Earlier in the climate crisis and before Covid-19, the city-shaping potential of infrastructure assumed that urban destinies were relatively stable and predictable. Lengthy delivery times seemed warranted. Now, however, urban uncertainty looks like the new normal. Let’s briefly speculate how one class of infrastructure – that connecting our cities – might benefit the nation.
Construction has commenced at Sydney’s second airport, on Badgerys Creek land the federal government patiently acquired over decades. As seems to be standard Sydney practice, some recently purchased parcels, necessary for site consolidation, delivered extortionate profit to a few well-connected land owners.
Meanwhile, the Greater Sydney Commission (GSC) proposed Sydney’s third city, dubbed the “Aerotropolis”, to exploit the economic benefits flowing from the new airport.
The GSC intends for it to become primarily a modern logistics hub. Passengers are expected to prefer the existing Mascot facility, despite its curfews and other restrictions, due mainly to the facility’s proximity to the CBD.
With the predicted end of the pandemic still moving well into the future, Qantas continues to suffer from global travel restrictions but hopes that vaccine rollouts will enable partial or complete recovery to pre-pandemic profit levels.
Sydney Airport is also suffering for much the same reasons. One of its shareholders, a significant superannuation fund, has sought to increase its holdings, a move initially rejected by the airport’s board as “opportunistic”. However, other shareholders have urged it to reconsider, fearful that outright rejection could crash the share value. What this value might comprise remains unclear.
Some commentators are less sanguine about airline recoveries. They consider that the increase of home working and tech-mediated team interactions will endure to a significant extent.
The greatest effect would be a reduction in business travel, the most profitable customer cohort for most airlines. For an industry accustomed to profit margins averaging around 5 per cent, a locked-in 10 per cent loss of business travel, as some predict, could be catastrophic.
Meanwhile, predictions of a return to normal once vaccinations approach 80 per cent of global populations – or similar rates within smaller “travel bubbles” – now look shaky, due to the increased infection rates of the Delta variant. Emergence of yet more variants, with different infection, morbidity and mortality rates, cannot be discounted.
Even narrowly defined highly qualified recovery predictions are stretching into the years, not months; some are simply open ended.
Yet surprising unexplained dramatic declines of virulence have also been reported in COVID-19 stricken Brazil, raising hopes of a rapid end to the pandemic.
Infrastructure Australia (IA) recently assessed the COVID-19 impacts on Australia’s infrastructure needs.
Big trends likely to persist within cities beyond a post pandemic recovery are work-from-home arrangements supported by greater IT capacity for virtual meetings; reduced public transport usage with concomitant increases in car and active modes (cycling and walking); and decreased CBD congestion but larger kerbside deliveries in suburban areas.
Between cities, large enduring trends include residential movements from major city centres to cheaper outer urban and regional centres, again made possible by IT improvements. However, domestic and international air travel looks likely to remain subdued in the longer term, partly reflecting the uncertain trajectories of COVID-19 management abroad and the possibility of further viral mutations.
CLIMATE CRISIS ADAPTION
The recently released Intergovernmental Panel on Climate Change report was widely characterised as a wake-up call to all nations’ efforts to reduce climate altering emissions, particularly for those countries now regarded as dragging the chain, like Australia. Decisive across the board action is required with no exception, including reduction of transport emissions.
Airlines are particularly sensitive to these pressures. Even though aircraft emissions account for 2-3 per cent of global emissions, they are highly visible symbolic markers of contemporary harmful environmental practices. Many view the decline in international travel wrought by the pandemic as a good thing for these reasons.
Unlike the fossil fuel sector that they currently depend on, aircraft makers and operators are desperately trying to become more environmentally sustainable.
For example, the European consortium Airbus Industries highlights its innovations in aircraft design, efficiency and fuels.
It is unlikely that full electric propulsion will be available for commercial aircraft within several decades, due to aerodynamic scaling effects of increasing aircraft size and the higher energy density of hydrocarbon fuels. Smaller electric-powered aircraft and bio-fuels look more promising, though the latter compete with food production.
Even without the environmental crisis, straightforward market factors seemed to doom larger aircraft anyway. Two competing mass air-travel architectures were expressed in the development of the Airbus A-380 “Super-jumbo” and the Boeing 787 “Dreamliner”.
The hub-and-spoke model served by the A-380 suited emerging urban conurbations striving to establish global-wide economic relevance. However, the point-to-point model better served by the 787 looks to have won out by avoiding time-consuming connections en-route between final destinations.
The environmental crisis has also renewed interest in surface travel.
The idea of east coast high speed rail (HSR) regularly appears amidst these discussions. The high infrastructure spend it would entail is also viewed by some as just the ticket for a post-pandemic economic recovery stimulus.
However, the Grattan pours cold water on these notions, pointing out that the high build costs only make sense for shorter runs serving larger and more distributed populations, more common in Europe and Asia. Further, the high cost would displace funding better and more productively spent on a large number of smaller projects across Australia.
They add that environmental savings of rail would take a quarter of a century to break-even from the initial high environmental cost of construction.
Upgrading existing lines to accommodate “fast rail” may make more sense, though greater economic benefits would still more likely be obtained by improving the connectivity within, rather than between, capital cities.
What might all this mean for a city such as Sydney?
Long construction lead times and high economic and environmental costs are likely to persist and weigh against any post-pandemic feasibility of an east coast HSR.
Offsetting that, the likely ongoing slump in domestic air travel may result in a higher proportion than the 20 per cent decanted air-travel demand, assumed in the original feasibility studies. However, as the Grattan has pointed out, even this would mainly benefit business travel.
Yet, the greater substitution of face-to-face meeting with IT mid-pandemic is likely to persist, hence business travel recovery will likely remain subdued regardless of the mode.
For that reason, greater urban productivity might be unleashed by investing in a basket of smaller projects within cities, as originally suggested by Grattan.
There is the possibility that changing work and population patterns may stimulate demand for inter-city rail services, formerly met only by either vehicle or air-travel modes pre-pandemic.
However, and given Australia’s low population, the extent of any increase would still be miniscule compared to European and Asian cites linked by HSR. Fast rail would likely face similar feasibility head-winds.
Further, there is no certainty that the pandemic induced population redistributions would be convenient to a theoretical rail route.
The rapidly increasing urgency to address the impacts of climate change paints a different though still fuzzy picture.
Within the space of a few years, carbon-exposed industries have changed from the foundation of our national prosperity to international pariahs, spurned by investors mirroring changing community sentiments. Only some governments seem resistant.
Even if it recovered to pre-pandemic levels – as has happened with some US airlines already – air travel will likely encounter similar hostility unless it transforms radically.
Though currently expressed as requiring national policy responses, climate action will eventually be expressed at the level of individual industries, whether by community demands or through formal mechanisms like the prospect of GHG taxes levied at national borders and passed down to or applied directly on individual offending industries.
Some airlines are starting to address these prospects. For example, United Airlines in the US recently contracted to purchase 100 small electric-powered aircraft for short low-passenger-number routes, perhaps similar to those currently served by our regional airlines.
The manufacturer, observed that, “the Heart Aerospace aircraft are cheaper to operate than traditional 19-seat planes that have largely been phased out in recent years, which could help bring new or additional air service to small cities where those flights would be too expensive today”. Hmmm.
Currently with ranges of only 400 kilometres, these aircraft would not match the pre-pandemic demand of Qantas’s most lucrative Melbourne-Sydney route, served mainly by its 737 fleet. Yet Melbourne to Albury and Sydney to Canberra would be well with the range of existing electric powered aircraft. Furthermore, range and passenger capacity are expected to increase as battery technology improves.
The prospect of new transport architectures
So far transport companies seemed to have “stuck to their knitting” – airlines with aircraft, road transport with buses trucks and cars, and rail with, well, rail.
The combined and enduring effects of climate change adaptation, changed work patterns and redistributed settlement patterns are likely to impact these stable arrangements unequally, and prompt profit-defending reconfigurations.
New route architectures and less modal specialisation could well beckon – reconfiguration as a transport service rather than, say, an air or rail service.
For example, airlines would likely continue to dominate international and longer-range intra-national travel, though with much greater focus on environmental sustainability and a greater concern for potential health impacts, as Qantas and the national government have already foreshadowed.
However, in pursuit of compensatory lower emissions, might it make sense for airlines to switch shorter high-capacity high-profit intra-national routes wholly to surface travel, thereby justifying investment diversification into rail? It is not unprecedented; Virgin operated high-speed trains in the UK until 2019.
Equally, following a demographic shift to regions and the growth of work from home, smaller airlines might discover greater demand for regional services to link dispersed workforces with CBD work-places whenever face-to-face work is required.
Might it therefore make sense to combine lower-cost lower-emitting electric powered aircraft with shared electric vehicle use in destination CBDs in one fare package to smooth the inevitable transport wrinkles of WFH?
What this might mean for Sydney
It seems likely that the Badgerys Creek facility will have a future simply because long-range aviation is unlikely to be displaced by other modes, particular for an island nation as remote as Australia.
However, compensatory environmental offsets will likely be expected, particularly if GHG-limiting border levies take off internationally. Offsets might be obtained through switches to more sustainable fuels, though wholly electrified long-distance air travel is likely many decades away, a time scale equivalent to the full rollout of HSR.
However, as IA has pointed out, post-pandemic work and leisure air travel patterns are unlikely to recover to pre-pandemic levels any time soon. This could mean that the demand for two heavy-aircraft airports in the Sydney basin may decline.
Redevelopment of Sydney’s Mascot facility, previously explored here, speculated on possible consequences of greater than planned airline preferences for a new curfew-free Badgerys Creek facility. The pandemic and climate crisis have simply injected even greater uncertainty into these relationships.
For example, Mascot’s key attraction – its proximity to Sydney – is now worthless if quarantine isolation will be required in the longer term, as predicted by some, yet on-campus quarantine facilities could easily be constructed at Badgerys Creek and thereby eliminate the high transmission risk that continues to be a feature of the hotel quarantine system.
Equally, the accelerating housing crisis, particularly near CBDs and despite the pandemic, will demand more creative solutions than applied thus far.
Mascot’s 907 hectares of land, with 10 kilometres of water frontage, would have to be on the cards, though with shorter trips in quieter electric aircraft some retention of inner-city capacity seems warranted, like London’s Docklands Airport, either at Mascot or Bankstown.
Public asset recycling has long been a shibboleth of conservative governments – recall Millers Point and Glebe social housing. When it comes to improving the productivity of cities, there is no reason the same principle should not be applied to transport infrastructure as well, as advocated by this author in relation to the Western Distributor.
The Mascot land could therefore diminish the cost burden of high speed or fast rail and thereby proportionally elevate its environmental benefits above air travel, particularly if rail largely, rather than partially, displaced air travel as the principal east-coast intercity transport mode.
A back-of-the-envelope calculation hints at the scale of potential benefit. The yield of some 900 hectares of land developed to an FSR of 3:1 is 27 million square metres. Dividing this by 100 square metres, to establish the number of apartments, and multiplying by, say, $300,000 as the land value cost per apartment amounts to some $80 billion. The projected cost of HSR some 10 years ago was $145 billion and assumed only a 20 per cent decanting of east coast air travel passenger demand.
Further financial benefits could flow to government to offset the cost of rail. Redirection of heavy aircraft to Badgerys Creek would eliminate the development height caps – imposed to protect aircraft approach corridors – between Glebe Island and Mascot. This would release additional development capacity for further inner-city redevelopment along this corridor.
As Lind and Sims have pointed out, up-zoning currently amounts to a gift of land to developers from governments, a circumstance that warrants the recovery of this benefit for taxpayers, as the conservative MP, John Alexander, has also long advocated.
The current interest of superannuation funds in Sydney Airport Corporation simply adds piquancy to this mix. Might they be more interested in investing beneficiaries’ funds in longer-term infrastructure assets?
CERTAIN UNCERTAINTY IS NOW THE PRINCIPAL UNKOWN
The only certainty now is that there is little certainty, at least that approaching the conditions when pre-pandemic infrastructure decisions were made and the climate crisis seemed more remote.
As the pandemic has destroyed economies globally and in Australia, it is even more important that we spend infrastructure funding much more wisely. There is no reason why the same disciplines should not apply to the future of existing infrastructure.
Both IA and Grattan have repeatedly observed, when business case assumptions for long term infrastructure projects change mid-project, re-evaluation and adaption is warranted in order to preserve the value of public investment. These conditions certainly now apply to airport investments within the Sydney basin and the value of cities to our national productivity.
Certainly, given the enduring economic damage caused by the pandemic, the last thing this nation needs right now are frivolous self-serving infrastructure commitments, like the panicked promises to build new station carparks in order to buy a few votes.
Acting cue: close eyes, slap hand to forehead, and mutter, “who will rid us of these troublesome morons?” (Apologies to Henry II)