Re: [Sydney] Light Rail into the CBD? [WARNING, contains maths/economics]

[jshugg@westpac.com.au (James Shugg)]

"Ted Gay" <tedgay@bigpond.com> wrote in message news:<mLVO6.11868$
> Found some figures in "Winning Back The Cities", these are 1989 Aussie
> dollars.
> Costs of (then) recent North American light rail projects per km:
> 
> San Diego Trolley East Line-Euclid    6.7
> Portland MAX (Gresham)                12.5
> Edmonton Clareview Extension         16.9
> Calgary North West Line                  22.0
> Edmonton Corona Extension             94.4 (Includes significant underground
> section)
> Multiply these figures by x to arrive at 2001 inflated and devalued AUD,
> where x is say at least four.
> 

Australian prices relative to the US in 1989 have certainly risen, but
not quite 4 times.

Assuming:
A$1 = US$0.89 in early 1989
A$1 = US$0.52 in mid 2001
US CPI = 121.3 in early 1989
US CPI = 176.8 in April 2001  ie US inflation since 1989 is
176.8/121.3 = 46%.

Taking the San Diego example, A$6.7 was US$5.96 in 1989. 46% inflation
takes that to US$8.7 in 2001, requiring A$16.7 at today's exchange
rate. That's an x factor of 16.7/6.7 = 2.5

But what this really tells you is that for an Australian to pay for
1km of the San Diego line in 2001, it would cost him 2.5 times more A$
now than in 1989. Or in more day to day terms, an Aussie on holiday in
the US has to pay 2.5 times more in A$ this year than he would have in
1989.

But for an Australian to pay for an Australian tram line, in 2001,
that would have cost A$6.7 per km in 1989, you only need to use the
Australian inflation rate. Australian inflation over 1989-2001 was
actually just marginally less than in the US (43%, including GST!),
meaning the cost this year would be 6.7*1.43 = A$9.6, ie an x factor
of just over 1.4.

You would only use the 2.5 factor if you were importing the whole
system from the US.

Obviously these are only ball park numbers because tramline
construction costs would not necessarily go up by the same amount as
the consumer price index, could be somewhat more or less.

Cheers, James