The Age: Labor’s East West Link ‘policy’ is pathetic. August 25, 2014, Kenneth Davidson, Senior columnist at The Age
Tim Pallas seems to understand the needs of the rent-seekers.
Victoria’s major political parties are so confident the East West Link project is stitched up, there’s no longer even a pretence that proper process has been followed.
Instead, the Coalition government is following the dodgy precedent set by the previous Labor government’s Wonthaggi desalination plant evaluation – eyes wide shut, no public business case, no cost/benefit analysis, no independent environmental impact statement, no mandate from the electorate, and no legitimate reason offered as to why the public-private partnership contract to build the road couldn’t be delayed until after the November state election. It’s a case of full speed ahead. Any bodgie argument will do.
According to government ministers, traffic-modelling experts predict East West Link commuters will save 27 minutes, on average, on a morning peak journey. Thinking this looked a bit rich, the former Greens mayor of Yarra, community activist Alison Clarke, decided to time her journey across the existing roads during the morning peak and found it took about 22 minutes. She videoed her journey with a clock on the dashboard to prove it. It would appear that the time savings were dreamt up by the government’s spin doctors.
An official who was well qualified to do the evaluation resigned last year on the grounds that the figures justifying the project could not be trusted. The truth is, like most road projects of this nature, any time saving is quickly eroded within a couple of years as more traffic is attracted to the new road, unless there are public transport alternatives.
As Clarke pointed out, either the East West Link is actually a time machine, or the estimates are garbage. Certainly the link is expensive enough to be a time machine. The estimated cost of the 18-kilometre road is $18 billion – that’s $1 billion per kilometre, or $1 million per metre. This compares with the $12 billion cost of the 57-kilometre Gotthard Base Tunnel through the Swiss alps, which is equal to about $211 million a kilometre, or $211,000 a metre.
Apparently it’s cheaper to tunnel through rock than mud, but the Gotthard comprises two high-speed rail tunnels, compared with a 4.4-kilometre single tunnel under the Melbourne Cemetery. The dead are sacrosanct.
Pity about the desecration of Royal Park due to the open-cut tunnelling for the rest of the road. And a further pity about the spaghetti junction connection with CityLink, which Transurban will widen in return for an extension of its lucrative concession to avoid peak-hour gridlock on the way to the airport.
For its investors, CityLink is the road to riches without peer. Its tolls are indexed by 4.5 per cent a year or the inflation rate, whichever is higher. Its tolls are at least three times the amount necessary to fully finance the road if it had been funded by public debt. And, thanks to the way the concession was structured, Transurban pays very little tax. A leading bank in the project was Macquarie. A chief architect of the contract in the then-government, state treasurer Alan Stockdale, was appointed to Macquarie on his retirement from parliament in 1999.
The East West Link is another financial boondoggle in the making. The government does not intend to ever release its business case, despite its claim that the results show the $18 billion investment for the full road would yield a positive return to the state.
The Labor opposition is as committed to the project as the government, but it pretends to oppose it because it realises that if it openly supports the link, it stands a good chance of losing up to three inner-Melbourne seats directly affected by the road to the Greens. Labor has adopted the position that if it wins the election, it won’t cancel the link if the contract is signed by the Coalition government before the election.
Labor’s Treasury spokesman, Tim Pallas, originally said Labor in government would not cancel the contract because to do so would involve “sovereign risk”. When it was pointed out that this was incorrect, Pallas claimed a government could not break a signed contract because it would lead to heavy financial losses if the state lost its triple-A credit rating as a result. He was then forced to retreat from this canard. The loss, in the unlikely event of a credit rating downgrade, would be trivial compared with the cost of proceeding with the link and the near certainty of a credit downgrade if the road is built.
As reported in The Australian Financial Review on August 11, Pallas now says that if contracts are signed before the election, a Labor government would build stage one of the link – not because it would have a legal obligation, but because Victorians have to understand that “when the state of Victoria says they are going to do something, they do”.
It seems to me that Tim Pallas knows what he has to do to show the rent-seekers who prosper most from lucrative infrastructure contracts that he understands their interests every bit as well as the Coalition. The pity for Victorians is that the de facto grand coalition between Labor and the government excludes a collaboration with the Greens – the only party going into this election with a coherent public transport policy.
Kenneth Davidson is a senior columnist for The Age. Email: firstname.lastname@example.org