ONE OF of the most significant broken promises of the Abbott Government has had little attention. But this week things started hotting up.
Five days before the last election Prime Tony Abbott said, “I have given a commitment that we won’t spend more than $100 million on any single infrastructure project without a published cost-benefit analysis.”
It was a worthwhile promise. It should have been easy to keep. And it would have improved the budget bottom line in the short and long term.
But then, a month before the November 2014 Victorian state election, the Abbott Government handed over $1 billion to Victoria for the $5.3 billion East West Link freeway. There was no published cost-benefit analysis.
There was no cost-benefit analysis because the project is a complete croc. Like nearly every public-private partnership to build freeways in Australian capital cities the taxpayer has had to pay huge amounts of money for very little benefit.
As soon as a freeway is built, it soon attracts enough traffic to make it congested. And then more money is tipped in to widen it or extend it. Or the private element of the project goes belly up and the taxpayer picks up the pieces.
The four belly-ups were: the Cross City Tunnel and the Lane Cove tunnel, both in in Sydney, and the CLEM7 tunnel and Brisconnections Airport Link tunnel in Brisbane. The last cost investors $4.8 billion.
Despite all the “M” freeways, Sydney’s traffic is still a nightmare. Melbourne’s is little better.
The solution is not more roads, but less traffic. And you get less traffic by building decent public transport.
Delivering free-flowing road traffic in Australia’s sprawling cities is a politician’s dream and an accountant’s nightmare.
Abbott’s Victorian venture puts the lie to his claim that “good economic management is in the Coalition’s DNA”.
The Coalition is no more immune than Labor from the politicians’ real DNA – vote-buying.
Just two months before the Victorian election, the Coalition Napthine Government signed the contracts for the project. It was utterly irresponsible to commit to that without a proper public cost-benefit analysis.
Before the election Labor’s Daniel Andrews promised to abandon the project saying the money would be better spent on public transport.
The public usually only gets details of these contracts and the parties to them when the arguments end up in court. And that is what has happened here.
And so it was this week that the Moonee Valley Council pressed ahead with its planning challenge to the project, despite the new Government saying it would stand by its promise to abandon the project.
Andrews, meanwhile, is resisting claims for compensation from the project’s consortium members, one of which is a corporation wholly owned by the Queensland Government.
Abbott is also on the spot. He is fudging whether he will demand his $1 billion back or whether he will let the Victorian Government spend it on other transport projects at a time when the Coalition is facing collapsing support in Victoria.
Several Federal Coalition backbenchers from affected areas in Melbourne have begun a campaign against the Victorian Labor Government to have the project reinstated.
How much easier it would have been if the Coalition Victorian and Federal Governments had applied principles of good government and not thrown billions of dollars on a project without an independent public cost-benefit analysis – not the usual pie-in-the-sky studies from those who hope to benefit from the project.
The project is so bad that Andrews believes he would still be better off without the money from the Feds and having to foot a compensation bill as long as he does not have to proceed with the wasteful project.
As it happens, Andrews has a couple of cards up his sleeve on the compensation claims. He could run dead in the Moonee Valley action and hope the court finds the previous Government’s actions were defective.
Or better, he could get an independent analysis done. It would show that the project was so financially ill-conceived that the consortium members would likely lose money so they are well out of it. And clauses in the contract stipulating defined damages would likely be unenforceable and be replaced by actual damage suffered such as modest lead up costs.
There are lessons here for the ACT and NSW. The ACT has at least partially resisted the big-road nightmare and proposed light rail. But just because it is public transport does not mean it will automatically pass a cost-benefit analysis.
Ultimately, the ACT will have to get more ambitious and connect Woden, Tuggeranong and Belconnen to the network. A partial network may not attract enough patronage.
Many fear a white elephant, but in the long-term good rail will usually beat other forms of transport.
The Alice-to-Darwin railway was condemned as a white elephant before construction. Now rail freight is cheaper than road freight and nearly all the big trucks are off the Adelaide-Darwin route.
The ACT Government should avoid falling into the Victorian conundrum by not engaging in unnecessarily large pre-election financial commitments.
And the ACT Opposition should refrain from promises to break contractual promises.
In NSW, meanwhile, the Government is proposing asset sales to fund two major road projects – West Connex and NorthConnex. It is like selling the family silver to buy two white elephants. And that’s what they are when you look at the history of Sydney road projects.
With all Australian Governments bleating about scare resources for infrastructure, state governments should be more careful on what they fund. And the Federal Government should not encourage them by under-righting their unanalysed idiocy with tied grants.
Demanding sensible infrastructure spending with proper cost-benefit analysis should have been an easy promise to keep. But not for Tony Abbott.
CRISPIN HULL
This article first appeared in the Canberra Times and Fairfax Media on 21 February 2015.