WestConnex, the $11.5bn road paved with Coalition gold

Guardian Australia: WestConnex, the $11.5bn road paved with Coalition gold. Lenore Taylor, political editor. Wednesday 13 August 2014.

Tony Abbott, the ‘infrastructure prime minister’, committed early but cost-benefit analyses ran late

Tony Abbott during a press conference in Sydney for the WestConnex motorway in 2013. Photograph: Paul Miller/AAP

Tony Shepherd, having completed his work heading the Abbott government’s commission of audit and his term as president of the Business Council of Australia, is enthusiastically pursuing his role as chairman of Sydney’s $11.5bn WestConnex road.

It is, he writes in the Daily Telegraph today, the most exciting project he’s ever been involved in: “WestConnex is not just a road. It’s Australia’s largest transport project unlocking $20bn in economic benefits to NSW.”

That $20bn figure comes from the executive summary of the project’s business case released last September.

But the Coalition committed the people of Australia to spending $1.5bn on the road before last year’s election, as part of the prime minister’s promise to be the “infrastructure prime minister” who would “build the roads of the 21st century” and have “cranes over cities” within the year.

At that time no business case was available. When the government promised WestConnex an additional $2bn loan in the May budget, the federal infrastructure department had not yet checked the business case calculations.

And the full cost-benefit analysis is still not publicly available, on commercial grounds, although some of it has been provided in confidence to the NSW upper house.

On 26 May – well after the extra $2bn concessional loan had been announced in the budget – Senate estimates heard the business case had not yet been provided to Infrastructure Australia, the body specifically charged with assessing and prioritising all federal infrastructure spending. In addition, the federal infrastructure department was asking “a number of questions to seek clarification around the traffic projections and traffic modelling that underpin the WestConnex business case”.

What makes this sequence of events – promise the money first, examine the business case afterwards – so astonishing is that it is precisely what the Coalition promised it would not do and precisely what it has repeatedly been advised not to do.

Its infrastructure policy pledged that all federally funded projects worth more than $100m would undergo a cost-benefit analysis by Infrastructure Australia.

It has been highly critical of former Labor governments for taking decisions ahead of proper cost benefit analysis, most recently after an audit of the national broadband network by the former Productivity Commission head, Bill Scales, found its planning had been “rushed, chaotic and inadequate”.

Scales recommended that big public-sector projects costing more than $1bn be subject to a cost-benefit analysis, with the results made public before the project starts, and that parties promising projects during election campaigns promise to have them fully costed by IA or the Productivity Commission, with the costings also made public.

The current Productivity Commission chair, Peter Harris, has complained about the same thing, saying in a speech in May: “The norm in major projects is that the announcement precedes the detailed planning. Then, if there is time, a cost-benefit assessment may be done, but often won’t be published due to confidentiality concerns. Following that, there is a rapid move to tender in order that the promise is not overtaken by the appearance of delay.

“If our infrastructure planning systems were valued, they would be regularly churning out detailed published assessments of cost and benefit in advance of announcements, and these would be given to the community to justify the immense size of some of the commitments being made. This would be in-depth analysis in advance of press release.”

The Australian Financial Review reported on Thursday an industry expert warning Australia is wasting between $4bn and $5bn a year on cost blow-outs on road, rail and bridge projects, in part because of inadequate scrutiny of cost-benefit analyses.

“Governments should also publicly release cost-benefit analyses to show taxpayers they were making the right choices on which projects to build,” said Garry Bowditch, the chief executive of the SMART infrastructure facility at the University of Wollongong.

“They have every right to make a decision between a desalination plant and a hospital, but the public should be brought into their confidence as to how that decision was made.”

The Abbott government plans to further assist these “roads of the 21st century” – on top of its own generous funding promises – through an asset recycling fund, a new pot of money to financially reward states that privatise assets and recycle the money into new infrastructure.

The asset recycling fund was supposed to be filled with money that had been set aside by previous governments in a “building Australia fund” and an “education investment fund”.

But the government has now refused to accept amendments made by the Senate – with the support of Labor, the Greens and the Palmer United party bloc – which would have forced it to keep the $3.5bn set to be taken from the “education investment fund” out of the new road building honeypot and to – you guessed it – make public the cost-benefit analyses.

The government argues that building roads increases productivity and creates jobs. The expert advice says it does that only if the right roads are built, in the right place, for the right cost. (It also says you need a simultaneous investment in public transport to actually reduce traffic congestion, but that’s a whole new argument.)

And the assistant infrastructure minister, Jamie Briggs, insists it is “committed to more rigorous and transparent assessments of vital infrastructure projects to ensure we build more for less more quickly’’.

But that commitment does not extend to insisting on cost-benefit analyses before committing money, or to making them public.

And that means it is impossible to judge if we are building the right roads for the right cost because the cost-benefit analyses are not available for public scrutiny, and were not available to the government when it made its big funding pledges.

It’s worth keeping in mind this absolute disconnect between what the government said it would do on cost-benefit analyses, what it is being advised to do on cost-benefit analyses, and what it is actually doing, when laughing along on Wednesday night with The Hollowmen’s new comedy, Utopia, to be broadcast on the ABC.

It’s billed as “a satire about the difficult process of taking grand, uncosted, inadequately planned, fundamentally flawed schemes – and passing them off as ‘nation building’ ”.

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