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Executive Summary

Executive Summary for the East Coast Very High Speed Train Scoping Study.

Table of Contents

EX.1 Introduction
EX.2 Creating VHST Networks
EX.3 Policy and Strategy Framework
EX.4 VHST Technologies
EX.5 The East Corridor
EX.6 Preliminary Corridor Analysis
EX.7 Operating Performance and Transit Times
EX.8 Project Costs
EX.9 Financing, Creating and Operating an EC VHST
EX.10 Demand for an EC VHST
EX.11 Defining the National Interest
EX.12 Regional Development Impacts
EX.13 East Coast Metropolitan and Regional Economic Development
EX.14 Evaluation of an EC VHST System
EX.15 Is there a place for an EC VHST in Australia's Transport Future?

Full Report - Phase 1-Preliminary Study Final Report

- PDF version [PDF: 41942 KB]

EX.1 Introduction

Very high speed railways on Australia's East Coast have been under consideration for over fifteen years. To date these have been brought forward by the private sector for consideration by governments None have proven commercially viable without significant public sector funding contribution and /or other forms of financial concession.

This study, commissioned by the Commonwealth Government, is the first step in developing the Commonwealth's own view on very high speed trains (VHSTs). It examines the issue from the perspective of the "national interest".

The study is broad and considers policy issues; international VHST systems; potential corridors; technology options; potential demand; national interest economics; regional development potential; financing and operating possibilities; capital and operating costs; and benefit to users, non-users and the Australian public at large.

In this study, VHST means train technologies and systems which can operate in the range from 250 km/h to 500 km/h.

The study aims to provide a realistic first assessment of the viability of an EC VHST by considering what role it might play in the future transport task in the East Coast corridor of Australia which stretches nearly 2000 km from Brisbane to Melbourne.

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EX.2 Creating VHST Networks

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VHSTs have been in operation since 1964, when the Tokaido Shinkansen commenced operations in Japan. That system has subsequently been extended to serve Japan's extremities. In Europe, VHST development commenced with France's Lignes a Grande Vitesse (LGV) system. German, Italy and Sweden have all developed national technologies and high speed rail systems. Today, a massive program of building high speed railways is under way in Europe. High speed rail projects are also under construction in Asia. In the USA consideration is being given to a large number of possible VHST projects.

Given the huge costs involved, it is relevant to consider the reasons why nations are investing in VHST systems. Overwhelmingly, it has been possible to identify simple but powerful national goals which a VHST system helps to satisfy. In almost all cases, the initial development has been to expand transportation capacity in corridors where existing rail and other modes are reaching saturation. National and regional development has also been an objective. In Japan, the Shinkansen is seen as a spine on which urban and regional development is supported. In Germany it is seen as an instrument of building national unity. Similarly, European unity is being promoted by building VHST links between countries. In all cases, Governments have had substantial involvement in financing the VHST systems.

To date in Australia, a common, powerful vision of the role of a VHST in the East Coast of Australia has not been held by the Governments which would be involved.

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EX.3 Policy and Strategy Framework

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The lack of such a common vision in Australia is, in part, a reflection of the fact that five governmental jurisdictions would need to be involved in an EC VHST. Furthermore, there are policy issues in relation to rail systems that go to the core of Australia's federal system of government. All five Governments would need to be totally committed to a project of the scale of an EC VHST and would need to contribute political, administrative and financial support. All five Governments would need to be involved in establishment of an entity adequately resourced to create an EC VHST. The entity and the project would need their own policy framework as none exists at present at any level of government. In addition to such policy addressing the transport and development aspects of a VHST, there are environmental policies which would provide a context for development and operation of a VHST system. Other environmental policies define national goals and objectives which a VHST could help to deliver.

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EX. 4 VHST Technologies

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VHST technologies were originally developed to address national needs though most European technologies are now being marketed globally. Japanese technology has been more domestically focused though it is now being exported to Taiwan. In all cases, significant government contracts and/or research funding have underpinned the development of such national technologies.

Two forms of technology are possible candidates for an EC VHST. In the 250 km/h to 350 km/h range there are several manufacturers producing steel wheel on steel rail (SWSR) VHSTs. For speeds between 350 km/h and 500 km/h there are two MagLev technologies, one German and one Japanese. These MagLev systems are totally incompatible, being based on entirely different engineering principles. Only the German Transrapid MagLev is close to being in revenue service.

SWSR technology has been characterized by competing views about the most economical means of achieving fast travel. One view held that expensive new straight alignments and powerful trains were necessary while the other favoured sophisticated tilting suspension on the rolling stock to enable faster times to be achieved on existing tracks or on less straight and less expensive new track. Such polarization has now largely disappeared, with all manufacturers being able to offer VHST products with any desired combination of power, speed and tilting capability.

A MagLev system would be closed, meaning that no other technology could operate on its infrastructure. Furthermore, there is no competitive industry at present for the supply of MagLev systems and possibly not for there maintenance. A SWSR VHST system, on the other hand, could operate on existing rail infrastructure or enable other rail operators to operate on its infrastructure. There is a substantial industry established to supply both VHST rolling stock and to build and maintain VHST infrastructure.

There are no emerging technologies which appear even remotely likely to challenge either SWSR VHST or MagLev VHST technology in terms of their passenger moving capabilities in the foreseeable future.

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EX.5 The East Coast Corridor

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If the VHST is to be created and funded as a public transport enterprise, it will need to relate effectively to the centres of population throughout the East Coast corridor. That is, there is a balance to be reached in terms of providing a service to people in the corridor and achieving minimum point-to-point travel times. Thus, current and future patterns of settlement are key determinants regarding corridor selection.

Environmental constraints will also be powerful determinants in corridor selection.

To achieve minimum transit times, a VHST alignment would need to be as straight as is practical. However, the topography of the East Coast corridor is such that the straightest routes encounter the most difficult terrain and bypass the existing centres of population. Consequently, any alignment will be longer than is optimal for capital city to capital city travel.

In each of the longest sectors there are two broad corridor options. Between Canberra and Melbourne there is an inland route via Albury-Wodonga and a so-called coastal route via the Monaro and Gippsland. Similarly, between Newcastle and Brisbane there is an inland route via the New England or a coastal route via the Gold Coast.

Immediately north and south of Sydney there are also options. To the south, possible routes are via Sutherland and Wollongong or via Campbelltown and Bowral. To the north, the existing route via Hornsby could be followed and a postulated route in tunnel under the Hawkesbury River has been examined, principally to assess the effect of a major route shortening.

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EX.6 Preliminary Corridor Analysis

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Three key planning parameters drive corridor selection and preferences: population size and distribution, cost, and environmental issues. However, it is demand and cost effective engineering that will initially drive provision of any form of EC VHST, with environmental considerations forming the basis for comparison of otherwise similar corridors.

In broad terms:

• Canberra to Melbourne - the inland corridor appears likely to be less costly to develop and less likely to have significant environmental issues;
• Newcastle to Brisbane - the coastal corridor appears more likely to connect with growing centres of population, to be less costly to develop, and to be manageable in terms of environmental issues;
• South of Sydney - corridors via Campbelltown and via Wollongong both address significant areas of population. Via Campbelltown would appear to involve lesser cost and lesser environmental issues;
• North of Sydney - environmental and terrain constraints make all corridors extremely expensive. Of the two considered, the existing corridor is likely to be the less expensive and more likely to be acceptable environmentally;
• Metropolitan entries and exits are crucial to all forms of VHST and need to be resolved if optimal time performance is to be achieved.

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EX.7 Operating Performance and Transit Times

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Modeling was undertaken, using TMG's MTRAIN simulation software, to determine the potential performance of trains of maximum speeds of 250 km/h, 350 km/h, and 500 km/h over indicative alignments in the nominated corridors.

For comparison purposes, the travel times of the existing 160 km/h XPT are about 10 hours 30 minutes between Melbourne and Sydney and 14 hours 15 minutes between Brisbane and Sydney.

For a limited stops VHST, the estimated intercapital transit times were found to be of the order of:

	Existing Air	250 km/h	350 km/h	500 km/h
Melbourne to/from Sydney	1.4	5.1 - 5.6	4.1 - 4.5	3.2 - 3.5
Brisbane to/from Sydney	1.5	5.5 - 5.6	4.4 - 4.6	3.4 - 3.6

Clearly, no VHST can match air on a terminus to terminus performance. Taking into account other components of overall travel time such as terminus access, gate waiting time and the like and then deducting a 20 minute "comfort bonus" in favour of VHST, even the 500 km/h VHST cannot match air for these intercapital journeys.

However, the real issue is not so much whether VHST could match inter-capital air travel times but whether it is able, as a result of its service characteristics and stopping patterns, to capture a unique and sustainable market in its corridor.

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EX.8 Project Costs

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Indicative costs for the construction of VHST infrastructure were estimated from a range of sources including Arup-TMG's database and published sources. A benchmarking analysis of international projects was conducted to determine the relative cost of an EC VHST as compared to similar VHST projects around the world. Costs for an EC VHST from Melbourne to Brisbane were assessed to range from about $32 billion to $59 billion for systems in the 250 km/h to 500 km/h range. These costs are for a full double track EC VHST and are in the lower half of international costs on a per kilometre basis. It is considered that lower implementation costs might ultimately be achievable through measures such as partial use of single track where traffic density permits. For this level of assessment variability on infrastructure costs should be assumed to be in the range -10% to +30%.

Rolling stock pricing was based on actual tender data where available or from authoritative sources. The cost of a notional 400-seat trainset of maximum speed of 250 km/h to 500 km/h was assessed to range from $40 million to $100 million. Operating costs were estimated using a "bottom up" approach and benchmarked against international data, adjusted on a parity price basis.

Operating costs in the 250 km/h to 500 km/h technology range were assessed to average about 6-7 cents per passenger-kilometre at startup, increasing as the business increases in scale.

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EX.9 Financing, Creating and Operating an EC VHST

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There are a variety of methods by which a VHST could be financed and created. The most common international model has been that government has effectively been the financier, developer, long term owner and generally the operator of the service and the system. This confers the ability to call competitive tenders for all aspects of the project and the service. In some notable cases - the Japanese rail system in particular - the government owned operation has been privatised. Ultimate control of the infrastructure assets has generally remained in public hands. A range of public private partnership financing arrangements are also possible with risks being allocated to the party best able to manage them. A key issue in determining the private sector's ability to participate in financing is the capacity of the project to generate adequate cashflows to service its debt and equity.

A project of the scale of an EC VHST would take between 10 and 20 years to create, provided that adequate construction phase funding were available and that the Australian infrastructure industry had adequate resources to apply to it. In practical terms, an EC VHST would be constructed in stages, with each stage preferably being operable as a VHST service upon completion.

A key issue would be the creation of the organization to operate the VHST service, long-term operations and maintenance being the core business of a VHST system. Globally, the private sector is increasingly taking over government transport businesses. Nevertheless, if governments are to be major investors in an EC VHST, it would be appropriate that they retain a close participation in all activities and phases of creating and operating the system.

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EX.10 Demand for an EC VHST

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A preliminary assessment of demand for an EC VHST was conducted, involving three key steps: estimating the inscope base travel market in 2001; projecting the inscope base travel market to 2051; and forecasting diversion to VHST from other modes and induced travel.

The inscope area covered a region from Melbourne to north of Brisbane and up to about 300 km from the coast. Total travel in 2001 is estimated at 158 million trips, comprising 17 million business trips and 141 million non-business. Sydney-Melbourne (6.7 million trips) and Sydney-Canberra (5.4 million trips) are the largest flows. The number of air trips in 2001 within the inscope market is estimated at 11.1 million.

Growth in air travel has been double that of road in the past decade. The number of trips on trunk intercapital air routes has doubled over that period, though trip numbers on regional air routes have been more volatile with some declining and some growing.

The base market is projected to double over the next 20 years and to double again by 2051. Air travel in particular is forecast to increase its share of both the business and non-business markets. A general shift to air is forecast on the basis of higher income levels, even with adjustment for an increase in fares.

Diversion to VHST was estimated on the basis of comparison of overall service level offered by a VHST to that of potential donor nodes. Ten diversion models were applied to 1240 separate travel markets. Demand, passenger-kilometres travelled, and revenue were estimated for 52 possible route combinations for 250 km/h, 350 km/h and 500 km/h technologies.

By 2051, the total inscope market is forecast to grow to 522 million trips p.a. assuming current population trends. VHST trips are forecast to be from 59 million p.a. to 75 million p.a. for the 250 km/h to 500 km/h VHSTs over the full corridor. By 2051, VHST is forecast to divert between 36% and 43% of trips and acquire 57% to 63% of its revenue at the expense of the air travel mode.

The demand assessment showed the performance of each VHST technology for the corridor as a whole and for its component sectors. Key findings related to network effects, by which a complete Brisbane to Melbourne service could generate up to 25% more demand than the sum of separate Brisbane to Sydney and Sydney to Melbourne routes. For the Sydney-Canberra and Canberra - Melbourne sectors, the network effect of having the full route in place is a 92% increase.

A large proportion of potential demand is shown to exist in the regions adjacent to Brisbane, Sydney and Melbourne. Forecast changes in distribution of population are not shown to have significant effect on total travel, with absolute population appearing to be more important in determining demand for an EC VHST.

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EX.11 Defining the National Interest

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An EC VHST has often been referred to as a project of national interest. Underlying this seems to be the notion that it is somehow more important than other projects or worthy of special consideration and financial support by governments. The notion of national interest projects has a long history in Australia. The most recent project of similar scale was the Snowy Mountains Scheme. Such projects, including an EC VHST, are not national interest goals in themselves. They achieve such status by being the means to deliver a high level strategic goal or set of goals. Examples of such goals are found in the Commonwealth Government's key objectives for the rail industry: a competitive economy, industrial development, better accessibility, improved safety and environmental sustainability. National goals are often set throughout the political process. For example, in Japan, the further development of VHST is seen as reinforcing the key economic axis of the nation.

The conventional means of evaluating the relative worth of projects to the nation is by cost benefit analysis. This is based on the premise that equivalent impacts are equal no matter whom they affect. It also involves decisions about the present worth of future costs and benefits through the selection of discount rates. High discount rates tend to devalue future benefits and costs relative to more immediate ones. It is argued that the use of high discount rates effectively mitigates against public investments, whose very aim is to change the present and to create a new future. Obviously, if an EC VHST could demonstrate its worth at "normal" levels of discount rates and also be clearly a means to satisfy national strategic goals, which may not be satisfied without it, it could be an economically attractive proposition for government investment. Alternatively, it may be appropriate to apply lower discount rates in assessing the worth of the project on the basis that the national interest benefits are keenly sought and can be supported through the political process.

There is a body of evidence to suggest that economic benefits beyond those of merely an effective transport mode can accompany development of a VHST but that these do not eventuate in the absence of a supportive policy framework.

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EX.12 Regional Development Impacts

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Regional Australia in the East Coast corridor is generally enthusiastic about a VHST and it is widely held that such a project would be of significant economic benefit to those locations it serves. Equally, there are fears about not being served and consequent negative effects on regional and local economies.

The evidence from international experience is not so clear-cut about the benefits. Recent OECD research into this issue reported that:

"a clear objective for an infrastructure project concerning regional development, including the context and specific strategic needs of the region is necessary. Further, these objectives should also include their relationship to other policies, sectors and tiers of government and the impacts of the project should be evaluated against these broader objectives."

This suggests that a VHST is a component of stimulating economic growth but that other factors are also relevant. Examples of such factors are economic stability and strength in the local community, coordinated planning for development, and a strong and educated workforce.

Nevertheless, there are well documented examples of development being stimulated around VHST stations, increased tourism in regional centres, increases in service industries, and relocation of businesses to regional areas consequent on VHST construction.

There are also examples of negative effects on regions. In one case, the VHST sufficiently changed accessibility to influence a corporation to shift back to the major cities leaving their staff to commute.

Regional development is most likely to result from a VHST project when it is accompanied by supportive policy and positive actions by governments.

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EX.13 East Coast Metropolitan and Regional Economic Development

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An assessment is made of the possible effects that an EC VHST might have on the regions through which it could pass. As noted in Clause EX.11, such effects are not necessarily a direct outcome of a VHST and would require supportive policy and actions to bring them about.

Some examples drawn from the assessment are:

• A VHST might strengthen transport linkages and reinforce growth in South East Queensland and beyond into Northern NSW;
• The Hunter region would enjoy significantly improved travel times to Sydney and may develop a long distance commuting market;
• Sydney's role as a global city could be enhanced and could benefit from improved links to the regions and to the other capital cities;
• The ACT region could benefit by the linkage of its concentration of highly educated workforce and research facilities to the commercial opportunities in Sydney and day tourism to the ACT could also be enhanced;
• The Riverina and North East Victoria regions may enjoy some increased tourism and, for those regions closer to Melbourne, the possibilities of long distance commuting and better access to high quality social infrastructure in Melbourne may be benefits. A VHST would not affect the other major economic drivers such as agriculture in this region (nor in other regions); and
• Melbourne's benefits may come principally from its enhanced connectivity to the ACT and to Sydney. Benefits could include increased tourism as well as better access for skilled workers who may commute from longer distances.

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EX.14 Evaluation of an EC VHST System

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An EC VHST is forecast to capture a significant part of the future transport task in the East Coast corridor. Its market share comes principally from a reduction air travel in the corridor. For example, by 2021, after a notional ten years of operation, a 350 km/h EC VHST is forecast to generate 34 million trips per annum, of which 13 million will replace growth in air travel. By 2051 VHST is forecast to have 66 million trips double the trips by air. The highest inter-capital flow would be between Sydney and Melbourne.

The highest demand assessed for 2021 was 40 million trips over the full corridor, assuming 500 km/h technology and the shortest route options via Wollongong and the coastal routes north of Newcastle and south of Canberra. The heaviest individual corridor loading, however, would occur on the sectors immediately north and south of Sydney.

A VHST could generate a range of economic benefits such as passenger timesaving, air and road decongestion, reduced road accidents, and reduced greenhouse emissions. However, revenue and user benefits are of an order of magnitude greater than the benefits to the public at large, costs being dominated by infrastructure capital cost.

As an example, the following findings emerged from economic evaluation of 350 km/h technology, a discount rate of 7% being applied:

• No combination of costs and revenue delivers a positive net present value (NPV) on a simple cashflow financial assessment. The full Brisbane to Melbourne VHST project shows a financial internal rate of return (IRR) in the hands of governments of less than 2.5%.
• For the private sector to achieve a 15% hurdle rate on its investment it would be necessary that government fund around 80% of the full project and more than 85% of the Melbourne-Sydney and Sydney-Brisbane stages. This assumes that all surplus revenue would go to service private sector debt and equity.
• The full Brisbane-Melbourne VHST would yield an economic NPV in the range -$15 billion to +$73 billion (IRR from 4% to 14%). The NPV at 7% for the Brisbane-Sydney corridor ranges from - $13 billion to +$25.0 billion while that for Sydney-Melbourne ranges from -$11 billion to +$11 billion.
• Providing the system can be funded and put into service, revenues from the EC VHST service appear to be sufficient to cover operating costs.

At the macro level, the Brisbane-Sydney corridor appears to be the economically strongest service, apparently driven by the demand in the Newcastle-Sydney sector. However, the socio-demographic variables of this sector are such that its demand risk is high.

The full project has a significantly greater NPV than either of the parts, indicating that the more extensive travel possibilities and greater connectivity, especially in the Newcastle-Canberra corridor, increases revenue. In all corridors, users enjoy a significant multiple (approximately 2.5) on their fares, whereas the ratio of public benefits to publicly borne costs is in the range 0.12 to 0.25. 250 km/h technology is the most cost effective in generating demand in the short to medium range corridors (Newcastle to Canberra). The 350 km/h and 500 km/h are about equally cost effective in the longer range corridors in generating demand, revenue, and user benefits per dollar of capital invested. Taken across all sectors and stages, the 350 km/h technology appears to perform best on these indicators.

An EC VHST could have a significant impact on air services. An estimated 194,000 air traffic movements could be removed from Sydney Airport by 2021 of which 159,000 are estimated to be regional services to East Coast towns. An EC VHST could assist in avoiding the adverse environmental effects of airport expansion but would generate a set of different effects spread over a very long corridor, some of which may be regarded as adverse by the specific communities affected as are airport effects.

A VHST would reduce road vehicle-kilometres travelled in the corridor. However, benefits of alleviating traffic congestion may not be significant as the greatest amount of road traffic replaced would be outside metropolitan areas - on the NSW North Coast and between Albury-Wodonga and Shepparton in particular.

Corridors can be selected to avoid major environmental effects, at the national, state and regional level of policy and planning.

A VHST may assist in the satisfaction of some broad national strategic goals such as improved regional accessibility and connectivity, enhanced transport safety; reduced dependence on oil, and enhanced environmental sustainability.

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EX.15 Is there a place for an EC VHST in Australia's Transport Future?

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Very High Speed Trains for intercapital travel have been under consideration for over 15 years in Australia. Such is the level of interest that the private sector has been prepared to invest heavily and to compete vigorously for the right to build, own, and operate such a massive project.

Business interests, regional government and communities continue to lobby Governments in support of the concept and its image as a means of generating growth in regional East Coast Australia is untarnished.

The scale of an EC VHST must not be underestimated. An EC VHST linking Melbourne, Sydney, and Brisbane is on the same scale as all of the Japanese Shinkansen constructed to date or the whole of the German High Speed Rail program and greater in length than the proposed California High Speed Rail project.

It would be, on any set of measures, a project of national interest and impact on national and regional economies. Its cost and risks would be of such magnitude and its construction and operation of such scale that it could only be achieved through the leadership of Australia's Commonwealth and State Governments working in concert to the common purpose. Under such leadership, there would be many opportunities for private-public cooperation and partnerships to deliver and possibly operate elements of the project.

It has been shown that an EC VHST could capture a significant part of the future East Coast travel market and provide relief to the other modes. International experience indicates that economic growth in a VHST corridor can occur but requires more than just construction of the VHST to be realized. The project appears to have economic merit, if it can be funded. Nevertheless, there may be alternatives which are more affordable and which offer greater public benefits.

For these reasons an EC VHST could have a place in Australia's transport future. The securing of a place for an EC VHST in Australia's transport future would be dependent on whether or not it could become an integral part of a vision and action plan for a new paradigm of development, mobility, and transportation connectivity in the East Coast corridor.

An EC VHST will not achieve such status in the absence of political vision and leadership, long-term bipartisan political commitment, the full participation of all Governments and the collective will and skills of Australians.

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All photos courtesy of UIC except Transrapid is courtesy of Transrapid Australia

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