The two options evaluated in the Melbourne Metro business case for locating a new station adjacent to the existing South Yarra station (source: Melbourne Metro business case)
The two options evaluated in the Melbourne Metro business case for locating a new station adjacent to the existing South Yarra station (source: Melbourne Metro business case)

It’s an iron-clad certainty that initial estimates of the cost of building new transport infrastructure are way too low. There are many reasons for that, including deliberate understatement of costs and scope creep i.e. demands to increase standards or add features.

A current example of scope creep is the call for the $11 Billion (nominal) Melbourne Metro project to be expanded to provide another station at South Yarra adjacent to the existing one. Groups like the City of Stonnington, the local Member (Greens MP Sam Hibbins), the State Opposition and various advocacy groups argue the new line should provide the opportunity for travellers to interchange by transferring to the existing station at South Yarra.

Advocates advance a number of arguments:

  • The route of Melbourne Metro will pass very close to the existing South Yarra station before joining the existing Cranbourne-Pakenham rail line; providing an interchange station close-by is a no-brainer (see exhibit).
  • South Yarra is one of the busiest stations outside the CBD.
  • The local Forrest Hill precinct is rapidly densifying.
  • Providing opportunities for interchange between rail lines is a fundamental attribute of a metro.
  • The existing Cranbourne-Pakenham line, which Melbourne Metro subsumes, goes via the existing South Yarra station.
  • When it was in power in 2014, the Opposition’s version of Melbourne Metro – Melbourne Rail Link – included an interchange station at South Yarra estimated to cost around half the Government’s estimate.

The Government, on the other hand, says no to a another station at South Yarra. It relies on a number of arguments (see here, here, and especially this fascinating mem0 to the Transport Minister obtained by Sam Hibbins under FOI):

  • It would cost an extra $970 million nominal to build because of the intense development in the area (or $700 million if a lesser option – requiring a time-consuming walk across Toorak Rd to interchange – were used).
  • 94 homes and parts of the Jam Factory would have to be acquired.
  • The number of passengers who would benefit from an interchange station – and the number who would be disadvantaged by its absence – is small.
  • The benefits would be very low relative to the costs; the Benefit Cost Ratio is 0.3. That means each dollar of expenditure would return only 30 cents worth of benefits over the life of the project.
  • The Opposition’s proposed South Yarra station would cost a lot less ($380 million in 2015$) because its Melbourne Rail Link would’ve used smaller capacity trains requiring 164 metre platforms. Melbourne Metro will use higher-capacity trains, requiring 250-metre-long platforms (as a point of comparison, the long axis of the MCG pitch is 171 metres).
  • There are other interchange opportunities at nearby stations, primarily Caulfield and CBD South.
  • Users of the existing South Yarra station will enjoy a high level of service when Melbourne Metro opens. There will be a peak direction train every two minutes from South Yarra to the city. Passenger loads will fall from 100% capacity to 70% on average.

It would, of course, be nice to have another station at South Yarra and it would make existing residents and businesses in the area better off. It seems unfortunate not to capitalise on every interchange opportunity in Melbourne’s relatively sparse rail network.

But it’s hard to argue with a BCR of just 0.3. That’s much worse than the 0.45 BCR that the former Government estimated for the East-West Link motorway; some of those who are now calling for a South Yarra interchange station condemned the East-West Link for precisely this reason.

Almost $1 Billion is a huge amount of money. There are other socially useful things the Government can do with it that would actually deliver a positive return for the citizens of Melbourne and Victoria.

Melbourne Metro will provide interchange opportunities with other rail lines at two of its five new stations i.e. CBD North and CBD South. The other three new stations – Arden, Parkville and Domain – will provide the opportunity to interchange between trains and trams.

So much for the key arguments for and against. The public discussion around this issue intensified this week when the City of Stonnington announced it’s prepared a study that concludes more people would benefit from an interchange station than the Government says, and moreover, it would cost a lot less to build.

According to this report in The Age (see Melbourne Metro: South Yarra railway station must be included, rail expert finds).

Tens of thousands of extra commuters would benefit from an underground railway station at South Yarra, which could be built for as little as $400 million, new research has found…It would benefit an extra 65,000 passengers a day, the council’s report predicts.

If the City of Stonnington’s report can survive scrutiny, this sounds like great news. I expect everyone, including the Government, would support another station at South Yarra on that basis; the salient point is Prahran is an electorate that all parties feel they can win (it went from the Liberals to the Greens at the last state election).

However, Council hasn’t made the report available for review. All I could find after trawling its web site is the media release issued by Council. Why isn’t Council making the report available publicly? (update: Council has at last attached some docs to its media release).

The numbers don’t really matter though; Council’s interest is undoubtedly political. It wouldn’t be footing the bill for the new station so it doesn’t care about the BCR or the foregone opportunities the money could otherwise buy.

It wants to put pressure on the Government to build the station; the standard political tactic is to underestimate the costs and overestimate the benefits in order to appeal to those who assume it must be a good thing e.g. see Is this rail line too good to be true? and Does the proposed Rowville line make sense?

I don’t doubt the consultants Council has retained acted in good faith, but they didn’t write their brief and they don’t control how their results are used politically. Politicians will often “sell” an attractive cost estimate publicly without acknowledging the compromises involved e.g. reduced benefits, more impacts borne by a politically powerless group, or technical problems glossed over.

In this case, I have to wonder if Council arrived at its $400 million construction estimate by simply inflating the former government’s $380 million (2015$) estimate to 2016 dollars? As noted, what worked for that scheme wouldn’t work for Melbourne Metro.

Whatever the merits of the argument for Melbourne Metro to incorporate another station at South Yarra, it’s a clear illustration of how the scope and hence cost of projects can expand.