A leading French train manufacturer says it’s difficult to attract private funding for very fast train projects.
For very fast trains to ever leave the station, Australian governments would have to foot most of the $114 billion price tag.
A leading French train manufacturer says in the current environment public-private partnerships (PPPs) don’t work for very high speed rail projects.
They are too expensive and take too long to give returns even if the venture is profitable, Alstom Transport president Henri Poupart-Lafarge says.
The amount of private equity is beyond the capacity of almost all investors and the debt takes 30 or 40 years to mature.
“Even in Australia, which is the country of a number of infrastructure funds and big funds like Macquarie and so forth, I’m not sure they would be in a position to really put this amount of money in,” he told reporters in Paris.
An Australian government report released last year on the proposal to link Brisbane, Sydney, Canberra and Melbourne by high speed rail estimated it would cost $114 billion and not be finished until 2065.
The Abbott government has indicated its support and started to preserve a land corridor for the line.
Mr Poupart-Lafarge said it was important to have airports on board with high speed rail projects for them to be effective. But this was unlikely if airports didn’t have congestion problems.
“Where it works with very high speed is because the airports themselves are happy to see some short distance trips being taken out of their own platforms to allow some space for the long distance ones,” he said.
“If you have no limit on your airport capacity then it’s more complex.”
Around the world, there was a lot of excitement about high speed rail about 10 years ago but there is no market now.
Mr Poupart-Lafarge cited the case of Brazil, where the government is now guaranteeing 95 per cent of the financing for its high speed rail project.
It started with a full PPP, then took out the infrastructure component when it couldn’t attract private investors.
Later the government said it would guarantee 70 per cent of the debt for operations and maintenance and contribute a substantial part of the capital.
“It’s a PPP except it’s a very, very small P for private and a big P for public,” Mr Poupart-Lafarge said.
In Argentina, the enthusiasm for high speed rail has waned as people wondered whether the government wouldn’t be better off spending the money on upgrading existing urban rail lines.
A similar argument is happening in India.
However, he said the perennial issue in Australia was not yet a lost case, with a growing appetite for public transport.