Current state

The City Loop isn’t one tunnel but a network of four separate tunnels that encircle the Melbourne CBD, with train services from different lines taking different routes around it at different times of day, before finally arriving at Flinders Street.

A result of this is that inbound trains full of passengers will slowly empty out as they make their way around the entire loop.

Before arriving at Flinders Street Station almost empty.

A loading pattern shown in this diagram from the 2012 PTV Network Development Plan.

Figure 16-2: Existing City Loop operation and train loadings – 2012 PTV Network Development Plan

Which goes on to say:

Constraints in the Northern Group revolve around the need for Craigieburn and Upfield lines to merge in the City Loop, thereby restricting the combined frequency to 24 trains per hour.

On the Burnley Group, the terminating and turning back of Burnley local trains at Flinders Street limits capacity on all Burnley Group local lines.

The current routing and efficiency of the loop and terminating lines in the city is an inefficient use of resources (trains and infrastructure), as demonstrated in Figure 16-2. The line thickness designates an indicative train loading for the AM peak period.

From the above figure, it can be seen that the loop operation is inefficient because all trains entering the loop will be overloaded. However, by the time they run across the viaduct between Flinders Street and Southern Cross, they will be nearly empty, which is a waste of valuable central area track capacity.

In addition, Burnley local services (the Glen Waverley and Alamein lines) that run direct to and terminate at Flinders Street will be underutilised as many passengers will transfer onto loop services at Richmond, which again is a sub-optimal use of trains and infrastructure.

And a solution?

The 2008 East West Rail Link ‘Analysis on Rail Capacity’ report introduced a solution – reconfiguring the City Loop tunnels.

Northern – Burnley loops connected

The existing four city loop tunnels operate independently from each other. Rather than operating each group independently, this option would see trains running between North Melbourne and Richmond, either via Flinders Street (FSS) and Southern Cross (SXS), or via the Melbourne Underground Rail Loop (MURL). For this option, the following operations could be achieved:

• Sydenham to Glen Waverley / Alamein / Blackburn via FSS, SXS
• Craigieburn / Upfield to Belgrave / Lilydale via MURL

Operations would assume that layovers and crew changes would take place at suburban termini rather than at Flinders Street or Southern Cross.

By allowing Burnley and Northern trains travelling in the Melbourne Underground Rail Loop (MURL) to continue on to North Melbourne or Richmond respectively rather than looping around to Flinders Street, track and platform capacity at Southern Cross, Flinders Street and across the viaduct would be released. In association with discontinuing the practice of reversing trains at Flinders Street station, this would allow for direct services from each group to be linked.

The spare capacity at Flinders Street station could be used for services from Caulfield and Clifton Hill groups, and allow for network expansion.

The infrastructure works required to enable Northern-Burnley operations as shown include:

• new tunnel connection from the Burnley loop tunnel west of Flagstaff to the existing western loop portal south of North Melbourne;
• new tunnel connection from the Northern loop tunnel south of Parliament to a new portal situated in the Jolimont rail yards and connected to existing Burnley down track;
• new platform 7 at North Melbourne, forming an island platform with existing platform 6;
• track slewing on either side of North Melbourne to enable sectorisation of lines.

Passenger impacts would need to be carefully managed due to need to terminate Werribee/Williamstown trains at Southern Cross. Furthermore, this option does not offer new travel opportunities or CBD connectivity, and introduces some risk of overcrowding issues which would need special attention during the design of this option.

This option would allow the metropolitan rail network to transport around 114,000 passengers into the CBD in the morning peak hour.

And the concept was further refined in the 2012 PTV Network Development Plan.

The removal of loop operations on the Northern and Caulfield loops and the connection between specific lines on each side of the city will result in the creation of two new Cross-City lines, with capacity for an additional 30 trains per hour in the peak (Craigieburn – more than six trains per hour, Upfield and future Northern lines – more than 18 trains per hour and Burnley local lines – more than six trains per hour)

High level scope of works:

• New tunnel link between Flagstaff (Caulfield loop) and North Melbourne platform 2. This will enable trains from Craigieburn to run into the Caulfield loop to Flagstaff, then exit via the existing portal at Richmond platform 5 and continue on to Frankston via Parliament
• New tunnel link between Parliament (Northern loop) and Richmond platform 3. This will enable trains from Frankston to run into the Northern loop to Parliament, then exit via the existing western portal at North Melbourne on to Craigieburn via Flagstaff
• Enabling works for new tunnel link from City Circle loop to down Burnley Through line to facilitate through running from Clifton Hill Loop Line to Ringwood Loop Line for the purposes of stabling and maintenance
• New fly-over from the Upfield line onto the through suburban lines at North Melbourne (over other Northern Group tracks)
• Bi-directional signalling at North Melbourne platform 1 to enable operation of city-bound and outbound Seymour services to Southern Cross

The package of works identified for this period will provide the following benefits:

• Free up two viaduct tracks following removal of loop routing, effectively providing two new tracks through the city
• Provide greater capacity for growing passenger demand on Craigieburn and Upfield lines and all Burnley express and local lines
• Enhance service reliability through the full sectorisation of lines through the city and suburban sections
• Enable quicker travel times for outbound journeys on the Burnley express line through segregation from local stopping services
• Provide faster cross-town journeys by eliminating the need for passengers to backtrack or suffer layover time at Flinders Street
• Extend the network connectivity for Burnley local services by providing direct through services to Southern Cross and the west
• Facilitate easier cross-town travel through the city for all northern lines to employment, education and retail precincts clustered in the east
• Provide a better balance in passenger loadings on trains bound for either the underground city stations (Flagstaff, Melbourne Central and Parliament) or the surface stations (Southern Cross and Flinders Street), as opposed to the heavily loaded loop services and relatively lightly loaded direct services terminating at Flinders Street
• Simplify the rail network by providing direct access to and from all city stations at all times of the day, reducing current confusion and inconvenience associated with daytime loop reversals
• Increase efficiency of train movements through the city by removing loop services
• Reduce train congestion at Flinders Street by eliminating terminating and turnback manoeuvers for Burnley local services, thereby increasing train efficiency through reduced train fleet requirements
• Enable the rationalisation of track and removal of excess point work in the central area to reduce maintenance requirements
• Provide network capacity to enable new rail corridors to be built in future years to serve new developments in the northern outskirts as well as an express link to Melbourne Airport

Along with a clear visual showing how two small sections of tunnel result in such a large uplift in the overall passenger capacity.

Figure 16-3: Proposed reconfigured loop operation and train loadings – 2012 PTV Network Development Plan

While 2021 Infrastructure Victoria spoke of the best time to deliver the City Loop reconfiguration project – now.

The Melbourne Metro Tunnel will enable some new services on Craigieburn and Upfield lines, but these would reach capacity by the mid-2030s. If these new services were introduced without
reconfiguring the City Loop first, they would be heavily disrupted for long periods during the project’s construction, and affect many more passengers.

Reconfiguring the City Loop immediately after completing the Melbourne Metro Tunnel minimises disruptions to passengers, particularly as the realignment of the Cranbourne and Pakenham services through the Melbourne Metro Tunnel upon opening can leave one of the two loop tunnels affected by this project empty. The Victorian Government should start detailed design and planning quickly to identify critical works to undertake before the Melbourne Metro Tunnel is completed. This can avoid significant disruption to the network.

The window of opportunity to deliver the City Loop reconfiguration project will close as demand continues to increase, and the network may only temporarily have enough spare capacity to change train service patterns during construction to minimise passenger impacts.

The Victorian Government should complete a business case for the project within the next two years. Reconfiguring the City Loop would enable more frequent and reliable services by creating two high frequency separated lines connecting northern and south-eastern areas. The business case should consider timing, including starting the project immediately after the Melbourne Metro Tunnel is completed.

Footnote: passenger capacity at the stations themselves

Turns out running more trains isn’t the silver bullet to increasing the number of passengers able to travel – capacity on the escalators and through ticket gates at railway stations is another.

A problem also flagged in the 2012 PTV Network Development Plan:

16.8 City Loop station upgrades

Service frequencies through the City Loop stations will increase with the provision of high capacity signalling on the Clifton Hill Group and better utilisation of existing signalling systems on the other loops. Moreover, the connection of the Northern and Caulfield loops will result in a higher proportion of train loads alighting at the City Loop stations.

Preliminary investigations completed to date, utilising simulation software and focused on Parliament station at this stage, have indicated that some additional escalator capacity will be required as well as an enlargement of the forecourt areas and an increased number of barriers at the main entrances.

At this stage of the investigation, platform capacities do not appear to be an issue even though these are causing some concern at present. This is due to the fact that in future all trains through a given platform will be running to no more than two stopping patterns and destinations.

It is currently considered that additional escalator capacity can be provided by insertion of new escalators into the existing escalator banks. The extension of the forecourt areas is an at-surface construction issue that should not be overly complex.

Key benefits
• Ensure station access and platform capacity can support passenger movements at peak times
• Reduced congestion and therefore improved travel times at key CBD stations.

High level scope of works
• Install new escalators at City Loop stations
• Widen forecourt areas and install additional ticket barriers where necessary to improve throughput.

And which is being addressed at Melbourne Central station as part of the Metro Tunnel project, with two new escalators being installed between the concourse and platform 1/2 to cater for the increased number of interchange passengers once the adjacent State Library station opens.

Further reading

• 2012 PTV Network Development Plan
• 2008 East West Rail Link Analysis on Rail Capacity report
• Infrastructure Victoria Reconfiguring the City Loop
• “Why Melbourne’s outgrown the City Loop” at Melbourne on Transit
• “Melbourne’s City Loop – the work of the Devil” at Under The Clocks

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The story behins

We start in the 1970s with the construction of the Museum station – now known as Melbourne Central – in a cut and cover box beneath La Trobe Street, between Swanston and Elizabeth Streets. To make room for the massive excavation, Melbourne Underground Rail Loop Authority acquired properties so that La Trobe Street was detoured to the south.

Public Record Office Victoria image (via ABC News)

The Melbourne Underground Rail Loop Authority also acquired additional land south of Museum station for a future commercial development, with this 1973 artists impression showing how it would be integrated with the underground station.

PROV image VPRS 12903/P0001, 698/27

However the plans for over site development stalled, and the decision was made to build three standalone entrances to Museum station – from Swanston, Elizabeth and La Trobe Streets. The architecture firm responsible was Perrott Lyon Timlock & Kesa, with the above ground entrances designed by project designer Graeme Butler.

The main entrance to the station was at the south-west corner of Swanston and La Trobe Street, with a civic plaza located over the escalators down to the station concourse.

Graeme Butler photo

Once the station box was completed and La Trobe Street moved back to the original alignment, construction of the station entrance started in earnest.

Graeme Butler photo

But by mid-1978 the intended opening date of December 1979 was looking unachievable – October 1980 set as the new date, following delays to the new ‘Metrol’ train control centre.

Weston Langford photo

Enter Queen Elizabeth II

On 1 March 1980 it was announced that Queen Elizabeth II would be coming to Australia to open the new High Court Building in Canberra on May 26, followed by visits to Sydney and Melbourne.

Photo by Con Tassios, via Wikimedia Commons

Another construction project also underway in Melbourne was City Square at the corner of Swanston and Collins Street, with Queen Elizabeth II cutting the ribbon to open it.

Graeme Butler photo

But Melbourne’s new underground railway – it wasn’t ready yet! So the civic plaza on top of the station entrance was tidied up.

Graeme Butler photo

Ready for the Royal Visit on 28 May 1980.

Screencap from MURLA film

The Royal Visit

Her Majesty The Queen and His Royal Highness The Duke of Edinburgh arrived at the station via La Trobe Street.

Screencap from MURLA film

Exiting their car on the north side of the street.

Screencap from MURLA film

Walking along La Trobe Street a short way.

Screencap from MURLA film

And down the ramp into the station.

Screencap from MURLA film

The ramp ran along a sloped garden, providing a lightwell into the station concourse.

Screencap from MURLA film

Once in the station, the party headed down another level to inspect a number of displays on the platform.

MURLA photo

And then back up the escalator to the concourse.

Screencap from MURLA film

After another escalator the party reached Swanston Street, where they walked up a flight of stairs to the upper level plaza.

Screencap from MURLA film

A crowd watching from the State Library forecourt across Swanston Street.

Screencap from MURLA film

Up ahead – a waiting plaque, covered in a velvet curtain adorned with the Melbourne Underground Rail Loop Authority logo.

Screencap from MURLA film

Time to pull back the curtain.

Screencap from MURLA film

And there’s the plaque I found – “Queen Elizabeth Plaza named by Her Majesty The Queen, 28 May 1980”.

Screencap from MURLA film

Time for a quick photo with Her Majesty.

MURLA photo

And then it was time for the next engagement of the day.

So what happened to Queen Elizabeth Plaza?

Following the Royal Visit work continued: stage one of Museum station and the first two City Loop tunnels were officially opened on 14 November 1980.

The dome in the middle of Queen Elizabeth Plaza was completed.

Graeme Butler photo

Overshadowed by Coops Shot Tower.

Graeme Butler photo

An island among wasteland waiting to be redeveloped.

Graeme Butler photo

At what was then a quiet part of the Melbourne CBD.

Graeme Butler photo

But farewell

Redevelopment of the surrounding area was soon approved as part of the ‘Melbourne Central’ complex, and by 1989, Queen Elizabeth Plaza had disappeared beneath the new shopping complex.

Photo by Jkarjalainen, via Wikimedia Commons

The shopping centre opening atop the station entrance in 1991.

Sydney Hughes postcard

With the Queen Elizabeth name applied to ‘Queen Elizabeth Walk‘ on 11th September 1991.

But just over a decade later, it was now the turn of the Swanston Street station entrance to disappear.

Closed in 2003 as part of the redevelopment of the Melbourne Central, replaced by a maze of escalators running through the shopping centre.

Not exactly fit for a queen, is it?

And the ramp to La Trobe Street?

The ramp used by Queen Elizabeth II to enter Museum station survived far longer.

As did a spiral staircase to La Trobe Street.

Despite being enclosed by shops along La Trobe Street and a car park to the north, both remained in almost original condition until a few years ago.

Until the site was acquired for the Aurora Melbourne Central development. Demolition work commenced in 2015.

The connection to the station box hacked away at the north side of La Trobe Street.

Making way for the basement of the 84 storey residential tower.

The replacement station access to La Trobe Street? A dank graffiti covered staircase and lift.

Definitely not a place you would bring royalty to inspect!

Footnote: a few more Royal Visit titbits

The Department of the Prime Minister and Cabinet has a copy of the 1980 Royal Visit program – 30 minutes was allocated for the Queen to inspect Museum station.

3.10pm

• Alight at La Trobe Street entrance
• See selected features of the station
• Her Majesty unveils a plaque naming “Queen Elizabeth Plaza”

3.40pm

• Depart for Government House

In their 1980 annual report, the Melbourne Underground Rail Loop Authority made special mention of the Royal Visit.

It is fitting that the Authority received recognition by Her Majesty The Queen and His Royal Highness The Duke of Edinburgh during their recent visit to Melbourne by their making an inspection of the Underground at Museum Station, culminating in the conferring by Her Majesty of her name on the plaza above the eastern entrance to the Station. In due course the plaza will be integrated into the Museum Station area redevelopment.

The visit by Her Majesty The Queen and His Royal Highness The Duke of Edinburgh provided a further impetus for public involvement with the Loop and its potential benefits. It also made possible a welcome opportunity to open Museum Station for inspection by special interest groups of individuals, and representatives of organisations who have made significant contributions to the project, and workmen (with their families), many of whom have been involved with the project since its inception.

Special reference is made to the Media which, in story and picture, provided a continuing coverage of Loop progress, particularly the television sector which, by virtue of its unique nature, enabled millions of viewers throughout the world to see activity taking place underground and in areas otherwise completely hidden from public view, including an extensive national and international coverage of the Royal Visit.

The full film of the visit is here:

‘phunnyfoto’ on Flickr was also there for the Royal Visit, photographing the event from atop 200 La Trobe Street.

Finally, on Flickr you can find more photos of Museum station by Graeme Butler.

Footnote: another Royal Visit to a delayed station

Queen Elizabeth II also visited a behind schedule railway station during her 1975 visit to Hong Kong – but still left behind a plaque to mark the occasion.

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Philip Mallis photo

The back story

The City Loop encircles the Melbourne CBD, with train services from different lines taking different routes around it at different times of day, before finally arriving at Flinders Street.

And because the loop consists of four independent tunnels, train services can continue running on one line while another one is closed.

But what about passengers on the line which isn’t running through the City Loop?

Answer – they catch a “Train Replacement Train”.

Confusion abounds

These “train replacement trains” start at Flinders Street, then visit Southern Cross, Flagstaff, Melbourne Central and Parliament, before arriving back at Flinders Street.

Screens on the concourse at City Loop stations call this replacement service the “City Circle”.

Philip Mallis photo

But the screens at platform level call them a ‘Flinders Street’ train.

And the trains running these services just show ‘Special’ on the front.

While back at Flinders Street Station, it’s called a ‘City Loop’ train.

Confused?

Enter the ‘City Circle’

With four independent tunnels in the City Loop looping around the CBD, each one needed a name.

MURLA diagram, undated

Based on which train lines they are connected to.

• Northern Loop – serving the lines through North Melbourne,
• Burnley Loop – serving the lines headed towards Burnley,
• Caulfield Loop – serving the lines headed towards Caulfield, and finally
• Clifton Hill Loop / City Circle – serving the lines towards Clifton Hill, along with a branch back to Flinders Street.

The Clifton Hill / City Circle name can be seen on tunnel walls.

And on emergency exit signage.

The most interesting feature of the Clifton Hill / City Circle tunnel is an underground junction, located just south of Parliament station – a popular spot for urban explorers before security was upgraded.

To avoid any unwanted attention I’m not going to link back to the original photographer

The other end of the tunnel is located beneath the Exhibition Street bridge.

My only photo of the junction was taken hanging out of the open window of a Hitachi train, packing a high powered flashgun.

But I recently made a special expedition to the portal to capture it in use.

And after a loud TOOT an X’Trapolis train emerged from underground.

Headed up the ramp bound for Flinders Street Station.

Footnote: some photos from the past

Until August 1993 the ‘City Circle’ service operated full time to provide cross-CBD travel, until it was replaced by the newly-introduced free City Circle Tram service at ground level.

But City Circle trains still ran as required for operational reasons – I stumbled upon one at Flinders Street platform 1 back in 2005, advertised as a ‘City Circle’ service on the old CRT next train display system.

And took one for a ride in 2012, with the displays onboard the train calling it a ‘City Circle train’.

So that’s great progress in the past decade – going from consistent ‘City Circle’ messaging towards passengers, to a mix of ‘City Circle, ‘Flinders Street’, and ‘Special’.

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I started off at Wikipedia, and they put the final cost as $500 million, citing a Metropolitan Transit Authority publication from 1985.

I then stumbled upon the annual reports of the Melbourne Underground Rail Loop Authority, the government body responsible for planning, financing and constructing the Melbourne underground rail loop. Their 1971-72 annual report had the following to say on the cost:

The engineering consortium of John Connell- Mott, Hay & Anderson, Hatch Associates Inc., and Jacobs Associates was commissioned in August 1971 to prepare a pre-design report for the construction of the Loop.

The Consultants presented their report in February 1972. The report was comprehensive and confirmed the basic concept of a four tunnel, three station system. It also included a conceptual design of the Loop and detailed cost estimates therefore, possible variations of the plan (the cost of which does not materially alter the total cost estimate) and detailed proposals for project management under the Authority’s direction.

The construction cost estimate of the basic plan adopted by the Authority is $117.23 million excluding land acquisition which may be separately financed, signalling and communications (which will largely be Victorian Railways’ matters), and administrative and service costs including consultancy fees and interest on monies borrowed. This estimate is based on prices current in the last quarter of 1971.

As early as 1974 concerns had been raised about the completion date being delayed.

In its initial 1971 planning the Authority scheduled the completion of the Loop for mid-1978 to accord with the expectation indicated by the Minister of Transport when the Authority was formed. That completion date was dependent upon the Authority’s loan allocation in each year being sufficient for its planned works programme. Limitations on the Authority’s loan allocation for 1972/3 and 1973/4 have resulted in the date for completion of the Loop being re-scheduled for the end of 1980 – with provision for the first trains to run through it by December, 1978.

The cost of the project had also started to climb.

Due largely to the increases in price of materials and labour that figure has now increased to $162.78 million based on April 1974 prices.

In each of the years that followed, the estimated cost increased and the opening date was moved further back – by mid 1977 the authority was now aiming for the first train to run in late 1979.

The Authority experienced a year of vigorous progress in all sections of the loop. The program was maintained providing for the opening of the Burnley loop and Museum Station in December 1979 and completion of all works in 1982. The estimated cost of the project rose 9% to $328 million reflecting the overall inflationary trend.

As for the cost increases, these were attributed to an increase in project scope, as the 1977-78 MURLA annual report details:

The revised construction cost estimate of the basic plan adopted by the Authority in 1972 (then estimated as $117.23 million at last quarter 1971 prices) is $252.7 million updated to June 1978, prices. The revised basic construction cost includes the cost of technical improvements including a high quality track support system to minimise vibrations transmitted through the ground to nearby buildings.

Within the provisions of the Melbourne Underground Rail Loop Act 1970, as amended, various changes have been made progressively to the scope of the project which was adopted in 1972. The cost of these items, together with the cost of land acquisition, signalling and communications and administrative and service costs including consultancy fees, updated to June 1978, prices, is estimated to be $114.3 million.

Both construction and other costs continued to increase in the following years – with the 1979-80 MURLA annual report pushing back the first train even further.

The loops scheduled to be ready for operation in 1980 concurrently with Museum Station are the Burnley and the Caulfield-Sandringham. The Clifton Hill loop / City Circle and Parliament Station are planned to be available for operation by the end of 1981 and the North Melbourne loop and Flagstaff Station by the end of 1982.

In their 1980-81 annual report the authority celebrated the opening of the first part of the loop, but also pushed out the completion date of the remainder of the project.

The west booking hall of Museum Station is planned to be operational in the second quarter of 1982, followed by the south booking hall of Parliament Station in the third quarter. Flagstaff Station and the north booking hall of Parliament Station are planned to be transferred to VicRail during the first quarter of 1983, and the remaining loop for the lines through North Melbourne is planned to be transferred by mid 1983.

In 1983 the new Transport Act was passed and the Melbourne Underground Rail Loop Authority was merged into the newly created Metropolitan Transit Authority, so the 1981-1982 MURLA annual report was their last – construction cost estimates being as follows:

The revised construction cost estimate of the basic plan for the construction of the Loop adopted by the Authority in 1972 (then estimated as $117.23 million at last quarter 1971 prices) is $287.20 million updated to June 1982 prices. This estimate and the earlier estimate exclude land acquisition, signalling and communications, and administrative and service costs including consultancy fees.

Within the provisions of the Melbourne Underground Rail Loop Act, as amended, various changes have been made progressively (as previously reported) to the scope of the project which was adopted in 1972. The cost of these changes and the exclusions stated above (but not including the cost of land acquired specifically for redevelopment) is currently estimated a $178.90 million. On this basis the total estimate as updated to June 1982, prices is $466.10 million.

The previous completion date of mid 1983 came and went, so it was the Metropolitan Transit Authority that took the credit in their 1984-85 annual report for the opening of the final stage of the City Loop – only seven years behind the initial estimates made in 1971!

Highlights this year included the opening in May 1985 of Flagstaff, the final station to be completed in the 18km of rail track in the underground Loop. The $650 million Loop project, one of the largest undertakings in Melbourne’s history,carries more than 600 trains per day.

So in the end I’ve got something resembling an answer – the City Loop cost between $500 and $650 million to build at 1985 prices, the exact figure varying if land acquisition, signalling and communications costs (funded by the Victorian Railways) and administrative and service costs (such as consultancy fees and interest on monies borrowed) are included.

A comparison

Run the construction cost figures through the Reserve Bank’s inflation calculator and the City Loop cost $1.3 to $1.7 billion to build at 2013 prices – about the same as adding a lane to the Monash – CityLink – West Gate Freeway corridor between 2007 and 2010.

However a simple indexation won’t tell us how much it would cost to build the City Loop today – construction expenses have risen much faster than inflation in the past decade, which would put the final dollar figure far higher. Alan Davies delves deeper into the issue in his blog posts “Why is infrastructure so bloody expensive?” and “Why do subways cost so much more here than elsewhere?“.

Tracking the cost increases

I have tabulated the “construction” and “total minus interest” figures from each Melbourne Underground Rail Loop Authority annual report – all figures are in $ millions, and have not been adjusted for inflation.

Sources

• Melbourne Underground Rail Loop Authority annual reports:
  • 1970-71
  • 1971-72
  • 1972-73
  • 1973-74
  • 1974-75
  • 1975-76
  • 1976-77
  • 1977-78
  • 1978-79
  • 1979-80
  • 1980-81
  • 1981-82
• Metropolitan Transit Authority 1984-85 annual report
• Metropolitan Transit Authority booklet published following the completion of the City Loop

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In the case of the state of Victoria, the current favourite way to get finance is via Public Private Partnerships: the government contracts a private consortium to build a piece of infrastructure, then pays them an exorbitant sum over a defined period to operate the facility, before it finally gets handed back to the taxpayer at the end of the term. The best known examples in Melbourne are the CityLink and Eastlink tollways – the desalination plant and the Royal Children’s Hospital are others.

The government says Public Private Partnerships work out cheaper for the taxpayer in the long run, and push the risk onto the private sector – but in reality we end up with socialised losses and privatised profits – greedy bankers making off with the loot when they succeed, and when they fail they sue the government claiming they were misled. In the case of the state of Victoria, we are currently paying a equivalent interest rate of 10 per cent to service PPPs, when the government could borrow money directly for just 3.5 per cent. (see this piece by The Age columnist Kenneth Davidson)

So how the governments fund infrastructure in the old days? When I was looking a newspaper advertising from the early 1980s I found the answer – government bonds. The way they work is simple: an investor loans money to the government, who in return receives a regular stream of interest over the term of the bond, and once the term is up, the investor gets their money back.

So what parts of the government issued bonds?

Telecom Australia was one, with their loans being backed by the Commonwealth Government. This was the “The Telecom Phone Loan” No. 17 from 1982 – as for what Telecom Australia intended to do with the money? They probably installed the now clapped out copper wires Malcolm Turnbull and the Coalition wants to reuse for their FTTN version of the National Broadband Network!

Another government-owned utility to issue bonds was the State Electricity Commission of Victoria. Responsible for the electricity supply to almost all of Victoria (more about the sole exception), back in the early 1980s the SECV was in the middle of building the massive Loy Yang power station and open cut brown coal mine in the Latrobe Valley.

The other big state-owned energy utility was the Gas and Fuel Corporation of Victoria – and they were no stranger to selling government backed debt to the public. With natural gas connected to metropolitan Melbourne by the early 1970s, by the time of their 1983 bond issue they were probably in need of funds to extend their gas pipelines to the smaller regional centres.

Another pillar of Melbourne before the changes of the Kennett years was the Melbourne and Metropolitan Board of Works (MMBW). Responsible for water supply and sewers in the city, as well as town planning, management of parkland and other open space, maintenance of metropolitan highways and bridges, and foreshore protection and improvements – the board was another government authority that needed big money to fund capital works.

Victoria wasn’t the only state to have state owned agencies issue bonds: over in Tasmania the Hydro-Electric Commission also ran adverts to gain investors. Given the early 1980s timing, the loan money was probably intended for the Franklin River Dam!

And if you throught public utilities were the only ones to offer loans to the public, the Australian National Railway Commission advertised their Public Loan No. 4 in 1981. Responsible for operating the railways lines inside South Australia, as well as over to Western Australian and the Northern Territory, they probably spent the money on their new fleet of BL class diesel-electric locomotives which were delivered a few years later.

However, I’ve saved the most interesting public loan advertisement for last – that of the Melbourne Underground Rail Loop Authority (MURLA). Established by the government to fund and build what is now known as the City Loop, in 1978-79 it decided to raise $30 million in funds through bond sales to the public, raised further money in the same way in the years to follow.

“Leaving your mark on Melbourne forever” – can you imagine today being able to invest your money in the infrastructure that Melbourne needs, and get paid handsomely for doing so?

Unfortunately it no longer works that way – the proposed Melbourne Metro tunnel is using $3 billion in funding committed by the Gillard government, but it is contingent on $3 billion from an unwilling state government, and another $3 billion via another sketchy Public Private Partnership.

Footnote

If you think interest rates of 10 to 15 per cent are high, you probably didn’t have had a home loan during the 1980s. Back then, high interest rates were the norm.

Further reading

• Need roads and rail? Then borrow and build by The Age economic editor Tim Colebatch
• Hospital PPPs show no signs of good health by Kenneth Davidson, The Age

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