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It's easier to reach Port Melbourne on the 109 tram from the CBD (which until 1987 was Australia's first railway opened in 1854) so I'd prefer TT Line stayed in Port Melbourne. However the decision's been made. I suspect patronage will decline.
Patronage for foot traffic may decline, but people will continue to take their cars. The price of rental cars in Tasmania dictates this for anyone who needs to move around Tasmania on a budget that is less than $500 a day.