Stop the gravy trains! The high-speed rail study and consultants.

In the terms of reference to the recent study into the non-viability of high-speed rail from Brisbane to Melbourne it is promised that “It will draw on expertise from the public and private sectors”.

So, who did this study that concluded that Australia would need 50 years and 114 billion dollars to build a high-speed rail line that would make travel slightly longer and more expensive than just going by air?

The report was compiled by a gravy-train made up by AECOM and its sub-consultants (Grimshaw, KPMG, SKM, ACIL Tasman, Booz & Co and Hyder), all highly-paid private consultancies. There was no noticeable involvement of the public sector at all.

What is wrong with that? Everything. Private consultancies get paid for their answers, not their honesty. Just take AECOM’s strategic vision: “Our purpose is to create, enhance and sustain the world’s built, natural and social environments”. Lovely. Its a bit cheeky of course to have entirely contradictory elements (build and natural) in your mission statement as if they are not contradictory at all, but what do you expect from consultants? Honesty?

KPMG Australia then, what about their reputation for honesty? Its stated values are of course beautiful, full of words like ‘respect’, ‘honest’, ‘community’, ‘integrity’.  But what about its history in this kind of area? Well, its 2010 report into the mining tax was a great example of being paid-for-an-answer. It was selective, made false comparisons, and uninformative. My conclusion at the time was that “The report, and in particular the summary, is indeed not an objective appraisal but a piece of propaganda that was bought for a reason.”

So, it is a bunch of paid consultants that now tell us that it would take 50 years to build a high-speed rail line (whilst the Chinese took 4 years to build a longer one between Beijing and Shanghai). And how serious are its pronouncements? Well, if you use their own disclaimer, not very much for they say in their own disclaimer “The Study Team has not verified information provided by the Information Providers (unless specifically noted otherwise) and it assumes no responsibility nor makes any representations with respect to the adequacy, accuracy or completeness of such information. ”

So, it was given a set of assumptions and information by others and takes no responsibility for checking those, meaning that its conclusions could have been pre-cooked by those ‘information providers’, including the controlling ministry. How handy! How convenient to have such non-inquisitive consultants! So much for integrity!

It is basically ridiculous to have national debates on the basis of the words of hired guns. The Australian civil service should have something like its own independent budget office with the ability to calculate the effects of major infrastructural projects, as well as major tax plans.

We now in fact have a parliamentary budget office and I hope it grows into a substantial independent body that can get us out of these consultancy-lead shadow debates.


Author: paulfrijters

Professor of Wellbeing and Economics at the London School of Economics, Centre for Economic Performance

7 thoughts on “Stop the gravy trains! The high-speed rail study and consultants.”

    1. Good question. The Productivity Commission could have, and perhaps should have, made it its business to set up a proper tax-modelling unit, transport unit, etc. It chose not to go into that direction in the last 20 years.


  1. Isn’t the obvious thing to better connect airports to city transport networks to improve the air travel experience? The main advantage of rail is that it takes you city centre to city centre. But if all capital cities had rail lines integrated into their suburban systems to their airports, the city centre round trip is much better. Sydney’s airport rail is great. Brisbane’s is ok but need more frequency and lower price.

    And while we are at it, would could save a bundle getting rid of the airport security charade.

    But on your actual topic of the consultant gravy train, this is just one small example of what has become a massive industry. I should try and find some data on government consultancy fees.


    1. I agree its fairly toothless at the moment but it seems the right vehicle to take on this role. What would your suggestion be?


  2. I read the report and was disappointed in it but not only on the grounds you deduce. More than half of Australia’s population live in the three east coast capitals plus adjoining cities. Linking them up by a fast, non-polluting, non-congesting technology would be incredibly beneficial particularly if cars and plane travel becomes less viable for environmental reasons.

    Agglomeration externalities and improved communications could be realised with such a rail link particularly if we move to realistic carbon pricing and shift away from carbon-based electricity supplies. Your comments about cheap air fares are less irrelevant if air (and car) transport remained mainly carbon fuel dependent. The report, by the way, also emphasises the role of cheap air fares and includes the carbon costs of a rail scheme rather than possible carbon savings. The main positive externality the report considered was reduced traffic congestion in cities.

    The report suggested that a private firm would not undertake the project since the IRR was so low. Hardly surprising given that so many of the benefits were not privately appropriable.

    But yes it wasn’t much of a report. Indeed:

    First rule of cost-benefit studies in an era where private values are emphasised: Large infrastructure projects that deliver substantial social benefits are inevitably duds. Think small and think private.


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