IFM's AirRail Melbourne proposal helps other projects to get financed
It might have appeared to slip under the radar, but the IFM Investors-led consortium's AirRail Melbourne proposal has already had a long life, with work commencing over a year ago.
IFM Investors was set up by industry super funds to manage their investments. It has stakes in Asia Pacific Airports which owns the lease and operates Melbourne Airport, and IFM also own the 30-year concession for Southern Cross Station.
The consortium behind the AirRail Melbourne proposal unveiled on the weekend, also includes Metro Trains Melbourne who in turn is majority-owned by Hong Kong's MTR corporation with John Holland and UGL Rail rounding out the minority shareholders.
The consortium brings substantial rail and aviation experience in addition to institutional finance to the table, with a spokesperson confirming the proposal had not appeared out of thin air, having undertaken a year's worth of work before the unveiling.
Speaking to Urban.com.au, a spokesperson confirmed that IFM Investors expects to use the Victorian Department of Treasury and Finance's market-led proposal process which should it progress toward the end of Stage 2, we're likely to see far greater detail released into the public domain.
The proposal is rail technology agnostic at this stage and the corridor and references to other government or election initiatives are deliberately open, owing to the many moving parts, chief of which is the state election in a few months time and the Melbourne Airport Rail Link business case which is currently underway.
It was only last week that the state government called for expressions of interest to participate in the Melbourne Airport Rail Link (MARL) and it will be interesting to see if any other well-rounded proposals such as AirRail Melbourne come to light.
Comment
One can't help but focus on the main organisation which is leading the consortium - they're in the investment and superannuation business.
Committing a further $5 billion on top of the Federal and State Government's $10 billion is likewise interesting because it's like the Southern Cross, Sunshine and Airport stations, tunnels and tracks and rolling stock will not cost $15 billion. This throws up the opportunity for the joint commitment of $10 billion to be reallocated between the Airport Rail Link and projects like quadruplications in the west.
Remember, as part of the initial Melbourne Airport Rail Link announcement by the State Government in July, part of the business case was to investigate how to get 'high speed rail' to Geelong. What high-speed actually means is anyone's guess, but the AirRail Melbourne documents published to date hint at it: it's about further separating metro and V/Line services in the west.
The groundwork for Melton electrification is currently underway with track duplication from Deer Park to Melton, and the Regional Rail Link unable to handle both Geelong and outer Melbourne suburban passenger commutes for much longer.
The Regional Rail Link was built for $3.65 billion; quadruplicating Sunshine-Deer Park-West Werribee won't cost as much - but rebuilding Sunshine station along with its rail junction won't be cheap.
If it costs $15 billion to get the Melbourne Airport Rail Link, with its dedicated tracks between Sunshine and the city boosting rail capacity even further, as well as adding even more track (and services) to the outer west, we're looking at widespread benefits.
We'll have to wait for the outcome of the state election and the release of the business case, but the AirRail Melbourne proposal (or a competing proposal if the market-led process eventually turns into a tender) has appeared at a good time.
