Westconnex cost ‘cover-up’ to end

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The Australian Financial Review: Westconnex cost ‘cover-up’ to end. Geoff Winestock and Jenny Wiggins. 13 August 2014

Kerry Schott says it is a “complete furphy” the ­government should keep business cases secret for commercial reasons.  Photo: Sasha Woolley

NSW could be forced to disclose most of the business case for its $13 billion Westconnex freeway project after an independent mediator rejected claims the material was privileged.

The decision comes as ­infrastructure experts, including key NSW ­adviser Kerry Schott argued it was a “complete furphy” the ­government should keep business cases secret for commercial reasons.

Mediator Keith Mason QC said in a finding released on Wednesday the NSW government was wrong to refuse to release all but 223 documents about the Westconnex project on the grounds they were “commercial-in-confidence”.

The documents were sought by the NSW upper house using a procedure known as a call for papers but Roads Minister Duncan Gay held back the documents and claimed privilege. Greens MP Mehreen Faruqi challenged the decision and called for the ­mediation. It found only two of ­225 documents should be kept secret.

Ms Faruqi said the government must now release all the documents cleared by the mediator which cover among other things the tolling strategy for the road.

“The independent arbiter has stated that the vast majority of documents which I challenged are not privileged. The Roads Minister needs to now ­commit to releasing the WestConnex documents and answer why they were privileged in the first place,” she said.

CALLS FOR ANALYSIS

As the mediation approached. the government released some of the ­documents last week, including an email in which independent consultants expressed doubts about the traffic forecasts used to justify the project.

Meanwhile, industry leaders backed calls for cost benefit studies on ­WestConnex and other big projects like Melbourne’s East West Link motorway to be made public.

Government claims that publicising cost benefit studies would lead to the release of commercially sensitive ­information and be “dreadful for ­tenders” was “a complete furphy”, Ms Schott told an infrastructure ­conference hosted by the University of ­Wollongong in Sydney on Wednesday.

“It doesn’t really stand up to close examination,” Ms Schott said, adding she was “completely astonished” the Rudd government had begun work on the National Broadband ­Network ­without undertaking a cost ­benefit analysis.

“The fact that a government would decide that it was going to commit $35 billion to $40 billion to something without actually doing a cost benefit analysis is just breathtaking.”

NBN Co chairman Ziggy Switkowski has called on governments to encourage more foreign competition for ­infrastructure projects, claiming they had hired local contractors at “over the odds” rates during the mining boom.

“Governments need to recognise when things are overheating,” Mr Switkowski said.

POPULATION GROWTH

The NBN chairman said ­governments should change tendering processes to encourage more ­competition by splitting large projects into smaller projects to allow medium-sized contractors to bid more effectively against market leaders Leighton Holdings, now owned by Spanish contractor ACS, and Lend Lease.

Governments should also seek out foreign firms and lessen regulatory burdens, such as safety and accreditation requirements, on foreign firms, he said.

Ken Henry, SMART’s chairman and a former Treasury secretary, also warned unprecedented ­population growth heightened the need to improve productivity. He called for clearer infrastructure pipelines and simpler project approvals processes, describing the current system ­as “inadequate, costly, complex and uncertain”.

In regional areas, state governments should outsource maintenance work to encourage more competition rather than giving it to in-house agencies like NSW’s Roads and Maritime Services, Mr Switkowski added.

The NBN chairman also called on governments to lay out schedules of projects over six to 10-year horizons to allow contractors to better manage their work forces, and reduce ­“onerous” design requirements that can account for 50 per cent of bid costs, which he said were “well above” ­international levels.

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