Here comes a very fast train! (Please, save us!)

 

Proponents of Prime Minister Albanese’s proposed $90 billion “very fast train” between Sydney and Newcastle must either be extraordinarily optimistic or extraordinarily well paid to promote it. It is hard to believe that anyone could honestly support such a proposal without financial incentive.

Too harsh? Everyone is entitled to an opinion, of course. But some opinions—for example, the belief that the earth is flat—are also open to ridicule. Entitlement does not guarantee credibility.

That this utterly risible proposal has been allocated $60 million for a business case plus a further $600 million for detailed planning before a cent is spent on actually trying to build it, is an insult to the democratic process. No one voted for what is shaping up as Australia’s most expensive infrastructure project - ever. If you thought the blowout of Snowy Hydro 2.0 from the $2 billion first announced in 2017 to the now $40 billion and 7 years late outlook was bad, this will be worse. It’s a vanity project of the Prime Minister of the highest order. “I will not be the Prime Minister when high-speed rail is finished but I am determined to be the Prime Minister who starts it,” he said earlier this year. Is that a promise or a threat?

Here are some details of what’s proposed: a 190 kilometre new fast rail connection from Newcastle to Sydney which will include 115 kilometres of tunnels and 38 kilometres of bridges and viaducts. Let that sink in. The primary rationale seems to be to alleviate the housing pressures of Sydney by opening up 160,000 new homes in the Newcastle area, so that people can live more cheaply there and commute to work in Sydney. Somehow, this is supposed to create a massive economic uplift – which it will, chiefly for the consultants who will enjoy riding this gravy train to its inevitable cost and time over runs.

The train promises to cut the train trip time from Newcastle to Sydney from around 2.5 hours to one hour. Driving the same currently takes 2.5 hours. The current regular air service by the regional airline operator takes 40 minutes – and this is evidently a commercial route (that is, not subsidised).

Why turn Newcastle into a dormitory for Sydney city centre office workers at a cost of $90billion (before catastrophic cost blow outs) when you could instead create more jobs in Newcastle, for much less? Imagine a Newcastle economy offering zero payroll taxes (estimated by Ai at $500m pa) and no land taxes ($350m pa). Do you think that might attract a few more jobs to the region? In fact, for $90billion, imagine the value of economic opportunity you could unlock in countless regional cities and towns across the country?

Proponents will point to the Eurostar connection between London and Paris as proof that fast rail can work. Yes, but each of those cities are metro regions of around 14 million people – which is a total market served of near 30 million - more than the entire population of Australia today. Or proponents might point to Japan’s Shinkansen – which services a combined population of 90 million people across several key cities. Or they might tout the Beijing-Shanghai high speed rail corridor – which serves a combined 150 to 200 million people. None are relevant to Australia’s population – now or projected – or our geography, and certainly not our economy.

You would be forgiven that the Prime Minister at some stage picked up the script for the episode of ABC TV’s “Utopia” which satirised the very fast train, but he mistakenly thought it a solid sounding idea. You just can’t make this stuff up. Here’s a Youtube link to refresh your memory: https://www.youtube.com/watch?v=8av3knflbQo

Instead of vainly grasping at examples that lack relevancy to shore up support, how about we think about some more local experiences? Melbourne’s proposed suburban rail loop was first announced in 2018 as a $50 billion project. It is now estimated by the Victorian Government’s Parliamentary Budget Office to cost a likely $216 billion in construction costs plus 50 years of operating deficits (losses) – for the first two stages.

Closer to home, Brisbane’s Cross River Fail was promised over and over again to be a $5.4 billion project that would revolutionise the network across SEQ. Passenger services were supposed to start this year. Latest cost estimates are a total program cost of $19 billion and a completion date of 2029.

Breaking the mould was Brisbane’s Moreton Bay Rail line – promised by eager-to-be-elected politicians for 130 years – and which was finally opened only a few months behind schedule (or 130 years late depending on how you look at it) in 2016 and only 15% over budget. But when first proposed, it was promised to carry around 10,000 passengers per day rising to 18,000 by 2031. Early usage after opening in 2016 was far lower, at roughly 5,000 daily passengers – and the number hasn’t changed over time much despite the advent of 50c fares and substantial population growth.

Interestingly, the business case was based on the assumption that more people would use the service to commute to the city centre for work (sound familiar Prime Minister Albanese?) Premier Jackie Tradd said at the time “A project like this, that will see 600 new trains go from the Redcliffe Peninsula to the city CBD every week, is a fantastic initiative for workers in this area.” In actual fact, rather than some 70% of users being commuters to the city centre as expected, estimates are that only around 30% are for this type of commute: the balance are local or inter suburban journeys. As always, the idea that people live in outer areas because they have no choice and do so for affordability only, and endure long commutes to city centre jobs, was a furphy.

(As an aside, when opening the Moreton Bay line, then PM Malcolm Turnbull said: “Realistically, someone could jump on a train here in Kippa Ring and use our public transport network to visit the beaches of Gold Coast or Sunshine Coast.”  Sure Malcolm, carting all your eskies and cabanas on the train, changing at central, and being dumped at Robina sounds like a fab way to enjoy the beach. Oh, did I mention this is the same PM who gave us Snowy Hydro 2.0?)

As for Cross River Rail, the original promise of an extra 52,000 passengers in the morning peak is looking shaky, as is the projected 95,000 by 2036. The current morning peak accounts for around 35,000 to 45,000 passengers – well below the original business case assumptions and this notwithstanding the advent of 50 cent fares. The extra stations will be great for the convenience of those working near them, or for occasional major events, but it is hard to see any of the original passenger projections getting remotely close to being realised.

Maybe our Prime Minister should spend some time talking to California Governor (and US Democratic Presidential aspirant) Gavin Newsom about his proposed Los Angeles to San Francisco high speed rail? First proposed in 2008 at a cost of $33 billion, and serving a combined population of 30 million people, latest estimates put the total cost at above $100 billion and maybe as much as $200 billion. It was originally said to be completed by around 2020, but it’s now looking more like 2040. So a final cost that is four times the original estimate and two decades late. To trim costs, recent reports suggest the twin track rail connection will now become a single track – dramatically cutting speeds and network efficiency. The fast train has been slowed down, even before it started.

With a couple of exceptions, there’s something in common with all these: they are championed by politicians, not demanded by the people. They involve obscene amounts of taxpayer dollars and are run by government agencies, with consistently dismal delivery records and almost none come close to meeting their original assumptions.

With an economy looking distinctly sick at present, and with the Federal budget blowing out due to unrestrained spending (and increasing taxes to pay for it) is this really the time to indulge a Prime Minister’s whim which even the most generous supporter must surely question? Unless they’re getting paid to support it that is.

Postscript: no sooner had I finished the research and write up for this, that we got news the Queensland section of the proposed Inland Rail freight project has been canned. According to The Courier Mail: “More than 30 years after the multi-state freight route was first proposed and with more than $2bn already spent, Labor says the cost for the full 1600km project had blown out to more than $45bn and would take at least another decade… As of 2023 more than $2bn had already been spent but an independent review warned the project’s costs had grown from $16.4bn to $31.4bn in just two years… A new analysis concluded it would cost in excess of $45bn and take until 2037 to deliver in full.”

The one thing rail is good at in this country is freight. Massive loads, moving slowly, over great distances. So the rail freight project that’s got validity and that's actually started is dumped but the Prime Minister’s $90 billion thought bubble is to proceed.

I promise, I’m not making this up.

 

 

What’s wrong with image? (The big retirement lie?)

 

Ten years ago I did a study into ageing and wealth. At the time, I called the study “old poor and lonely” – given this more or less summed up the picture for the typical retiree. Surely, a decade later on, things have much improved?

It depends on where you sit. Only a third of people aged 65 today are what you’d call self-funded retirees (in that they do not rely on the pension). This doesn’t mean they are well off though: fewer than 10% of superannuation accounts of people retiring today are of more than $1million. The superannuation industry tells us that for a “comfortable” retirement, you should ideally have around $700k in super for a couple. This assumes you own your own home outright.  The median (halfway point) of superannuation accounts of 65-year-old male today is only around $250k. For women, it’s less – around $180k to $200k. So half the retiring population has less than that. Think about that.

Roughly two thirds of today’s 65-year-olds will retire with some sort of age pension – full or partial. Those who are primarily reliant on the age pension are roughly half the retirees.

Dig further into the stats and we find that around one in seven retire as renters. This is much higher amongst singles, especially women. Around 60% to 70% retire owning their home with no mortgage, and the rest have a mortgage going into retirement.

Around in one four of today’s retiring 65-year-olds are single. This increases for older cohorts because women live on average longer than men. And while on that, those retiring at 65 today can expect on average to live another 20 years. That’s a lot of retirement to fund.

For the typical Aussie retiree in 2026 it’s not a brilliant picture.  Of course, the super industry, financial advisors, cruise ship marketers (!) and others who feed from the retirement savings of Australians will typically invest more energy targeting the top 10% with solid super balances and who own their own homes. Preferably expensive ones.

For the rest, however, who may have slogged through life in jobs that put stresses on their bodies, or who lived in rural and regional areas, or even those who lived in the big cities but on modest incomes – retirement will be a long way from the happy images of pastel cardigan wearing white haired seniors with perfect teeth strolling the beach with their designer dog and not a care in the world.  

Who can blame them for their political annoyance when they read of extensive NDIS fraud, bungled infrastructure projects costing billions, wasteful government advertising, unrestrained immigration or outrageous salaries for senior Canberra bureaucrats or University Vice Chancellors? Little wonder so many seem have drifted to the angry political corner of One Nation.

Australia is moving away from its more egalitarian roots to a society where a smaller number of haves are calling the shots. Half the country shares in only 5% of the national wealth. The wealthiest 10% control about half the nation’s wealth. The retirement story reflects this divide.

Sure, for those with small super accounts but who own the family home, there are ‘downsizing’ provisions which allow them to tip an extra $300k per person ($600k for a couple) into super if they sell the family home. But they still need to live somewhere, and the options for seniors are limited. An independent living unit will set you back typically around $500k, and easily more for the more salubrious product. Plus there are the weekly fees and the deferred management fee to think of. The industry caters more for the higher end.

If you have to move into aged care later in life, the options shrink again. Just getting a place in aged care can be harder than getting your first born into an exclusive private school: waiting lists have a different meaning if you’re in your late 80s and urgently need supported living. The state of our aged care system in Australia and some of the abundant horror stories tell you that, unless you’re reasonably wealthy, you’d probably prefer to be dead than going into some of the aged care places.

Why my sense of dismay? I’m not painting a picture of my own future (at least I hope not) but I am deeply saddened that a nation with such abundant wealth and resources has so dismally failed the generations that helped build that very wealth for others to squander. In the ten years since ‘Old, poor and lonely’ it looks very much as if we have done little to change what was a predictable future.

Clint Eastwood famously said, “getting old is not for sissys.”  But that doesn’t mean we should make it a herculean challenge for those who live through it.

Changing work and changing demography = changing cities

How much longer will cities be powered by office workers in a central location?

The history of cities is a long one, but the urban form of a mono-centric city that houses the best knowledge workers and professional minds, serviced by unrivalled inner urban amenity and metro wide transport networks, is relatively young in historic terms. It may also be short lived.

The pre-industrial city existed for several hundred years until around the early 1700s, and was largely a trade and agriculture hub, powered by people and animals. The industrial city of the late 1700s to mid 1900s was powered by mechanisation, factories and manufacturing, with workers living close to the places of industry. Think the London of Charles Dickens. This lasted maybe 250 years. The post-industrial city, powered by growth in service industries, finance, information and research, lasted roughly from the 1960s until recently – a period of maybe just 50 or 60 years. This is what drove demand for office buildings the world over. This is our world now, but it is changing fast.

Sydney of the early 1900s may seem an eternity away but this was only just over 100 years ago. 

Two recent media stories drew attention to forces which are inevitably, irresistibly reshaping cities again. Post-Covid changes to workforce dynamics, the rapid deployment of Ai, and the unrelenting march of demography (the ageing population) place us at the start of a new era of change.

The first story was by Hari Hara Priya Kannan, Data Scientist at The Demographics Group, writing in The Australian. “The story shaping commercial property markets is not the headline increase. It is the age composition beneath it,” she wrote.

“An expanding 70-plus cohort supports sustained demand for healthcare infrastructure – general practice clinics, specialist consulting suites, diagnostic facilities, rehabilitation centres and day surgeries… Suburban medical precincts, particularly in established middle-ring suburbs, are likely to benefit…

Growth in the 55-69 and 40-54 cohorts reinforces demand for professional services, financial planning, insurance, legal practices and wellness providers. As workforce participation among mature workers remains elevated, demand may shift toward flexible and decentralised office formats. At the same time, slower relative growth in the 25-39 bracket moderates expectations of rapid youth-driven expansion in inner-city hospitality and high-density retail precincts.

Office markets face a nuanced adjustment. As the share of older workers rises, demand may tilt toward accessible, flexible and decentralised formats. Commuting intensity may shift as retirement ages extend but full-time CBD attendance moderates.

Mixed-use precincts integrating residential, healthcare and essential retail may align more closely with demographic reality than single-use CBD developments.”

The second story dealt not with demography but technology, and specifically the impact of Ai. “Morgan Stanley axes thousands of jobs as AI up-ends white-collar work” was the headline, also in The Australian.

“The “great cull” is eliminating thousands of white-collar roles at major Australian companies… While jobs are also being axed, businesses are demanding a radically new AI-fluent employee, warning those who fail to adapt will become obsolete…

The mass sackings have sparked a new industrial revolution, with some executives warning of more to come as bots and algorithms consume human roles.”

Ai’s capacity to perform administrative tasks at ease and with speed, will surely take a toll on many thousands of jobs traditionally harboured in CBDs, but elsewhere also. Some estimates suggest over 40% of Australia’s administrative and support service roles could be replaced by Ai by 2030. And the Ai revolution is only beginning, with moves into medical, education, finance, even creative industries being impacted at light speed.

Office workers of the late 1960s. A little over 50 years ago but now nearly all these occupations are gone. 

Yes, Ai will create new, previously unimagined opportunities for some. For others, who relied on administrative skills, it will be a rapid and uncomfortable readjustment. The concentration of wealth and privilege in the hands of an increasingly smaller share of the population has been underway for some time. Ai may accelerate that inequity.

Today's "office worker" doesn't even need the office. They split their time between home and the office. 

The history of the evolution of cities reflects the history of work and occupations. With Ai impacting occupations in such a profound way, it is inevitable that city-wide changes will follow. Combined with our changing demography (“demography is destiny” the saying goes) a fundamental reshaping of our cities around what type of work is done where and by whom is surely underway. Already we can witness the replacement of traditional retail tenancies in suburban shopping districts with the rapid growth of health and allied health services. GPs, dental, physio, pharmacy, blood pathology, medical imaging, personal care – these are the new retail specialties, with growth driven by demography.

And in CBDs, the impact of ‘work from home’ along with rapid technological innovation appears to be equating to fewer overall CBD workers. The best and brightest will continue to drive demand for premium office space in the most amenable parts of the CBD, but the future of older style buildings in less prized locations is uncertain. Will they remain as offices, or be converted to schools, healthcare or possibly residential?

Options for unwanted CBD office space in secondary buildings could include conversion to education, health or possibly residential uses. But will they be reborn as refurbished offices? Who would fill them? What types of occupations that cannot be done by Ai?

What does seem certain is that CBDs are going to be less about the ‘business’ and increasingly more about the amenity. Inner cities are continuing to add enhancements from both public and private capital while many suburban and regional centres watch on with envy.

New apartments targeting the wealthier members of the community are viable only in inner city markets because wealthy purchasers can afford them, and because this is where many of them want to live due to the concentration of amenity in the inner city and proximity to their high end workplaces.

Meanwhile, modest new dwellings in many suburban areas struggle to be viable because development costs exceed the capacity of the local market to pay. 

In a similar vein, public capital devoted to new or improved cultural, recreational, transport, education, dining, entertainment and open space assets seems invariably to gravitate to inner city locations. This is despite the declining numerical weight of CBD/inner city jobs relative to a wider region, and despite the shifting demography which is also drifting away from centres.

The Hunger Games contrasted the excessive, indulgent wealth of monocentric The Capitol with the relative poverty of The Districts. Was this an allegory for the recent evolution of cities where wealth and privelege concentrates in urban cores which were only 100 years ago centres of industry and working class housing? 

Have we now reached a point in the history of the evolution of cities where the forces of change are now far ahead of our thinking? Are we still mentally of the monocentric mindset of the post-industrial city – despite all evidence to the contrary – and doubling down on infrastructure and private capital investment on that basis? Are we reinforcing that obsolete mindset with planning and other regulatory instruments which perpetuate that model and that period in time?

Change and evolution is impossible to resist. The new era of cities – the fourth industrial revolution – is upon us. We had better get used to it: it is time to think and act differently. There is no turning back.

Suburban centres will continue to evolve, and be home to a growing services, health and education based economy. The monocentric city will become polycentric. 

Do we need Elon Musk to help fix our planning systems?

I know the mention of Elon Musk can be triggering for some. Mention of planning laws is equally triggering, but for a great many more people. You will see the connection soon.

My first formal encounter with “planning law reform” was in the mid 1990s, when as a fairly new Executive Director of the then newly named Property Council, the case for planning reform was passionately promoted by the industry. Planning laws were - it was argued - overly complex, time consuming, inconsistent and riddled with costly process. Or so we thought. Oh, to have those bad old days back again.

The Government of the day introduced a reform package in what was known as the “Planning, Environment and Development Assessment Bill” (PEDA). We joked we should call it ‘the PEDA-file.’ The name was swiftly and wisely changed, into what would later become the Integrated Planning Act (1997).

Proponents hailed IPA as something of a revolution. It introduced what was billed as an ‘Integrated Development Assessment System’ (IDAS) which promised a more coordinated approach to assessing and approving development applications. It also introduced a less prescriptive form of land use control, via a system of performance-based planning – the idea being that how a project performs against outcomes of sustainability, economic and community criteria is more important that prescribing what can and cannot be built on a particular piece of land. Environmental sustainability was also heralded as a key objective of the act.

The IPA promise of greater efficiency and transparency proved an abject fail, if the burgeoning number of planning law specialists, town planners and associated experts is anything to go by. Local governments resisted interference in their plan making and adjudication powers, while applicants were faced with a confusing labyrinth of overlapping assessment pathways under different regulations. Ambiguity led to community anger, and the government of the day played up to it by labelling all developers as ‘greedy’ for trying to do what the original act had promised.

It kept us busy at the PCA. The Bligh Government, under pressure to resolve the widespread dissent, worked up a new regulatory framework, initially under Deputy Premier and Planning Minister Paul Lucas, then Stirling Hinchliffe who took over as Planning Minister in early 2009. The new ‘Sustainable Planning Act’ was passed in late 2009. I recall Minister Hinchliffe joking to me that a core KPI of his for the new Act was that the word ‘sustainable’ must appear on every page at least once. I later learned he wasn’t really joking. While the industry continued to be blasted as “greedy developers” the Act was very much positioned for political appeal to the growing environmental movement. Planning was becoming a political plaything.

Once again, any promise of regulatory improvement was a fail. Complexity, confusion, process-led assessments which took extraordinarily long times to consider, and inconsistent outcomes flourished under the SPA. More planning lawyers, town planners, and related experts were now needed to answer the simple question: “what can I do with this piece of land?”

And so once more it was necessary revisit the regulatory framework, with the noble aims of simplicity and transparency front and centre. And with that, some years more of industry advocacy later, the Planning Act (2016) was passed.

Are we any better off now than we were back in 1997? In a paper I was commissioned to produce for the Australian Institute for Progress titled “FASTER, BETTER, MORE - Why it takes so long and costs so much to deliver the housing we need – and what we can do about it” I observed that:

The increase in complexity is illustrated by the length of many state planning regulations: for example, the Local Government (Planning and Environment) Act of 1990 was 120 pages in length. The latest incarnation – the Planning Act 2016 – is 430 pages plus 526 pages of planning regulations, plus 54 pages of Rules under the Act, 86 pages of Minister’s Guidelines and Rules and over 200 pages in State Development Assessment provisions. Further, there has been exponential growth in local government planning schemes and infrastructure agreements which can run to thousands of pages.

Lawyers I spoke with told me they didn’t really know how many pages of rules and regulations were now in force – just that it would be so many as to be impossible to count.

To deal with this level of complexity, the Planning Institute of Australia is now calling for more town planners. True, the complexity is such that what could once be performed by a trained administrative officer now requires a team of university-trained Town Planners. But rather than asking for more town planners, could it make more sense to call for less planning red tape? After all, the idea of a university educated Town Planner with a HECs debt now devoting their mind to what are often mindless administrative processes seems a terrible waste of human intelligence.

According to Jonathan O’Brien - founding editor-in-chief of Inflection Points - this increasing complexity has eroded the productivity of planners over time:

So, where to next? I cannot find a single person in the industry – either within government or private sector – who considers our current framework to be efficient, productive and clearly understood by industry and the community. Not a single one. Most will say it’s inferior to what we had 30 years ago. Little wonder supply of even the simplest thing you can do (build a house) is so choked.

Enter Elon Musk. The guy is frankly quite weird, but you can’t deny his achievements. An outstanding example of that is how he has driven simplification of rocket engines used for his Space X rockets. The original Raptor 1 engine from 2019 resembles a NASA style tangle of pipes and process that produced 185 metric tonnes of thrust. The latest version is lighter, simpler and will produce over 300 tonnes of thrust. This evolution took just 6 years.

NASA to some extent reminds me of an organisation that resembles our planning laws – they changed little over time, resisted innovation and meaningful reform, created a burgeoning bureaucracy with their own inter-generational career paths, and cost increasingly more to operate.  Along comes Elon Musk, who rethinks every process and challenges every article of rocket science faith, and whose Space X is now leading NASA in many respects. The Raptor engines are a visual symbol of how that looks in real life.

 

Which means it (planning law reform) is possible. But it will not happen by applying the ‘business as usual’ thought processes, or by inviting ‘the usual suspects’ to the reform table. The processes and people that created the problems we have today are not the people to reform them.

Musk's 5 Step Algorithm to Cut Internal Bureaucracy (from Corporate Rebels.com)

1. Question every requirement

Before changing anything in your processes, the first step of Musk's algorithm is to create clarity about every requirement that exists today.

That clarity can be made by attaching a person—and a name—to every requirement. That is, each requirement should come with the name of the person who made that requirement.

Musk: "You should never accept that a requirement came from a department, such as from 'the legal department' or 'the safety department.' You need to know the name of the real person who made that requirement."

Once that clarity is achieved—that is, when every requirement has the person's name attached—then you can start questioning whether these requirements make sense. No matter how smart or how 'powerful' that person is.

Musk: "Requirements from smart people are the most dangerous because people are less likely to question them. Always do so, even if the requirement came from me. Then make the requirements less dumb."

2. Delete any part of the process you can

The second step of Musk's algorithm is all about subtraction—a widely undervalued habit in management. In this case, it is all about deleting any part of the process you can.

In fact, it is all about deleting just a bit more than you feel comfortable with.

Musk: "You may have to add [parts or processes] back later. In fact, if you do not end up adding back at least 10% of them, then you didn't delete enough."

3. Simplify and optimize

Only when you have walked through steps one and two can you start by simplifying and optimizing (parts of) your processes.

This particular order of steps protects you from doing unnecessary work—it keeps you from improving (parts of processes) that you do not need in the end.

Musk: "A common mistake is to simplify and optimize a part or a process that should not exist."

4. Accelerate cycle time

The fourth step of Musk's algorithm is all about speed. It is about finding ways to speed up your bureaucratic processes.

"Every process can be speeded up," says Musk. "But only do this after you have followed the first three steps. In the Tesla factory, I mistakenly spent a lot of time accelerating processes that I later realized should have been deleted."

5. Automate

The fifth and last step of Musk's algorithm involves automation. Now that you have clarity about your processes and have deleted any unnecessary parts to speed up your bureaucratic processes, it is time to start looking for what you can potentially automate.

Musk: "[Automate] comes last. The big mistake in [my factories] was that I began by trying to automate every step. We should have waited until all the requirements had been questioned, parts and processes deleted, and the bugs were shaken out."