Common Urban Myths About Transport
Myth: We can't have airport trains because the Citylink contract forbids it
Fact: Although the Citylink Concession Deed requires the State Government to compensate Transurban if it acts in certain ways that might restrict Citylink revenue, the terms of the contract indicate an airport rail link would only trigger compensation if it carries freight.
Melbourne's privately owned Citylink tollway is operated subject to a 'Concession Deed', a contract between the State Government and private operator Transurban. This specifies the obligations on both parties over the 33 year term of the contract. In particular, it places obligations on all Victorian Governments over that period in relation to transport policy and management.
At around the same time as Citylink a similar project, the Hills Motorway (M2), proceeded in New South Wales. The Concession Deed for that project implied that if the State were to develop new public transport services parallel to the M2, it would be required to pay compensation to the private tollroad operator. By agreeing to this, the government had effectively restricted itself from pursuing sustainable transport policies in the future, and this led to a public outcry over the contract terms.
The Concession Deed for Citylink also includes strong 'Material Adverse Effect' provisions that are broadly similar to those for the M2. These can be found in Clause 2.9 and the Appendix to the Deed, which is available from the government's online contracts system at www.contracts.vic.gov.au. These provisions might oblige the State Government to compensate Transurban if, for example, it
Since the western section of Citylink is also the main road route to Melbourne Airport, it would appear that a train line to the airport is just the kind of thing that would trigger compensation. Were this the case, advocacy of the train line might face problems (though even this is far from clear, as we explain below).
Fortunately, however, the Deed also expressly excludes certain items from triggering
compensation. In particular, Exhibit J to the Deed outlines a set
Exhibit J itself is not available from the contracts website, but it can be found on the Vicroads website. It lists a number of potential projects that the government at the time wanted to reserve the right to build at no risk in the future. This included on the one hand all the road projects from the Kennett Government's Linking Melbourne freeway plan of 1994 (most of them now built), and on the other hand,
In other words, there is no obstacle or liability for the
government under the Citylink contract if it wishes to build a
passenger rail line to the airport. The Deed
does provide in a specific clause that this rail link may
still give rise to a Material Adverse Effect if it
More recently, negotiations between the government and Transurban
have led to Transurban relaxing aspects of its Concession Deed in
return for generous government-funded road improvements (such as
additional lanes on the Monash Freeway). Transurban has already
stated in its 2006 'Sustainability Report' that it would not seek
But even if airport rail or some other improvement weren't specifically excluded, and Transurban reversed its current stance to insist on financial compensation, it's still not at all certain they would be entitled to claim it. A legal argument can be made that if Transurban could reasonably foresee at the time of signing its contract that the government might build an airport line sometime in the next three decades, it ought to have factored this possibility into its business case.
Returning to Sydney's M2 motorway, it turns out that the government has since built a train line parallel to the M2 (the Chatswood to Epping link) and the private operator has not made any claim for compensation. As the NSW Auditor-General has noted, the operator made clear at an early stage that it was taking into account the likely construction of the line. So even though the NSW government didn't protect itself by providing for the project in its contract, ultimately it has not been exposed to compensation claims.
Advocates of a train line to the airport, then, need not be sidetracked by the threat of Citylink compensation payments. A 'first stage' rail connection to the existing suburban network at Broadmeadows is feasible and could likely be built for around $100 million - about the same, according to the ACCC, as the airport operator takes each year in profit from its car parking operations.
© 2010 Public Transport Users Association Inc. (PTUA), Victoria, Australia. ABN 83 801 487 611.
Last modified: 23 October 2013