JOHN AUSTEN. Doubts about infrastructure go beyond Sydney Metro.

John Menadue recently asked for an open public inquiry into the NSW Metro scheme.  Given the momentous questions about that scheme and its supposed evaluation there is no doubt such an inquiry must be Australia’s highest infrastructure priority.

 https://johnmenadue.com/john-menadue-it-is-scandalous-how-infrastructure-spending-escapes-proper-scrutiny/ 

Serious questions about projects and evaluations don’t stop there.  Infrastructure Australia’s evaluation of Westconnex also demands revision.

It was recently revealed that Westconnex will no longer extend as first planned to Sydney’s Kingsford-Smith airport or Port Botany.  The media’s concern is whether motorists will be slugged yet another toll as they exit Westconnex – for another road to reach the airport.

Perhaps a bigger concern is Infrastructure Australia’s enduringly positive evaluation of Westconnex despite apparently significant changes to its functionality.  The assessment assumed a Westconnex-airport and seaport connection was part of the core functionality that the taxpayer was getting for its $17-20 billion dollars; apparently the relevant Sydney Gateway was to have costed $800 million.

What now is the public to make of the increase in costs of a ‘Sydney Gateway’ no longer provided by Westconnex but purportedly by a third party – at more than double the cost assumed by Infrastructure Australia in its original Westconnex assessment? (http://www.smh.com.au/nsw/1-billion-cost-blowout-in-westconnex-gateway-project-to-sydney-airport-20170810-gxt6wc.html)

What impacts do such scope reductions of Westconnex have on the merits of the overall project?  We cannot tell, from what Infrastructure Australia published.

Infrastructure Australia’s brief summary evaluation of Westconnex – similar to its fleeting assessment of the even more expensive Sydney Metro rail – recited NSW Government claims of a benefit/cost ratio of 1.7.  While not stating Infrastructure Australia’s own estimate, the summary implied a belief that the true ratio was less than this, closer to 1.0 – perhaps only just passing an economic merit test.

The summary said sensitivity tests provided some confidence for this belief.  However, it did not say what sensitivities were tested.  Did Infrastructure Australia test exclusion of the Sydney Gateway?  Did it increase the cost of this gateway connetion by more than double to see what that did to the business case for taxpayers?  Did they consider ‘toll saturation’ (a big topic in Sydney)?  Did Infrastructure Australia consider the financial costs for other roads arising from Westconnex?  Or cross-subsidies from other roads? Or less motorist demand due to an additional toll? These are all valid areas of analysis on behalf of taxpayers, given the billions at stake.

Some simple arithmetic might help to illustrate the point.  A billion-dollar extra cost would reduce WestConnex’s benefit/cost ratio by between 0.1 and 0.2.  If the true starting ratio was say 1.5 instead of the 1.7 asserted by the NSW Government, there might not be a real problem.  However, if it was below, say, 1.3, there might be a very big problem.

Hence it is not certain but at least possible that Westconnex is uneconomic because of scope and cost changes.  Such a possibility is increased if a West Metro was factored in – a fact even pointed out by a NSW Government memo!

Infrastructure Australia’s promoted importance of Westconnex, its $17-20 billion price tag and the lack of clarity in its summary are reasons enough for us to demand clarity and depth of analysis by independent parties.

Infrastructure cheerleaders may argue that as Westconnex is already underway, this call for clarification is merely trouble-making  –  Infrastructure Australia should not be asked to reassess its independent view.

That is a very bad attitude.  It undermines the integrity of and confidence in assessments.  Turning a blind eye to major shifts in what Westconnex purports to do and how much this might cost would encourage other States and wider proponents to try to mislead Infrastructure Australia and therefore the Commonwealth and the public on future projects.  On this basis, costs in said future projects could be omitted, the benefits exaggerated and functionality brazenly misrepresented, safe in the knowledge that there are no reviews or changes to the independent umpire’s first view of a given project’s merit.

The expenditure of tens of billions of dollars, and agreement to plans that in some cases will shape our cities irreversibly, should not be treated like a football game where the umpire’s first call is final.

Happily for Infrastructure Australia, it has already set its own precedent that should allow these major changes and questions around Westconnex to be reviewed in a straightforward manner.

Infrastructure Australia recommended a $4.5 billion dollar Cross River Rail project for Brisbane three times; twice under Anna Bligh’s Labor Government (2011 and 2012) and also under Campbell Newman’s Liberal National Party Government (2013).  However, after subsequent scope and cost changes by Anna Palaszczuk’s Labor government, Infrastructure Australia revised its evaluations and did not recommend Cross River Rail as a national infrastructure priority in 2017. Very odd!

Infrastructure Australia itself recently argued the community ‘needs to be educated’ about road matters.

What better way to start than a solid review of the revised Westconnex!

If an improved evaluation is not forthcoming soon, we have another candidate for an open public inquiry to sit alongside Sydney’s Metro.

John Austen was head of economic policy at Infrastructure Australia until  2014.  He is now a happily-retired Sydney western suburbs dweller.  More details are at his website The Jade Beagle.

 

print

This entry was posted in Infrastructure. Bookmark the permalink.

3 Responses to JOHN AUSTEN. Doubts about infrastructure go beyond Sydney Metro.

  1. Perhaps even more remarkable is the business case itself for WestConnex says that neither of the first two stages have a net positive benefit (being the M4 East from Concord to Haberfield, nor the New M5 from Beverley Hills to St Peters). Both were contingent on the third stage which links them, and to the Port and Airport. So the entire business case is invalidated, but the project with more than $4b of State funds and a $2b Australian Govt loan (itself heavily criticised by the Australian National Audit Office for its very lax governance) just continues. The Environmental Impact Statement (more than 7 500 pp) for this third stage shows that it will increase traffic congestion, reduce public transport speeds and reliability and will have lost all congestion benefits within 8 years of construction. It is all on the public record, but it is a large, complex project with a huge publicity budget to sweep problems under the carpet. When was the last time a Government roads project sponsored a league and an AFL team, built a child care centre and ran a grants program for playgrounds? Only something like WestConnex needs that level of “community engagement”!

  2. j austen says:

    mr lee-williams; thank you for that.

    after a series of articles, it seems infrastructure australia has faltered at least since the start of 2017; publishing under-researched material and with a lean towards more spending. i am not interested in the why but the what.

    by far the biggest concern is the sydney metro and its evaluation; westconnex, expensive though it is, is nowhere near as consequent – for good or bad.

    one of the problems with infrastructure australia’s published evaluation of metro was that it only looked at the sydney city part; the purpose of which is probably to bail out the north west mistake. all parts should have been looked at together, and if so the evaluation may have been very similar to what they say about westconnex; the early stages are not worth doing, but it is possible, if unlikely in the case of metro, they might be saved by later stages.

    so i disagree with the idea of chopping up a project assessment into components as then governments will only ‘assess’ those parts which seem worthwhile. pacific highway is an example of assessing the whole idea; as is westconnex – but this was not done for metro.

    on westconnex, the facts have changed. so whether or not the published evaluation is believed, it needs to be redone. and it needs to be substantially improved with the aim of providing confidence to the community in the assessor.

    one way of doing so is an open public inquiry seeking documents etc. given the issues i think that is inevitable for metro.

    there are other ways to improve public confidence in ‘research’, projects and issues of less magnitude. one is to hold public hearings before an expert reference group. a draft report, seeking comments, should be published by the ‘secretariat’ or ceo. comments should be published. a final report, of a substance equal to the importance of the project, should be published by the chairperson. these are techniques used by the productivity commission.

    those ideas will soon be at hte jadebeagle.com

    regards

    • That is a neat summary. The idea of a trusted reviewer is something that I have been a great supporter of. But then again, I thought that of IA and then saw what happened to Peter Newman. The reality is that where there is a passion project of an elected official, it seems nigh on impossible to get a defensible review process going. It gets captured by the need to sustain the announced project, regardless of merit. I dare say that if an independent evaluation team that was funded by donations from the public was set up with the best experts in the land, some imperative would be formed in Government to discredit it, rather than work with it, take constructive comment and address any identified issues. Such is the broken governance model and adversarial approaches to opposition, which just forces communities to act in the same way. Whereas civilised and useful consultation would work, and helping people understand complexity with the assistance of independent professionals would mitigate many concerns we are instead faced with an odd mix of hyperbole about benefits, obscuring of any problems and a stonewalling of any objection. Metro is fascinating, because it is a transport ideology wrapped up in a property play that could lead to transformations of communities (I am not judging good or bad) but it has an astounding price tag. Kings Cross Station in London was redone for not much more than a single station box on metro in the burbs. It could be brilliant, it could be problematic. But you are right, it hasn’t been rigorously evaluated in any form.

Comments are closed.