New rail tunnel may be privatised

A NEW $7 billion rail tunnel for Melbourne could be privatised under funding options being considered by the State Government and supported by public transport group Metlink.

A NEW $7 billion rail tunnel for Melbourne could be privatised under funding options being considered by the State Government and supported by public transport group Metlink.

The news comes as the Government refused to rule out fare increases to help pay for the proposed mega-tunnel.

Metlink's submission to Sir Rod Eddington's east-west transport inquiry has included private financing options for rail projects in Melbourne.

Metlink chief executive Bernie Carolan said the proposed rail tunnel from Footscray to Caulfield was an attractive private financing opportunity because it was a "stand-alone" line and not an add-on to an existing line.

"This sort of rail tunnel proposition lends itself to it (private financing) more than most public transport initiatives, simply because it is stand-alone," he told The Age.

Rail lines in Sydney and Brisbane have already been built using private finance.

Metlink is a strong advocate of the rail tunnel proposal. While it would prefer public funding for the project, it would support private finance to ensure the line is built.

The Government has not ruled out raising public transport fares to help pay for new infrastructure.

Melbourne's water bills are expected to double in five years to pay for new water infrastructure - including a privately financed desalination plant - and a similar cost-recovery model could now be under consideration for public transport.

Sir Rod's transport report suggested a toll on public transport tickets could be used to help pay for large rail projects.

"The study team considers a ticket levy to be a logical and practical revenue option that warrants further examination by the Victorian Government," the report said.

While the operation of Melbourne's train and tram system was privatised by the Kennett government in 1999, the State Government has retained the ownership of the tracks and trains.

Under the private funding model for the proposed rail tunnel, a private consortium, which could include investment banks and superannuation funds, would own the rail line for up to 30 years and receive payments from the Government for use of the line and new stations.

Melbourne's Southern Cross Station was built under a public-private partnership model that included income from retail outlets. The proposed train line and stations could also include retail space to help pay for the project, industry sources have indicated.

Public Transport Users Association president Daniel Bowen said a privately built rail line would have to demonstrate benefit to passengers.

"As with the privatisation of the operating companies, there is nothing necessarily wrong with that as long as the outcome is good for passengers and taxpayers," he said.

He said that while he had yet to be convinced the new rail tunnel was justified, if the tunnel project did go ahead it was important public transport costs did not rocket.

"So you are not stinging passengers for that infrastructure given they are already paying high fares," he said.

A spokesman for the Government said it was not ruling out any funding options. "We want to make decisions which address infrastructure needs but also deliver a strong, secure and sustainable future," he said.

RMIT transport expert Paul Mees said the Eddington report made it clear that increased fares were under consideration to help pay for new public transport projects.

Opposition Leader Ted Baillieu said he did not oppose public-private partnerships, but he could not say whether a fare increase could be justified for public transport projects without knowing the cost of the project.

KEY POINTS

? The rail tunnel would run from Footscray to Caulfield.

? Metlink is a strong advocate of the tunnel proposal.

? Rail lines in Sydney and Brisbane have been built using private finance.


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