East West Link: infrastructure adviser faces conflict of interest claims

Guardian Australia: East West Link: infrastructure adviser faces conflict of interest claims. Daniel Hurst, political correspondent. theguardian.com, Monday 26 May 2014 16.14 AEST

Officials confirm $1bn earmarked for stage two of Melbourne project, despite lack of business case and late 2015 start date

A protest against Melbourne’s East West Link. Photograph: Daniel Fogarty/AAP

The acting head of the federal government’s infrastructure advisory body has rejected claims of a conflict of interest arising from his prior work for the Victorian government on the controversial East West Link project.

Infrastructure Australia’s acting infrastructure coordinator, John Fitzgerald – who is on a leave of absence from the consultancy firm KPMG where he has worked on East West Link – defended his independence during a Senate estimates committee hearing on Monday.

Labor and Greens senators focused on concerns about the quality of evidence behind the government’s multibillion-dollar commitment to the East West Link, a cross-city Melbourne road and tunnel project.

Officials confirmed the government had earmarked $1bn towards stage two of East West Link by 30 June, despite the fact the Victorian government was yet to provide Infrastructure Australia with a full business case and the earliest construction could begin was late 2015.

Fitzgerald said the material provided by Victoria shortly before the federal budget was “very early, very high-level information” which he described as “conceptual”.

“There’s significantly more information that we would require for it to be a full business case,” Fitzgerald said.

He issued a media release on 29 April saying the Victorian government had provided Infrastructure Australia with “an interim business case for stage two”. The same release said advisory body had consistently held the view the East West Link was “a meritorious project”.

The Labor senator Stephen Conroy pursued Fitzgerald over claims of a conflict of interest regarding his ability to independently assess the project’s merits.

Fitzgerald, who was appointed to act in the infrastructure coordinator role in April, said he had taken a leave of absence from KPMG and anticipated being in this role for about six months. He confirmed that his activities at KPMG included work for the Victorian government on the East West Link.

Before going to KPMG in 2011, Fitzgerald worked for Victoria’s Department of Treasury and Finance. He said he was aware of the East West Link project at “very high-level”.

Conroy suggested to Fitzgerald there was a potential conflict of interest because of his intention to return to KPMG.

Fitzgerald replied: “I don’t believe there’s a conflict. The work that KPMG has undertaken on the East West Link has now finished so the work I was engaged with has finished. My only financial benefit was the remuneration I was receiving at KPMG.”

Conroy said: “That is actually the definition of conflict of interest … receiving money from the people you’re now going to spruik for.”

Fitzgerald responded: “I’m not spruiking for anybody.”

Infrastructure Australia provides advice to the government on infrastructure priorities but it is up to the government to decide whether and where to allocate funding.

Government officials told the committee the commonwealth had earmarked $500m for East West Link stage one in 2013-14 followed by $100m, $300m and $600m in subsequent years.

Andrew Jaggers, of the Department of Infrastructure and Regional Development, also explained the commonwealth’s funding profile for East West Link stage two: $1bn in the 2013-14 financial year, nothing in the following four years, and then $500m in 2018-19.

The department secretary, Mike Mrdak, said the government was keen to “see the acceleration of this project”, but the funding would be contingent on the business plan and advice from Infrastructure Australia.

“The payment is due to be made this financial year,” Mrdak said. “The final funding arrangements are subject to the provision of the business plan. It’s not clear whether the business plan will be available before 30 June.” Conroy said the decision to provide $1bn in the next six weeks to a project that could not begin construction until late 2015 was “about as shonky as it gets”.

Labor’s transport spokesman, Anthony Albanese, told reporters the decision defied the government’s rhetoric about a budget emergency and appeared to be “assistance to their friends in the Victorian government”, who would gain interest at the expense of the commonwealth.

Albanese also questioned Fitzgerald’s appointment and leave of absence from KPMG, saying the government must assure people the independent role of the public service was preserved.

East West Link stage one appeared on last year’s Infrastructure Australia priority list as a project with “real potential” – one step higher than “early stage” but less advanced than the other categories “threshold” and “ready to proceed”.

Fitzgerald said Infrastructure Australia was yet to see a full business case on stage one from the Victorian government but he understood it was “imminent”.

Other Victorian projects – the M80 ring road upgrade and Melbourne Metro Rail – were rated by Infrastructure Australia in the more advanced category of “threshold”.

Federal funding for the M80 has been reduced from $525m to $276m, according to officials. Tony Abbott also cut funding for Melbourne Metro Rail, saying public transport was a state government responsibility.

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