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The way to solve Sydney's CBD congestion is primarily through re-routing the buses, not by wasting $billions on costly, inflexible, low capacity, infrequent, slow, heavy (not 'light' at all), dangerous, imposing & pedestrian-unfriendly 19th-century trams/light-rail !
The advantages of buses over light rail are discussed in my "Strategies for growth in public transport" paper (with the Overground network concept), especially the higher service frequency that can be afforded, which is what customers value more than anything. Below describes re-routing Sydney buses to reduce CBD congestion. Further options for re-routing buses away from the congested northern Sydney CBD are also shown in my Sydney Metro plan.
Re-routing surface bus routes offers the fastest and best value-for-money solution, but improved pedestrian amenity and even greater capacity can be obtained at higher cost through bus tunnels, as done in Brisbane's Busways and recommended by Infrastructure NSW in its 2011 "First Things First" strategy referenced below.
Finally I propose below a relatively low-cost tunnel to create a partial ring-road for cars and buses to avoid Sydney's central and northern CBD.
1. Re-routing buses
The problem with Sydney CBD's bus congestion is (was) not a lack of bus capacity, but too much!
Sydney Buses has been creating severe congestion for many years by routing too many buses that are half or two-thirds-empty into the northern CBD (apparently just to suit decades-old scheduling & driver rostering habits).
More efficient routing is simply all that's required to solve the problem (rather than replacing rubber tyres with track!).
The basic concept is shown in the diagram below, and explained further in the pdfs attached here on bus re-routing & bus vs light-rail.
The main way that light rail provides increased capacity is by removing seats so there's room for more people to stand. But a similar approach can be applied with buses, e.g. the Mercedes-Benz "CapaCity" bus, which has a capacity similar to light rail, with space for 193 passengers including 42 seated, but is much cheaper and more flexible (fully low-floor, 20m bus with four double-width step-free entrances, single-articulated with two steered axles giving 23m turning circle):
Or here's a similar "track-free tram" proposed for Parramatta Road (in a rare outbreak of common sense from councils, having been released from the reins of democracy!) — which even the most ardent rail fan now supports over light rail:
Also, with the rapid development of battery vehicle technology, electric buses (maybe even driverless) would now be a much cheaper way of addressing diesel bus noise & local pollution than overhead tram power lines. Hybrid diesel-electric buses could operate on their electric motor in the intensely pedestrianised CBD then recharge their batteries from the conventional engine once outside the CBD. Alternatively, the latest battery charging technology would enable a bus to be quick-charged in ten minutes at the depot - faster than it could be refueled with diesel! Here's a new all-electric, 60-foot (18.3m), 60-seat articulated bus from Chinese firm BYD, which can do 275 miles (443km) after a full 2-3 hour charge and will be used to fully electrify the bus fleet in an LA County by 2018:
China is leading innovation & application of electric buses and other public transport technology such as trackless-trams (using painted lines for virtual guidance) and an elevated bus that travels above car traffic.
Meanwhile Sydney is repeating the mistakes of Edinburgh, creating CBD chaos that's driving retailers out of business, so it can put in 19th-century technology that will have lower capacity than buses and worsen CBD congestion!
2. CBD bus tunnels
Chapter 7 ("Bus & Light Rail in Sydney") of INSW's 2012 recommended State Infrastructure Strategy discusses the trade-offs between capacity and pedestrian amenity and highlights the limitations of light rail in Sydney's very small and constrained CBD.
Instead it proposed re-routing of buses in the short-term followed by the building of underground "Bus Rapid Transit" tunnels for a large increase in capacity whilst fully freeing up surface streets for pedestrians.
Writing this at 17 Sep. 2016, it may not be too late! If they dig a bit more where they've started light-rail preparatory work in these photos, they could make good entry/exits for a bus tunnel !
(update 9/8/17: even now may not be too late, since most of the money spent on CBD light rail so far would be on sub-surface preparatory works, which would be needed anyway for a bus tunnel, & the small amount wasted is nothing compared to the waste if they go ahead, or what governments waste on stupid decisions every year anyway!)
Here's what it could look like (picture of Brisbane's SE Busway tunnel):
After its wasteful flirtation with the Commonwealth-funded Gold Coast Light Rail, Brisbane seems to have returned to common sense with a strategy using buses instead of track, giving them the flexibility for higher capacity at lower cost, which in turn provides resources for what matters most to customers — faster, more frequent services to more destinations.
3. A partial ring-road
The attached "a partial Sydney CBD ring road.pdf" describes a partial ring-road for cars and buses to avoid Sydney's central and northern CBD, using a short (relatively low-cost) cutting/tunnel linking Kent St to Macquarie Street via the Cahill Expressway (which could be moved underground with a metro rail station if Circular Quay is rebuilt as in my proposed Sydney Metro strategy).
This partial ring road could be especially useful for diverting Barangaroo traffic, which is otherwise likely to be in gridlock once the area is fully developed.
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