In December last year, a new Czech government took office. Our country’s debt is rising at an unprecedented rate (CZK 800 billion in the last 2 years), inflation may reach 14% and Covid is still weighing on our economy. Yet all political parties continue planning the construction of high-speed rail lines here. (HSR/VRT).
How much will the Czech HSR cost and how will it affect us all as taxpayers?
Various figures have been reported in the media, ranging from CZK 450 billion to CZK 818 billion in a Senat 2 weeks ago. For politicians (government and opposition), however, such amounts are not a problem.
Furthermore, the Czech Republic needs to increase its defence budget from the current 0.7% to about 3%. Where’s that money coming from?
Will we pay for our HSR by issuing a bond, and issuing another as that falls due… and then go into default in a ‘South American’ manner? Can we defer responsibility for the cost of it to our children and those children yet unborn?
They won’t thank us, because HSR will be outmoded by the time it is built, and the population densities of our country are too small to allow it to operate without huge subsidies. Our population is projected to be static for the foreseeable future. International travel constitutes a marginal amount. The trains will be empty because of the basic conundrum: in order to achieve desirability through frequency there will have to be many trains an hour, and there simply aren’t enough people in the catchment areas of our small cities for this.
The politicians who support HSR and the Railway Authority (Správa Železnic – SŽ) claim that we will receive a large part of this investment from the European Union. The reality is likely to be quite different: According to a recent European Court of Auditors report, the EU contributes on average only 11% to the construction of high-speed lines in EU countries, and only that when they are perceived to be viable.
The construction of high-speed lines in the Czech Republic will burden the state budget with several tens of billions of CZK per year during the construction period.
Passenger train transport in the Czech Republic is heavily subsidised by the state and high-speed trains will be no exception. HSR operations will be loss-making. We will go into debt to make a loss. But the political rhetoric assures us that this is fine: “Czech HSR is a service to the people”.
It is not just the citizens affected by the construction of HSR who will suffer.
This huge investment does not yet include compensation for the municipalities affected by the construction and operation of the high-speed lines. This means that the project budget does not include money for the resources and measures that the municipalities will require to cope with the impacts of the construction and operation of the HSR. The Railway Administration comments that “the agreed and accepted requirements of the municipalities related to the transport infrastructure are covered by a general reserve within the investment costs.” These compensations have not been discussed with most of the affected municipalities in (for example) the Kutnohorska region, let alone agreed upon. In addition, the general reserve that they speak of for investment costs has been largely absorbed by the high inflation of construction costs since the feasibility studies were signed off.
The municipalities will have to repair and maintain new local infrastructure in their cadastral territory that is not directly related to the operation of the VRT, but necessary because of it.
For example, the construction of new facilities will be necessary to ensure the serviceability of the area around the line. The budget of each municipality affected by the operation of the VRT will have to provide for the future maintenance of roads along the line, underpasses, overpasses, green belts and similar measures. This will, of course, reduce the funds available for other services to citizens.
As tax-paying citizens, we are not indifferent to what public funds are used for. In projects planned to be in the public interest, it must be clear to every citizen what the benefits and risks of its implementation are. Many questions arise. For example the Vrtáci, z.s. association has been very active in asking local and regional councillors, MPs and senators. They want justification from the sponsors and developers of the VRT project about the social and economic sense of the whole work.
At the end of January, after more than six months of urging, the Railway Administration signed off on an old feasibility study for the Prague-Brno-Břeclav route, which passes through the Kutná Hora region. However, this version lacks detailed information on the economic return of the whole construction. Presentations by the railway administration show that only a third of passengers will use the high-speed lines for employment-related journeys. The rest of the passengers are students, pensioners and people travelling for pleasure.
For example, the current Minister for Transport, Mr Kupka, at a meeting of the mayors of the municipalities concerned, defended HSR by arguing that young people want to travel and that this fast mode of transport will enable them to go to Germany for the day for a concert. Politicians talk about the ‘Green Deal’, yet they encourage people to travel unnecessarily.
Indeed, such ‘induced’ transportation is a cornerstone of the supposed viability of the project. Without it, the project fails to meet the minimum economic thresholds. How is that? Simple. In the feasibility studies, the ‘time saved’ of those who would not ordinarily travel is monetised as an hourly value and ploughed back to make up the numbers. It makes up twenty per cent of the ‘economic benefit’, whereas the reality is that it is a cost. It’s insane. Far from improving the ‘benefit to cost’ ratio, induced transport reduces it. And the Railway Authority has yet to explain it.
The following two graphs illustrate quite how far from reality the Railway Authority’s predictions are.
And so we are back to square one. Where is the huge economic benefit that is consistent with environmental protection? Why is it so difficult for the Railway Authority to provide concrete, tangible figures that withstand proper independent scrutiny, with their sources?
Perhaps if we had fully electrified, modern and secure normal rail transport today, 30 years after the revolution, we would be happy and put the billions saved into necessary projects that actually benefit society.
N.B. This is an extended English version of Dr Mikulka’s article for Vrtaci, which you can read here: https://www.vrtaci.cz/rychlodraha-nespi/