This idea that you can stick an incoming government with an $8 billion bill just weeks before an election is a bit rich.
Mind you, the opposition in Victoria led by Daniel Andrews may not be voted into office come November 29. But that’s not the point. The point is that the decision by Andrews yesterday to jettison the East West Link deal is hardly “reckless”, as the government has framed it.
“Economically irresponsible!”, “sovereign risk!”, was the hue and cry from his adversaries across the aisle. In reality, Andrews has delivered the state a credible “out” when it comes to contracting for Australia’s most expensive toll road.
As revealed in Fairfax Media last month, thanks to analysis by actuary Ian Bell, the East West Link may cost a record $1 billion per kilometre to build.
Thanks chiefly to the immense cost of tunnelling, it is Australia’s most expensive road project.
Despite these frightening cost estimates, however, the state has kept its base case for the East West Link shrouded in secrecy. There has been no information on how the project is to be funded.
Given the dearth of detail in the public domain – and court challenges to the project – yesterday’s back-flip by Labor should be regarded as a sensible move. It would have been better if they had had a consistent policy all along; better still if they had insisted on transparency from the start.
Nonetheless, Andrews and co can hardly be expected to support such a big deal where there is such secrecy. Nobody should ever be required to commit $8 billion of other people’s money on a project they know nothing about – and which lacks community approval in any case. That would be truly reckless.
It is never a good look for governments to renege on contracts. It is natural for the Napthine government to be crying foul. But its own failure to put the proposal squarely in public view leaves it with no credibility. How can motorists and taxpayers know whether the East West Link stacks up, or how they are expected to pay for it?
How would Standard & Poor’s know, for that matter? How could a ratings agency evaluate the hit to the state’s budget and the effect on the state’s credit rating arising from the billions in finance that would need, somehow, to be raised?
In a judgment handed down in the Supreme Court this week – in which the government was sued over East West Link, 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 (six lanes) observers had expected traffic in the range of 80,000 to 100,000 a day.
The judgment shows the government has been sitting on the base case proposal since last June. It has refused point blank to share it with the public. This failure to be accountable and transparent is inexcusable, especially in light of the regular implosion of toll-road deals – such as the Cross City Tunnel and the Lane Cove Tunnel in Sydney and the Clem7 and Airport Link projects in Brisbane.
Traffic forecasts, on which these toll-road proposals live or die, have been regularly found to be too optimistic. In the NSW Supreme Court on Monday the case against traffic forecasters for the Lane Cove Tunnel, Parsons Brinckerhoff and Booz Allen, resumes, with the court expected to hear from four traffic experts. They will face scrutiny for implausibly high traffic estimates that were never matched by real traffic once the road ramped up.
BrisConnections, the group that orchestrated the $5 billion Brisbane Airport Link project is likewise headed for the courts. Even where information was public beforehand, it was wrong (traffic forecasts). Imagine how wrong the information might be when the details are only known by government and a handful of project promoters who stand to win millions from the deal.
The real scandal is not Labor’s move to dump the East West Link deal, it is secrecy. The scandal is that politicians – from both sides of the house – are so unaccountable to those who elect them and rather so accountable to vested interests who don’t vote but do stump up party donations.
As in Victoria, so in NSW the government has kept the financials secret for its number one road project, WestConnex. At an estimated capital cost of $15.6 billion, it is unacceptable that the public has not been provided with the details of its number one infrastructure spend.
Public confidence in government is low. In NSW, government ministers have been dropping like flies in the wake of corruption allegations in the Independent Commission Against Corruption – mostly involving hidden donations from business. That neither side of politics is willing to support calls for a federal ICAC suggests there is much to hide in Canberra too.
And yet in Victoria, the government expects its citizens to simply trust it in its secret dealings with the infrastructure lobby. The only way it can be trusted is to make all its dealings transparent, open to public scrutiny and debate. Once these basics are in order, a convention might be struck on the amount of time that should elapse between a billion-dollar spending promise by a government and an election.
Even before the case for a road project is made, a “public sector comparator” should be done by government to assess whether the money might be better spent on rail than road, and then a comparison of funding and structuring models for each (government versus PPP, for instance).