Construction of the One-hour Turku Rail Link Will Return Approximately 750 Million Euros in Taxes and Earned Income
The planning and construction of the new railway link between Helsinki and Turku is an important project in terms of its socio-economic impact and it would, before its completion, generate employment corresponding to nearly 15 000 person-years, approximately 700 million euros worth of earned income, as well as tax revenues to municipalities and the state in the amount of 263.2 million euros. The information is based on a study conducted by Gaia Consulting Oy.
– Approximately 750 million euros of the overall investment would be returned in taxes and earned income. The investment would be divided over multiple years, and the aim is to complete the construction in parts, says Pekka Ottavainen, Managing Director at Turku One Hour Train Ltd.
The information in the study is based on the general plan for the project, where the overall cost of the rail design and construction is estimated as three billion euros. The estimate has been adjusted by updating the rate of inflation and the charge factor as well as certain cost items, which means that the study has been produced based on an investment of 3.8 billion euros.
– The company is currently preparing its own cost estimate for the completion of the entire project, and the initial range is thought to be 3.4–4.0 billion euros. As the planning proceeds and the schedule and level of costs are clarified further, we will of course be able to provide a more specific estimate. We are currently reviewing solutions for optimizing the cost level, says Ari-Pekka Niemelä, Chief Financial Officer of Turku One Hour Train Ltd.
Assessment of Post-project Impact Is Being Finalized
Of the total investment into the Turku One-hour Rail Link, two percent will be allocated for rail design and 98 percent for construction design and the construction itself.
During the construction stage, the expenditure will consist of material and service purchases. Bulk of the procurement, approximately 2.3 billion euros, will take place in the areas of bridge and tunnel construction as well as road and railway construction.
The rail design and construction will result in employment corresponding to almost 15 000 person-years. The project will generate approximately 700 million euros worth of earned income, approximately 209.1 million euros will be paid in personal income tax, and corporation tax will amount to approximately 54.1 million euros.
Of the generated tax revenue, approximately 75 million euros (28%) will be collected by the municipalities and approximately 189 million euros (72%) by the state.
– The results of the study show that the project has a significant impact on economic activity even before its completion. As traffic begins along the new railway link, the regional economic impact will extend to commercial and industrial life and the labor market within the catchment area. The company will share more information about the results in the coming weeks, Ottavainen says.
Improved Accessibility Creates Positive Spillover Effects
In addition to the direct economic impact, the new rail link will have numerous spillover effects on, among other things, the accessibility of the affected areas, integration of the economic and labor market area, and the future of mobility. The areas surrounding the stations in the municipalities are expected to become more popular and thus more valuable.
But money alone is not enough, as active development is required.
– We have been able to respond to this with the project partnership concept. In addition to the state, the municipalities are also involved in the project as owners and participate actively in the design process through financing, zoning, and land use planning, Ottavainen says.
Pekka Ottavainen, Managing Director, tel. + 358 (0)400 261 097, pekka.ottavainen(a)tunninjuna.fi
Ari-Pekka Niemelä, Chief Financial Officer, tel. +358 (4)0 573 9691, ari-pekka.niemela(a)tunninjuna.fi