counterfactual. However, there is a substantial complication in pursuing these
comparative questions: it was not public sector involvement itself but the
earlier arrival of and persistence with public sector ownership and operation
of that differentiated Australian railways.
Many forms of assistance were provided to both private systems elsewhere
and to the government systems in the Australian colonies and states. More-
over, as noted, many countries nationalized their railway systems (at least for
many decades). And many other countries—including New Zealand—
embarked on massive expansions of their railways in the latter decades of
the nineteenth century and the early decades of the next. That is to say, other
countries may have taken different paths or had different timing, but ended
up in similar positions.
Consequently, it is difficult to assign to public ownership itself definite
responsibility for the observed Australian outcomes, rather than to public
sector intervention more generally. Therefore, instead of attempting a system-
atic comparative analysis, this chapter draws selectively from international
experience.
First, the outcomes: thefinancial results of Australian railways were briefly
discussed in section 9.2.1; here the purview is broader, on net social value.
It should be said that the only effort at quantifying the economic costs and
benefits of an Australian railway system, Davidson (1982), concluded that the
NSW system produced a net economic benefit overall, 1852 to 1972/73, with
‘internal rates of return’no lower than 10 per cent for any of the subperiods
examined, and higher than the rates of interest on the debt. Admirable as it is,
Davidson’s calculation did not account for all costs, including those arising
from the regulation of competition from other modes. Moreover, it is very
doubtful that a Davidson-like calculation would show a net benefit for the
period after 1972. Nobody has attempted this kind of calculation for any other
state, but some have offered qualitative judgements.
Noel Butlin (1964), although critical of the extent of branch line construc-
tion and rivalry over Riverina trade, judged that the branches paid off in the
1920s. For Victoria in the nineteenth century, Frost (2000) arrived at similar
qualitative conclusions: the railways made a net positive contribution to the
colony’s economy. Boot (2000) demurred, citing the lax investment criteria
that were applied by government, as well as the difficulties that Victoria had in
meeting its debt obligations during the depression of the 1890s.
What difference did the public ownership make and, more narrowly, what
difference was made by early reliance on it? Unfortunately, Davidson’s calcula-
tion cannot tell us—in particular, it sheds little light on the gap between the
best feasible outcome and the actual. Maybe private railways would have con-
tributed more to economic and social welfare; maybe not. The most ambitious
effort along these lines is Bogart (2010), comparing the cost-efficiency of the rail
Jonathan Pincus