data. Applying a broad percentage up-lift to the results of the traditional appraisal does not provide any additional or meaningful information for Infrastructure Australia to consider in the decision making process.

   The Capital Metro business case introduces a further non-transport benefit by asserting that in addition to direct transport and wider economic benefits, the light-rail will add a non-overlapping set of benefits associated with increasing land values of properties located near the proposed transport corridor. Not surprisingly, some cost-benefit and finance experts have argued that the land values rise because of the travel-time benefits and the possible agglomeration effects, and that to include these again is a classic case of "double counting". And further, policies that promote higher-valued land use are independent of the light-rail proposal (or at least could be facilitated using cheaper methods such as busways or autonomous cars) and hence should be evaluated separately.

   In this context, a reliance on high non-transport benefits to justify a positive economic forecast attracts scrutiny.

   Transport benefits comprise a low proportion (41%) of the project benefits in the Capital Metro business case:

   Benefit Component	$m, current prices	%
   Transport benefits	406	41
   Land use benefits	381	39
   Wider economic impact	198	20
   Total	984	100

   Comparable figures for other transport projects:

   Project Transport benefits as % of total claimed economic benefits East-West Link, Melbourne 83 WestLink Melbourne 89 Melbourne Metro 75 - 80 Capital Metro light-rail 41 HighSpeedRail 2 (HS2 London-West Midlands) 82 Crossrail (London) 70 Jubilee line extension (London) most recent assessment, 2004 64

   [Sources: Job density, productivity and the role of transport, Victorian Dept of Transport, 2012, Agglomeration Benefits of the Melbourne Metro, SGS for Public Transport Victoria, 2012 and Economic Case for HS2: Updated appraisal of transport user benefits and wider economic benefits, A report to Government by HS2 Ltd, 2012]

   The Canberra light-rail is a clear outlier: the next closest project (Jubilee line) has an over 50% higher ratio of transport benefits. Perhaps these non-transport benefits are justified by framing the project as an enabler of a changed urban form, rather than as a transport project. However, the lack of certainty of the robustness of assumptions which give rise to such abnormally high non-transport benefits, let alone the independent expert opinions of "double counting" and Infrastructure Australia's explicit cautionary notes on using such figures at all must give pause, for without such overwhelming non-transport benefits, the costs of the project greatly exceed the benefits. Even accepting the calculations of the transport benefits arising from the additional 750 peak and 750 off-peak daily public transport round-trips enabled by the light-rail in the business case at face value, the transport benefit-cost-ratio (BCR) of the project is 0.5, that is 50 cents benefit for each $1 of cost.

3. Lack of clarity regarding the calculation of the agglomeration benefit

   The Capital Metro Business Case assigns a present value of $165m to agglomeration benefits over to the life of the project. As mentioned above, the calculation and value of agglomeration benefits is a contested area in transport economics, and their inclusion as part of a cost-benefit analysis requires transparency as to their derivation. A critical parameter in their calculation which allows a comparison to be made between their use in this business case and theory is the elasticity of productivity with regards employment density. Table 61 of the business case lists many such "agglomeration elasticities", including those for agricultural, forestry, fishing and mining, which are unlikely to be applied. However, the source of these figures and how they have been used is not stated. Most significantly, nowhere is it stated what aggregate agglomeration elasticity parameter has been used.

   Table 61 "Wider Economic impact assumptions" does contain a value for something labelled "Uptick for business user impacts" which could conceivably be the aggregate agglomeration elasticity, although there is no other reference to this label in the business case. Its value is given as 10%.

   It is troubling if such a high figure as 10% has been used as the elasticity, especially without a careful justification, given that Job density, productivity and the role of transport (Victorian Dept of Transport, 2012) reports elasticities of 7% - 8% from Australian studies (and 4% from the Graham, Gibbons and Martin 2009 UK study).

   If a figure of 10% has been used, it is possible that the agglomeration benefit, as theorised, has been over-stated by at least 25%, or $40m. A $40m reduction in benefits results in the project benefit-cost-ratio (BCR) including all transport, "land use" and "wider economic impact" benefits to be rounded down to 1.1, rather than be rounded up to the claimed 1.2

4. Lack of consideration of technological impacts on transport and reliance on dubious congestion costs

   The Capital Metro business case makes no mention on the impact of technology on the role of and demand for urban transport. However, much of the economic and social justification of a project running in parallel, the roll-out of the National Broadband Network (NBN), is based on behaviours it promotes which greatly reduces the demand for travel, such as:

   1. teleworking: the Australian Public Service have a goal to increase from 4% to 12% the number of employees teleworking at least one day per week. IP Australia's teleworking trial increased the number of hours worked by staff whilst teleworking from 7% in 2007 to 12% in 2013.
   2. home shopping
   3. home entertainment (streaming movies rather than visiting theatres)
   4. using video-chat to replace physical visits
   5. education (virtual classrooms and MOOCs)
   6. remote medical monitoring and diagnosis
   7. 3D printing

   The likelihood of such comprehensive substitution of travel should be at least discussed in the business case.

   According to the NBN media release, Canberra's connected commuters ditch peak hour for digital fast lane (NBN, September 2014), "New research shows better broadband will cut road congestion and increase worker flexibility". The media release quotes Stephen Greaves, Professor in Transport Management, The University of Sydney's Business School:

   "Frustrated commuters who live in the suburbs and city outskirts stand to benefit most as they have the potential to significantly reduce the hours spent travelling to 'knowledge based' jobs traditionally located in the Canberra's CBD. This type of work typically deals in the trade of information rather than physical products or labour, and can be more easily done online from the convenience of our home offices or smart working hubs.
    
   The flow on effect of this will extend beyond those working from home as less congested roads and public transport systems will mean better travel times for all."

   Transport and Urban planning consultant, Alan Davies, noted in July 2014 that

   A draft Infrastructure Australia report says officially forecast traffic congestion is double what's actually happening; flawed methodology overstates the need for new urban roads.

   He goes on to quote the Infrastructure Australia industry consultation draft, Spend More, Waste More, which is highly critical of the systematic overestimation of travel growth and congestion costs in Australian cities being used to justify unnecessary expenditure on roads.

   In an earlier article (Will we drive a whole lot less in the future?), Davies discusses Bureau of Infrastructure, Transport and Regional Economics data which shows per capita travel started to level off in the mid 1990s and then fell from 2004-5:

   ..but I suspect the key explanation is the obvious one: we're increasingly substituting electronic communications for driving; we're making fewer trips.
    
   For those with the ability to exploit the potential of technology, the warrant for driving is considerably weaker than it was 10 years ago. More and more transactions can now be done from the workplace or home (or anywhere) without the need for a travel.
    
   It's possible, even likely, we're only witnessing the start of a sustained downward trend in travel, especially driving.

   There are very few details on the calculation of the single major transport benefit of light-rail, time-savings, in the Capital Metro business case, and no mention at all of how technological developments will affect demand for travel over the next 30 years of forecast benefits. However, careful consideration of such developments is vital for such a forecast.

   The business case does rely on the Bureau of Transport and Regional Economics' forecasts that were refuted by the Infrastructure Australia industry draft report to claim that "the social costs of congestion could rise from $0.11bn to $0.2bn per annum for Canberra by 2020, based on "business as usual" projections of transport activity".

   Although these congestion costs (according to Infrastructure Australia industry draft) may be greatly exaggerated, the Capital Metro business case is less clear on exactly what will be the effect of the net 750 extra peak period round-trips claimed by the business case (out of a Canberra total of 200,000) in reducing congestion costs. Will it reduce congestion costs from $200m per annum to, say, $195m per annum?

5. Lack of clarity regarding the calculation of travel-time savings, errors in hourly wage rate figures and optimistic forecasts for real wage growth

   Travel-time savings, which at $222m (present value) over the life of the project, represent 55% of transport related benefits. However, it is not clear how the travel-time savings have been costed, and the business case seems to have used a "value of time" value 15% higher than Australian Transport Council (ATC) guidelines and to have used an optimistic forecast for real wage growth over the next 30 years.

   The ATC National Guidelines for Transport System Management, Volume 5, 2006 state the work-time travel should be valued at the average wage rate, and non-work-time travel at 25-30% of this rate.

   The business case assumes the value of time will grow by 1% per year above inflation, presumably on the assumption that real wages will also grow by that rate. However, it is optimistic to assume that real wages will grow at this rate, as over the last year Australian average wages have not increased in real terms. Real wages have not increased in the USA since 1964. Apart from unanticipated changes in political and social contracts regarding the share of surpluses distributed to wage earners, real wage growth is determined by productivity and the terms of trade, and the RBA's outlook for neither is optimistic. It is quite likely that the factors behind recent real wage growth in Australia will not be maintained in the short and medium term.

   In these circumstances, the business case's assumption of the growth in the value of time and real wages is optimistic, leading to an over-estimate of travel-time savings.

   [Incidentally, the business case sensitivity analysis in Table 30 erroneously states that a higher value of time escalation factor (1.5%) will result in lower BCR (1.1), when it will actually increase the BCR: a higher inflator on the value on time increases benefits over time and hence increased the BCR.]

   Of even more concern are the wage rates used for the value of time calculations.

   The business case states that the 2014 value of time is "$17.30 p/h for public transport users, $19.10 for car and $53.95 for commercial vehicles" and that those figures are "estimated in line with ATC national guidelines". However, those guidelines state that work time travel should be "valued at the average hourly wage rate (including income and payroll taxes)" (page 48). Average weekly wages in Canberra in May 2012 were $1357 according to the ABS. The national average hours worked is 31.6 ("all employees" hours were not broken-down to State level), giving an estimated hourly wage rate of $42.94/hr. Payroll tax in the ACT is 6.85%, and ignoring the payroll-tax threshold, this gives an estimated hourly wage including payroll tax of $45.88. (Not ignoring the payroll-tax threshold would result in a slightly lower hourly wage.) The business case is based on 2014 wages. In the two years since 2012, the Australian wage price index has grown by the annual trend rates of 2.7% (2013) and 2.5% (2014), (an average over the two years of 0.2% above CPI), increasing the estimated hourly rate in 2014 to $48.30.

   The figure used in the business case, $53.95, is $5.65 or 11.7% higher than this estimate based on ABS data and the ATC guidelines.

   According to the ATC guidelines, non-work-time travel should be valued at between 25% and 30% of the work-time valued. Hence, using the mid-point of 27.5%, the business case should be using a value of $48.30 * 0.275 = $14.49, rather than the $17.26 figure they are using. That is, the non-work time value used in the business case is 19.1% higher than it should be according to ABS data.

   The business case constructs a weighted car travel time using 5% of the work-time value and 95% of the non-work-time value, of $19.10. When ABS supplied wage data is used, this figure should be instead be $16.18.

   In summary, the business case uses inflated wage figures which must be deflated to accurately represent 2014 wages according to the ABS.

   Travel time category	Business case travel time values, 2014	More accurate travel time values, 2014 derived from ABS data	Deflator required to correct business case values
   Public Transport	$17.26	$14.49	16.0%
   Private travel - car (95% of Car Total)	$17.26	$14.49
   Business travel - car (5% of Car Total)	$53.95	$48.30
   Car Total	$19.10	$16.18	15.3%
   Light Commercial Vehicle	$53.95	$48.30	10.5%

   [Source: Table 53, Capital Metro Business Case and ABS wage data cited above]

   Hence, as the vast majority of travel-time savings are derived from public transport and private car savings, and as travel-time savings are proportional to the value-of-time figures, the erroneous wage rate figures used in the business case alone have resulted in the travel time savings being overestimated by at least 15%. That is, rather than travel-time savings being $222m (present value), they probably are at most $189m.

   Furthermore, assuming a less optimistic real-wage growth rate of 0.5% (rather than 1.0%) reduces hourly wages by 8% at the mid-point of the 30 year costing period (1.01^15 years/1.005^15 years), leading to a more realistic travel-time savings of $174m.

   This more realistic estimate reduces total transport benefits from $406m to $362m resulting in a transport benefit-cost-ratio (BCR) of just 0.44.

   The business case notes that the light-rail will enjoy signal priority over competing traffic. Additional traffic lights will also need to be installed. However, no discussion or details of the magnitude of the negative impact of these measures on travellers not using the light-rail is given, so it may well be that they have not been included in the nett travel-time savings calculation. However, as the vast majority of travellers traversing along and through the light-rail corridor will not be not using the light-rail, their negative time savings will greatly reduce and may even negate any savings if a complete calculation of travel-time savings were to be performed.

   In addition to the factors discussed in this section, although the business case omits the relevant details, travel-time savings have almost certainly been based on travel volume estimates that fail to take into account technological developments and were based on outdated over-estimates from BITRE of personal travel (as discussed above). A more thorough analysis of the impact on declining per-capita travel is likely to significantly further reduce the asserted travel time savings, further eroding the project's claimed BCR.

   Perhaps of most concern is the Capital Metro's Environmental Impact Statement which shows that in 2021 the light-rail project will increase congestion and travel times and significantly lower average vehicle speeds in the road network, and will increase the demand for extra traffic lanes and road-works to reduce congestion. An analysis of the EIS modelling is contained in Appendix 2: Increased travel times and congestion reported by Capital Metro's EIS, below.

6. Travel-time inconsistencies within the business case and with other ACT Government publications (current ACTION timetable, AECOM 2012 Transit Lane Warrants Study)

   1. Travel-time estimates grossly inconsistent with Capital Metro's own rolling-stock requirements and service frequency

   The Capital Metro website's Passenger Experience page states:

   A frequent and reliable service

   Capital Metro could run throughout the day and into the night, featuring high frequency services each day, with operating times such as:

   • 7am-6pm weekdays the services will run every at least every 15 minutes most of the day and every 6 minutes during peak.
   • Weekends and weekday evenings at least every 15 minutes.
   • The journey time between the City and Gungahlin is anticipated to be 25 minutes or less.

   The Capital Metro Business case section 3.1.2.8 states:

   The rolling stock component of the project is likely to entail the provision of 14 light rail vehicles with capacity of approximately 200 people and a length of approximately 33 metres. This is the most usual currently available configuration for light rail vehicles. The light rail will have level boarding at all doors, priority seats for mobility impaired and designated areas for wheelchairs and pushchairs. The purchasing of 14 vehicles accounts for one vehicle assumed to be under maintenance and another for unscheduled repairs, with 12 light rail vehicles in service.

   To summarise, Capital Metro asserts that 12 vehicles are required to service the peak load (with 2 purchased as spares) with a 6 minute interval vehicles.

   If 12 vehicles are required to provide a 6 minute service interval, then it must take each vehicle 12 * 6 = 72 minutes to complete one round trip. A round trip consists of one trip in each direction, plus the turn-around time at the end of each trip. Based on similar services, such as the Gold Coast light-rail, the turn-around time should be 2 minutes per trip. Hence the 72 minutes is made up of two trips taking 34 minutes and two turn-around times taking 2 minutes.

   That is, the assumption of trip time in the business case that drove the requirement for 12 vehicles (plus 2 spares) is that the single peak trip time is 34 minutes, not 25 minutes.

   If the trip time was only 25 minutes, then the round trip time would be only (25 + 2) * 2 = 54 minutes, and so to meet the promised 6 minute service interval, only 54 / 6 = 9 vehicles (plus 2 spares) would be required.

   It seems very unlikely that the Business Case would overestimate the number of vehicles, because with a purchase price of at least $4m-$5m per vehicle plus ongoing maintenance, they are very expensive and hence lower the project's benefit-cost ratio.

   The inescapable conclusion is that the actual transport modelling which informed the business case's rolling stock requirements found that 12 vehicles were necessary for a 6 minute service interval because the transport modelling showed that the single journey time would be 34 minutes.

   One can only speculate as to why a figure of 25 minutes was used instead. However, a journey time of 34 minutes is much longer than the current AM peak Red Rapid 202 service (19 minutes before 8am, 24 minutes after 8am), and such long travel times would reduce if not negate the travel-time savings on which the touted benefit-cost ratio is dependent and also negatively impact passenger demand with respect to the Red Rapid, as passengers would wonder "why stand for 34 minutes on light-rail when I could sit for 19 (or 24) minutes on the bus?"

   Two independent ways of calculating the single trip times (one based on the Gold Coast light-rail experience and one based on use of acceleration, deceleration and maximum speed data, time spent at each stop and signal delays) generate estimates between 31.5 and 34 minutes. Complete details of these calculations are provided in Appendix 1 below.

   2. Travel-time savings inconsistent with ACTION timetable

      The business case claims "Travel time on light rail will be approximately 23 - 25 minutes from Gungahlin to the City in the AM peak, with signalling priority, better than the existing red rapid bus travel time." (Table 11, Page 62)

      This is the only occassion in which a light-rail journey time of less than 25 minutes is posited: elsewhere in the document, the "target" time is given as 25 minutes, for example: "The target journey time will be approximately 25 minutes in peak from Gungahlin to the City" (page 45)

      Perhaps the possibility of a 23 minute journey was inserted to counter criticism that rather than being faster than the existing "red rapid" bus travel time, the light-rail's 25 minutes is actually 5 minutes slower than the the travel time of two AM peak "red rapid" services, and 2 minutes slower than average of the current non-stop "red rapid" services in the AM peak.

      As noted above, Capital Metro's own peak rolling stock requirements (12 + 2) and peak service interval (6 minutes) implies a single journey time of 34 minutes, not 25 minutes. But for the following analysis, we accept the 25 minute figure.

      The current ACTION Network-14 Red Rapid 200 timetable gives the departure and arrival times for 5 non-stop services (route 202, marked with an 'x' in the timetable) from the Gungahlin Town Centre to Civic in the morning peak period. The first leaves Gungahlin at 7:33 and arrives in Civic at 7:53. The departure and arrival times for the others are: 7:49 - 8:09, 8:04 - 8:28, 8:14 - 8:39, and 8:19 - 8:43. These five journey times in minutes are 20, 20, 24, 25, 24, giving an average of just under 23 minutes.

      Outside peak hours, the facts are bleaker still for the light-rail business case. Even the normal (ie, stopping) "Red Rapid" service takes just 22 minutes for the trip from Gungahlin to the city at 10am, 1pm and 3pm and just 19 minutes at 9pm.

      Thus, even based on Capital Metro's optimistic "targets" it is highly questionable that any travel-time savings for public transport users should be included in the "benefits" of light-rail, and more than likely, the time savings benefits will be negative for existing "Red Rapid" passengers forced to use light-rail.

   3. Modelling used to justify travel time claims is inconsistent with other measurements

      The business case claims "Based upon micro simulation modelling performed in 2013¹, the current average Gungahlin to City morning peak travel time of approximately 35 minutes.." (page 51).

      The footnote referenced states: "It is noted that the micro simulation modelling has been based upon the proposed rail corridor and Roads ACT travel time surveys. This modelling has not been used to calculate economic benefits, as these have been derived via strategic (macro) modelling. Micro simulation modelling has been based on highly detailed analysis of traffic flow on specific roads and intersections likely to be affected by the light rail route, whereas strategic modelling considers land-use models to predict the volume of demand and travel patterns".

      Unfortunately, details of "strategic (macro)" modelling are not supplied in the business case. However, as noted above, the current average Gungahlin to City morning peak travel time for an ACTION bus is 23 minutes, not 35 minutes, invalidating all arguments and calculations based on that figure.

      Perhaps the unstated argument is that buses travel faster than cars, because a bus transit lane runs for 1.3km city-bound on Flemington Avenue, and there is a short bus lane southbound just before the intersection of Barton Highway and Northbourne, that advantages city-bound buses over cars. [There are no such advantages for buses in the other direction, towards Gungahlin.]

      To assess the magnitude of this advantage we can refer to the study of transit lanes commissioned by the ACT Government and undertaken by AECOM and published in 2012. Discussing the Flemington Rd transit lane, this study noted:

      The results of the journey time analysis illustrate that there is a very minor difference between the observed journey times in the general traffic lane and the bus lane. The surveys show that the bus lane is approximately 9 seconds and 6km/h quicker than the general traffic lane over a distance of 1.3km during the AM peak period.

      That is, the bus gains an advantage of 9 seconds over cars due to the transit lane. The study did not quantify the advantage given to buses from the short transit lane before the intersection with Barton Highway. However, even assuming cars suffer a total disadvantage of 2 minutes, that is, that a car journey along the bus (and light rail) route from Gungahlin to Civic takes 2 minutes more than a bus at the same time, then based on the ACTION "red rapid" non-stop AM peak services, the average car journey takes 25 minutes in AM peak, 10 minutes less than the journey time modelled by Capital Metro.

      Both TomTom's route planner and Google Map's traffic journey estimators routinely give travel times of between 19 and 25 minutes for a car journey between Gungahlin Town Centre and Civic (Northbourne and Alinga) during the AM peak. Their selected routes for AM peak typically avoid Flemington Av in favour of Gungahlin Drive/Barton Highway.

7. Internal inconsistency of population growth estimate

   The magnitudes of the claimed agglomeration and land-use benefits in particular, and to a lesser extent the travel-time benefits, are correlated with population growth. Without population growth, there are no agglomeration benefits even in theory, and no increased constant demand for land. Without population growth, any increase in demand for land along the transport corridor is offset by a reduction in demand (and hence value) of other land in the territory.

   However the business case does not explicitly specify the vital population growth assumption. Perhaps the framers of the business case wished to avoid discussion on population growth, particularly as population growth is both essential to the assumptions suggesting economic viability and not favoured by the community.

   Instead, the business case supplies two significantly different estimates for population growth:

   • On page 56, an average population growth of 1.6% is assumed to justify the assertion that, if current land use policies are retained, "the existing supply of developable greenfield land within Canberra may be depleted within as little as 17 years if no action is taken". The growth estimate in this assertion may feed in to the calculation of urban densification benefits ($72m), land value benefits ($168m) and infrastructure efficiency savings ($140m). Because these components form such a large part of the claimed project benefits ($381m), the population growth estimate is a vital assumption that must be made explicit.
   • On page 57, projected population growth is stated to be 1.2% between 2011-2021 and 1.0% between 2021-2031.

   Presumably, only one population growth estimate has been used but the business case sheds no light on which one. Because these two assumptions result in a population difference of over 50,000 people by 2031 (equivalent to about a half-Tuggeranong), they imply significantly different futures for Canberra, and significantly different BCRs.

8. Community support for implicit population growth assumptions

   The Capital Metro business case is dependent on increasing population required by the theory of agglomeration effects, tax from the increased labour supply and land use benefits, contributing respectively $165m, $31m and $381m to the business case. The total value of these direct population-increase-related benefits is $577m, almost 59% of the total benefits.

   Increasing population is also required for an increasing demand for transport (since BITRE have noted that per-capita travel has been dropping for 10 years), which drives the business case's travel-time and congestion related benefits.

   In short, without significant population growth and acceptance of contestable assumptions about future urban planning and travel patterns, there is no possible business case for light-rail.

   However, an explicit commitment to high levels of future population growth is notably absent from policy associated with the light-rail proposal.

   A survey conducted by The Australia Institute in 2005, How Big Should Canberra Be? by Clive Hamilton and Claire Barbato, may explain this coyness. They noted that "[72 per cent] of Canberrans believe that the city's population should be no bigger than it is now". Less than 14% of respondents favoured growth beyond 500,000.

   Implicit in the business case's required assumptions are that the population of Canberra will increase rise, to somewhere between 456,000 (~1.1% growth) and 508,000 (1.6% growth) by 2031. (It is unclear which growth estimate is used by the business case.)

   The survey found that the negative impacts cited on quality of life with a Canberra population of 500,000 or more where:

   • Environmental problems, like water shortages and pollution: 78%
   • Traffic congestion: 53%
   • Social problems like crime: 32%
   • Pressure for inappropriate development: 28%
   • Less friendly city/too anonymous: 10%

   On the assumption that economic growth depends on population growth, the authors note:

   One of the most common mistakes of the growth argument is that economic expansion is in itself beneficial. In fact, improving the average incomes of residents is a more meaningful (if still flawed) primary objective. Thus the focus should be on per capita growth not the overall level of growth. While higher population growth would undoubtedly result in a higher growth of total income, it is hard to argue that a faster rate of population growth would result in a faster rate of per capita income growth.

   The Australian Greens' population policy does not argue for pursuing economic wealth by population growth, noting "Population policy should not be primarily driven by economic goals or to counter the effects of an ageing population" and "The continuing rapid increase in the human population has the potential to adversely affect national or international outcomes in environmental sustainability, human health and welfare, and other areas. Current rates of resource use are not sustainable and are compounded by inequitable distribution of wealth and power".

   The support of the ACT Greens for a light-rail proposal that not only encourages but relies upon significant population growth for economic justification is puzzling.

9. No error/uncertainty estimates for value of benefits

   The business case makes a considerable effort to quantify risks associated with the cost estimates, yet makes no attempt to quantity uncertainty associated with benefits.

   In some respects, costs should be readily amenable to estimation: there is great experience with development both of transport infrastructure in Canberra and of light-rail.

   Additionally, costs will be firmed by the tender/contract process, so variations should be safely identified before a contract is signed.

   Benefits, on the other hand, take decades to realise, and are subject to the vagaries of technological development (which seem to have not been considered), human behaviour, population trends and wider economic forces. Further, the majority of the benefits of the light-rail arise from using contestable (and unclear) application of theorised benefits of agglomeration and other "wider economic impacts", the extensive use of which raises red-flags according to Infrastructure Australia guidelines.

   Hence, a balanced and professional business case would identify, discuss and attempt to quantify the major uncertainties and risks associated with each benefit. For example, how are the claimed benefits affected by, and with what probabilities, the following reasonably likely conditions:

   • the internet increasingly substitutes for travel
   • planned increased development of employment in Gungahlin, Belconnen, Woden, Tuggeranong and Brindabella Park, reducing the growth in commuter traffic to Civic, Parkes and Russell
   • population growth occurring at a lower rate than assumed
   • the claimed agglomeration efficiencies not being achieved
   • the popular uptake of shared autonomous cars for transport
   • increasing land development beyond the ACT border
   • negative economic and social outcomes attributable to population growth
   • lower than expected uptake of light-rail due to the inconvenience of changing modes (for example, current Gungahlin->Russell/Barton "Red Rapid" travellers do not need to disembark on Northbourne, walk to the Civic bus interchange then wait for and board a separate service to their destination).

   The business case leaves the reader with impression that the highest possible benefits have been calculated and "locked in". For example, "Light rail will lead to travel time savings: up to $222m million in present value terms ... over 30 years" on page 62 becomes "locked in" as a "bankable", 100%-certain travel-time savings of $222 in the BCR. Presumably the author of the "up to" statement was working on a probable range of travel time savings, of which $222m was the upper limit. (It is suggested above that an analysis of travel-time savings performed in accordance with ATC guidelines and latest ABS data shows that the maximum value of travel-time savings is likely to be much less, and population growth estimates and technology impacts may reduce this even further.)

   Not providing error-bars and probabilities for any benefit components totalling $984m in the business case naturally raises suspicions that the benefits may be achievable only if all optimistic assumptions are accurate, all contingencies which may effect the benefits have been identified, there are no "unknown unknowns" and there will be no unexpected developments in human behaviour, technology and the economy in the next 30 years. Such confidence is hard to reconcile with experience.

10. Lack of evidence for the dependency of land use and wider economic impacts with this specific transport option, rather than population growth in general

    Land use ($381m) and other wider economic impacts ($198m) comprise almost 60% of the benefits as calculated by the business case. However, no dependency is established between the specific transport option described in the business case, light-rail, and these benefits.

    These benefits arise from two sources: land use changes and increased population, both of which could be facilitated by from policy changes which can be put in place independently of light-rail.

    The assumption that the most economically and socially effective transport option to facilitate these two changes is light-rail is left unsupported by the business case. An earlier ACT Government submission to Infrastructure Australia demonstrated that these same outcomes could if desired, be facilitated cheaper and more flexibly by a dedicated rapid bus system, and this web-site presents strong evidence that autonomous cars can do the same, only much cheaper and more effectively.

11. Double-counting of benefits because land value increases are primarily caused by travel-time savings

    "Land value" benefits of $168m are attributed by the business case to land along the light-rail corridor increasing in value. The methodology described in Table 25 only considers the land along that corridor: it does not consider the possibility that increased demand for this land may reduce relative and even absolute demand for and hence the value of other land in the territory, which would require an offsetting reduction in ACT land values as a whole.

    More concerning is the high probability of double-counting, because the reason that land in this corridor may be more valuable is due to the perception of travel-time savings by potential buyers. But this benefit (travel-time savings) is already fully counted as $222m in the business case. To include it twice is an error.

    As explained by Dr Leo Dobes who teaches cost-benefit analysis at the ANU Crawford School of Public Policy in A simple sanity check on Canberra's light rail project (Canberra Times, July 16 2014):

    Increased property prices will occur if people living along the route value the availability of the light rail. Those travelling in different directions by alternative transport will not find it worthwhile to relocate to the light rail route.
     
    Residents and developers who own land along the route before construction will gain in wealth, but those wishing to buy property will encounter greater expense. And assuming that prices do rise, there may well be an offsetting fall in prices in other areas as people move away from those areas to the light rail route.
     
    Most important of all, counting increased property values as well as savings in travel time and the cost of petrol, would involve counting benefits twice. Double-counting occurs because increased property prices only occur due to the perceived benefits of reductions in costs. Prices would not rise otherwise.

    "Urban Densification" benefits of $72m are attributed by the business case to:

    • savings in electricity and water usage resulting from increased density
    • "agglomeration and productivity gains similar to those captured as wider economic impacts by encouraging firms and workers to locate in closer physical proximity" (page 100)

    No breakdown is provided as to the contribution of each benefit. The first benefit sounds reasonable: less electricity and water is generally used, but it is questionable how much of this is a economic benefit not captured by the separate benefit of increased land value. That is, given two properties, one of which requires the owner to use more water and electricity, other things being equal, then the more "efficient" property has a higher value.

    The second "agglomeration and productivity" benefit seems indistinguishable from the usual benefits covered by the traditional agglomeration benefits, and also from travel-time-savings. As described, the "closer physical proximity" of firms and workers gives rise to precisely the agglomeration benefits separately accounted for under "Agglomeration benefits" ($165m) and as part of the travel-time savings ($222m)

    Without a coherent explanation of why these benefits are not being included elsewhere, it is difficult to see why urban densification benefits are not also being double-counted.

12. Reliance on subjective and unsubstantiated argument

    Amongst the subjective and unsubstantiated arguments put forward in the Capital Metro business case are:

    1. Rail tracks are permanent

       "The permanently fixed nature of light rail tracks which provide certainty for residents and investors. A quantifiable increase in residential and commercial property values has been demonstrated in areas in close proximity to light rail alignments. The same increase in land value does not occur from new bus routes." (page 71)

       The implied contention is that a bus route could be removed from an area, leaving residents and businesses stranded without public transport. However, in what cases would this happen? Presumably, only if there was insufficient demand to justify the service.

       As this long list of torn-up and abandoned Australian tram lines shows, rail has the permanence of a snow-flake in the Sahara. Large tram networks in Adelaide, Brisbane, Hobart, Perth, Sydney and many regional centres have come and gone, as have "heavy" rail lines. At the top of the imaginary competition ladder, "Australia's most transient transport infrastructure", is rail, just ahead of lighthouses.

    2. Light-rail is the way to attract young families to Canberra by promoting alternative housing options

       "It is particularly important to attract young families to live in Canberra, where they will spend and support new business and services. To entice these families from larger cities, we must offer good employment and good, affordable living. While the landscape setting and environmental quality of our city is a drawcard, the lack of vibrancy in our urban environment, the limited range in housing and the cost of living can be discouraging." (page 54, quoting from the 2012 ACT Planning Strategy)

       The business case proposes (and relies upon for economic justification) that housing density along the light-rail corridor will be greatly increased above Canberra's current average. It also seeks to create an environment that will attract young families to Canberra.

       Young families were one of the demographic categories studied in the Grattan Institute's 2011 survey, What Matters Most? Housing Preferences Across the Australian Population. Figure 8 from their report reproduced here, shows that for this demographic to be attracted to Canberra, housing should match the characteristics of the typical current Canberra suburban dwelling:
       
       Figure 8 from What Matters Most? Housing Preferences Across the Australian Population

       Large, secure, detached housing with a garage and big garden near family and friends is what these young families want. The Capital Metro business case asserts otherwise, but without supporting evidence.

    3. Light-rail enhances the "gateway to the Capital"

       "Elements of Northbourne Avenue may represent a sub-optimal entrance to our nation's capital. Components of the original development that have taken place along Northbourne Avenue during the post-war year are visually unappealing, adversely impacting first impressions of the city.
        
       The sub-optimal gateway to the capital:
        
       - Provides a generally undesirable impression of the city, making it less attractive for occupants and visitors;
        
       - Creates a utilisation problem, as Northbourne Avenue's density of development is low compared to other parts of inner-urban Canberra and other cities in Australia and overseas; and
        
       - May contribute to lower property value growth along Northbourne Avenue." (page 59)

       The "original development" along Northbourne Avenue is the direct result of government policies. The business case augments the above commentary with this image of government-owned housing on Northbourne Avenue which has been left to run-down by the government:
       

       The government can readily redevelop or lease the land in question along Northbourne Avenue, setting whatever land use and planning restrictions the community wishes. This course of action is not dependent on light-rail. As the government's own submission to Infrastructure Australia showed, the "Bus Rapid Transport" (BRT) option could be implemented quicker and far cheaper (less than half the cost) with almost identical estimated benefits ($1187m for BRT compared to $1225m light-rail - Tables 52 and 53).

       If anything, a busway would provide a more visually pleasing vista than the rails, overhead transmission wires and poles required by light-rail. Both median strip light-rail and busway require extensive visually-intrusive traffic lights and crossings to safely convey public transport passengers from the centre of Northbourne Av to the sides of the busiest road in Canberra.

       It is hard to imagine either option improving on the current gateway, Northbourne's verdant median strip of majestic eucalypts hosting galahs and cockatoos.

       The report prepared by URS for the ACT Government, City to Gungahlin Transit Corridor: Concept Design Report (April 2012) strongly recommended a kerbside, rather than the median alignment that has been chosen for the light-rail in Northbourne Avenue: "Kerbside bus lanes or light rail lanes have been selected for Northbourne Avenue between City and Barton Highway to enhance its unique character as the primary National Gateway. ... Only transit operation in the kerbside lanes strengthens the multi-faceted role of the Avenue by meeting its ceremonial, commercial, activity and travel roles" (pages 52-53).

       ---

       Images of Northbourne Avenue, the "gateway to the Capital", that the Capital Metro business case decided not to use:
       

       Looking south along Northbourne Avenue, at the intersection of Macarthur Avenue / Wakefield Avenue [Source:Bidgee, Wikimedia Commons]	The green grass and trees of Northbourne Avenue, Canberra, njcull, Flickr, taken Dec 2012
       Late afternoon sunshine through the eucalypts on Northbourne Ave, Cimexus, Flickr, taken Apr 2008	Morning traffic on Northbourne Avenue, Dave Sag, Flickr, taken Jun 2013

       Images of the Gold Coast light-rail that the Capital Metro business case decided not to use:
       

       Poleland: The run down Queen Street to Wardoo Street. Not made any more attractive by the large number of service poles., Simon Morris, Flickr, taken Sep 2013

       G:11 crossing the Sundale Bridge into Southport, bound for GCUH. Surfers Paradise skyline in the background, Darcy Reynolds, Flickr, taken Nov 2014

Framing the contract to fairly reward the developers and operators if the Business Case is accurate, and to protect the community if it is not

Summary and conclusion