Melbourne–Brisbane Inland Rail Alignment Study - Australian Rail ...

Sensitivity analysis
The following sensitivity tests have been performed to understand the impact of changes in key variables on
economic outcomes. Sensitivity tests 1-7 are based on the Infrastructure Australia guidelines contained in Reform
and Investment Framework: Templates for use by proponents - Templates for Stage 7 (released October 2009).
Others have been presented to reflect adjustments to key assumptions.
Table 38 Economic sensitivity analysis ($ million, discounted, 2010 dollars)
Inland Rail Economic BCR
Operations commence:
2020 2030 2040
1. Core appraisal (7% discount rate) 0.80 0.97 1.19
2. Discount rate reduced to 4% 1.52 1.72 1.93
3. Discount rate increased to 10% 0.48 0.60 0.77
4. Demand reduced by 30% 0.58 0.71 0.86
5. Demand increased by 30% 1.01 1.23 1.51
6. Capital costs decreased by 30% 1.11 1.35 1.63
7. Capital costs increased by 30% 0.63 0.76 0.94
8. Coastal route considered to be unconstrained in the Base Case – the core 0.77 0.92 1.08
analysis assumed that there will be capacity constraints on the coastal route in the
Base Case (‘practical capacity’ at 14 intermodal train paths per direction per day
around 2060). This test assumed capacity will not be reached on the coastal railway,
and that capital expenditure will occur to ensure this
9. Demand with more sensitive elasticity assumptions – ARTC elasticity
1.07 1.31 1.62
assumptions were applied as they were more sensitive than those obtained from
ACIL Tasman freight customer surveys
10. Alternative access prices for intercapital freight – the core appraisal
0.60 0.73 0.89
assumed similar access charges as the coastal railway. This scenario assumed a
higher Inland Rail access price for intercapital container freight (128% higher). This is
the price estimated to deliver the greatest total revenue (balancing the price increase
with a consequential reduction in demand)
11. Alternative rail access price based on road/rail access price analysis – analysis was undertaken
concurrently with this study to understand the impact on road and rail competitiveness from changes in
Government pricing policy. The impact on Inland Rail from alternative pricing policies are assessed:
11a. Road pricing based on depreciated optimised replacement cost
1.02 1.22 1.46
(DORC) values / Rail pricing as status quo – heavy vehicle road pricing is
currently based on a PAYGO approach. A shortcoming of this approach is that
the cost base may be understated. This could be addressed if road pricing was
based on DORC values for road assets. This scenario tested the impact on Inland
Rail if road applied a DORC pricing approach, assuming the current allocation of
costs to heavy vehicles and rail priced as per the current rail regime
11b. Road pricing based on PAYGO with higher heavy vehicle cost
0.90 1.09 1.32
allocation / Rail pricing based on current ARTC access charges – a further
shortfall of the current road approach is that the proportion of the road cost base
allocated to heavy vehicles may be understated. To test this, adaptations to
current road PAYGO were assumed by increasing the heavy vehicle allocation of
total road costs (34.5% compared to current 23.3% for the Melbourne–Brisbane
road network)
11c. Road pricing based on DORC / Rail pricing on DORC including a
return on contributed assets – this scenario tested a more equal pricing
regime. It assumed road user charges based on DORC and current NTC
allocation of costs to heavy vehicles, and rail access charges based on DORC
including a return on contributed assets (i.e. included rail assets funded from
government contributions, that would not be included in the current rail pricing
regime)
0.30 0.37 0.46
92
11. Economic analysis
ARTC • Melbourne–Brisbane Inland Rail Alignment Study – Final Report