I am just back from a trip to Japan.  One thing that struck me as relevant to Sydney were bullet trains, or as they are called there, Shinkansen.  Maybe they could help with the housing problems we face in the Sydney basin.

I was in Kyoto.  Kyoto is 363 km from Tokyo.  It takes the train about 2 hours to make the trip and it stops around 3 or 4 stations.  Sydney to Port Macquarie is 383 km and it takes the best part of four and a half hours to drive.  Train to the nearest station (Wauchope) takes six and a half hours.  If you go south of Sydney 380 km you end up in Bermagui.

More interestingly Osaka is 42 km from Kyoto and a bullet train will get you there in 15 minutes.  If you use the slower express train it takes 30 minutes.  Services run every few minutes during peak hour.

As the population of Sydney grows, the need for more land grows.  This year in Sydney there are 16% less properties for sale than last year.  Supply is the problem.  There are just not enough houses to go around so prices continue to rise for a scarce resource.

You can restrict population growth, and reduce demand, by doing such things as ceasing immigration.  Would this be acceptable?  Not likely.  You can encourage more high rise.  Objections would be loud from local residents.  The other option is to release more and more land on the fringes.  But getting from the fringes to where the jobs are just gets harder.  It leads to unemployment, reduced income, crime and education issues.  It expands the gap between rich and poor.

Now imagine this as a concept.  You have a major population centre between 50 and 100 km from Sydney serviced by bullet train.  You could have people working in the Sydney CBD, but living outside Sydney, able to get to work in under an hour on the Sydney bullet train.

I don’t know which location would suit, but think probably south or south west from the CBD.  West means you have to drill holes through mountains.  North puts you in the central coast or Newcastle which is already fairly well developed.  What we are looking for is an area where there is currently low development.

The process for development would be that the government creates a new satellite city connected to the CBD by regular bullet train.  Maybe it could stop at the proposed Badgery Creek Airport.  By selling off the land to developers, the government generates funds to build the bullet train line and infrastructure.  Land is priced at a level which make it affordable for buyers to buy and build.  The current median price in Sydney is $850k.  Maybe you aim for a median of $600k for a house and land.  You might even restrict investors so that the majority are owner occupied.

The government will need to release land that is probably classified as crown land.  I am not saying this would be the location, but one example could be Belangelo State Forest.  Belangelo is 3,800 hectares (9.300 acres) and is currently used for timber production.  If you allowed 50% for housing and 50% for infrastructure it equates to 18,500 quarter acre blocks.  That is without considering any units, townhouses or other sorts of dwelling.

Initially of course the train service will probably operate at a loss until a critical mass of people use the service.  In fact, the line could be built in stages.  For example, the train initially may only go as close as 20 km to the city.  The next stage could take it 10 km closer and finally it would terminate in the CBD.  Provided people saw a forward plan to build the service to the CBD, they could make a decision about when to move to the satellite city.  There needs to be an overall infrastructure plan and a matching timetable.

There will obviously be objections on environmental grounds.  It is worth remembering that 200 years ago, most of Sydney was natural bush.  100 years ago, much of the outer fringes were bush.  50 years ago, there were still areas of bush in what is now Frenches Forest.  Canberra did not exist 150 years ago.

The train would run through areas that people will object to for all sorts of reasons.  I am sure not everyone was happy about the Japanese bullet trains when they were proposed.  Any change to infrastructure will face opposition.  Imagine trying to convince people to build a Sydney Harbour Bridge today?  There would be a million reasons why it should never happen and it would be a brave government indeed that tried to push it through.

Other objections will come from investors who will want more access to building lots; current Sydney home owners who may see their values drop as supply increases; local residents who want to retain their country lifestyle; developers who want to make as much money as they can from the proposal; overseas investors objecting to being locked out of the process.  In fact the objections would probably overwhelm any government’s will to proceed.

We haven’t even discussed the financials of the project.  It is not likely to be a break even situation, and it may require ongoing support in terms of subsidised train fares for years to come.  It would be interesting however to do the sums, and look at what benefits may be realised.  They would be hard to quantify.  For example what would be the productivity impacts of having a larger pool of workers who would consider travelling to the CBD to work?  What is the impact on consumer purchasing if first home buyers in a satellite city have lower mortgages and more disposable income?  How much tax does that additional expenditure generate?

So what is the purpose of raising the concept?  The purpose is to say that if we apply some creative thinking to the problems facing real estate price escalation, and first home buyers in particular, we can alleviate the pain, and may even solve the problem.

The problem is not the price of real estate.  The problem is the opposition to any conceptual discussion of a solution.

Governments do not have enough power to say that something they propose is for the common good and is not necessarily to make everyone happy.  It seems it is not acceptable for the minority who don’t like something, to forego their vested interest for the majority.  The idea of “for the common good” is called democracy but that is not what we practice.

In an adversarial form of government as we have in Australia, the opposition are not likely to join forces with the government to present a united front.  They are more likely to see an opportunity to gain support by being divisive.

A concept such as this would require all major parties to present a united front.  Is this likely to happen?  Not unless the public demand it.  So it is back to you and me.  Do we want to solve the problem by demanding the major parties come up with an agreed conceptual solution – not necessarily this one – or just complain about house prices and let the problem fester for our children and grandchildren?