The Victorian government may cry “sovereign risk!” but the Opposition has delivered the state a credible “out” when it comes to contracting for Australia’s most expensive toll-road.
As revealed by Fairfax Media last month via analysis by actuary Ian Bell, the East West Link is estimated to cost $18 billion to construct, or $1 billion per kilometre.
Despite the frightening costs though, the state has kept its base case for the East West Link shrouded in secrecy. There has been no information on how the project might be funded.
Given this dearth of detail in the public domain – and existing court challenges to the project – the back-flip by Labor could be regarded as a sensible move. It would have been preferable if they had maintained a consistent policy all along, better still if they had insisted on transparency from the start.
It is never a good look for governments to renege on contracts. Naturally, the Napthine government is crying foul over the Opposition back-flip but its failure to put the proposal squarely in public view leaves it without a leg to stand on. How can we know if the East West Link stacks up or how the public is expected to might pay for it?
How would Standard & Poor’s know? How would ratings agencies evaluate the hit to the state’s budget and the effect on its credit rating arising from the roughly $18 billion which needed to be raised?
In a judgement handed down in the Supreme Court this week – in which the government was sued unsuccessfully for “carrying on a business” – traffic estimates of 120,000 vehicles a day were cited.
This seems high. Even for a road of two three lane tunnels, or six lanes, observers had expected traffic in the range of 80,000 to 100,000 a day.
The judgement says the government has been sitting on the base case proposal since last June. The gross failure of transparency could even be deemed to be scandalous in light of the routine implosion of toll road deals – such as the Cross City Tunnel and the Lane Cove Tunnel in Sydney and the Clem 7 and Airport Link projects in Brisbane.
Traffic forecasts, on which these road projects live or die, have been regularly found to be too optimistic – too late. In the NSW Supreme Court on Monday the case against traffic forecasters for the Lane Cove Tunnel, Parsons Brinkerhoff and Booz Allen, resumes with the court expected to hear from four traffic experts on the same day.
Brisconnections, the group which teed up the Brisbane Airport Link project is likewise headed for the courts. Even where information was public beforehand, it was wrong in its traffic forecasts. Imagine how wrong it might be where the details are only known by government and a handful of project promoters who stand to win millions from any deal.