Tunnel vision used for business case
BY WENDY BACON
The NSW government has squandered the opportunity to properly cost infrastructure projects by omitting substantial costs from the equation, Associate Professor Glen Searle told the NSW Parliamentary Inquiry into the impacts of WestConnex.
Professor Searle’s evidence came near the beginning of three days of evidence in which the the government’s defence of the costing and lack of accountability of the WestConnex planning process was strongly challenged. Even so, government representatives told the Inquiry crucial pieces of information were either secret or had to be taken as ‘questions on notice’ because they couldn’t be answered in real time.
Alexandria Residents’ Action Group (ARAG) co-convenor Ben Aveling summed it up for many groups when he told the Inquiry, “As citizens of this State, we have not been able to find out. The Government has used and abused its powers to keep the project beyond scrutiny.“
Professor Seale, who is part of the University of Sydney’s Architecture, Design and Planning Faculty, told the Inquiry that the WestConnex business case had ‘serious inadequacies’, ‘lacked transparency’ and suffered from the problem of being used to justify a decision that had already been made rather than weighing up the costs and benefits before it was made.
This meant that there was “little incentive for the government to prepare an exhaustive analysis that compared this project with alternatives, and much incentive to prepare a narrowly based case.”
The process used to develop the preliminary business case for Westconnex was severely criticised by the NSW Auditor General in 2014. Infrastructure NSW CEO Jim Betts told the Inquiry that a new, much stronger process had been applied and that 36 checks had been conducted on WestConnex. However, these are all ‘cabinet in confidence’ and therefore secret. In fact, the NSW LNP government does not intend to publish any more business cases for major infrastructure projects.
NSW Treasury representatives refused to disclose the baseline financial modelling for WestConnex. Last year, NSW Treasury told the NSW Parliamentary Inquiry into Tolls it couldn’t release the modelling because of the sale process. But now Treasury representatives told the Inquiry that it would be kept confidential for more than 40 years because it could be used in selling further motorways. Treasury also refused to disclose the agreed timeline for the flow of dividends to the NSW government, which still owns 49% of WestConnex
It is already clear that the NSW government’s claim that the overall budget for WestConnex is $16.8 billion disguises billions of dollars in costs to the public such as $1.6m more for the Sydney Gateway, which was quietly dropped out of WestConnex, and more than a billion dollars for other road projects made necessary by WestConnex.
On top of large extra road building costs, Professor Searle listed many other costs that have been ignored. These include the costs of increased congestion on some local roads, loss of property value, health impacts including the costs of increased noise and pollution, loss of heritage and biodiversity and the impact of project construction on communities and businesses. He told the Inquiry that while some costs are hard to estimate, most of these costs could be financially assessed using standard models.
Dr Patrick Harris, a senior research fellow at the Menzies Centre for Health Policy, representing the Public Health Association of Australia also told the Inquiry that public interest issues including public health had not been considered. He described this as a “blind spot” and expressed concern that the equity considerations had been ignored, especially the impact of failing to consider alternative policies for Western Sydney.
NSW Roads and Martime (RMS) CEO Mr Ken Kenofski told the Inquiry that the “lion’s share of the assessment are the economic benefits of time savings, and reduction in accidents”.
ARAG’s Ben Aveling, who is also an IT specialist, challenged RMS time-saving claims telling the Committee that 80 per cent of these (time saved) hours are “non-motorway traffic moving just a little bit faster because there is some traffic underground. That, itself, contradicts what academics tell us. They tell us that building more roads increases the number of cars. It does not increase the speed of cars. So even that microscopic increase in a lot of cars — a big number times a small number gives a big number – 80,000 hours a day and it probably will not happen if the academics are right ….To get those benefits you need free-flowing traffic, and we are not going to get free-flowing traffic outside the motorway. It is even questionable if we will get free-flowing traffic inside the motorway.” He nominated his own suburb of Alexandria as one that will be overwhelmed with traffic, even according to the WestConnex EIS.
SGS Economics and Planning consultant Terry Rawlings appeared at the Inquiry as advisors of the City of Sydney. SGS also disagree with RMS’s time savings analysis. They estimate that rather than the claimed cost benefit ratio of 1.7, the ratio could well be less than 1 when the “overestimated benefits and the underestimated costs are taken into account. The health costs alone could be huge if Dr Nassar and Professor Torzillo’s concerns turn out to be correct.
The accurate calculation of economic costs and benefits are hugely significant in public policy terms. Even so, the language of cost-benefit analysis cannot capture the lived experience of communities including schools that are daily bearing the brunt of seven years of construction or the long term stress of tolls and car dependency.
This is one instalment in a series on the Parliamentary Inquiry into WestConnex.
