An advisor for some of Melbourne’s biggest transport projects has called out misappropriation of taxpayer dollars and growth forecast “failures” in the state’s $1.9 billion infrastructure pipeline, and criticised NSW for similar malpractice.
A succession of transport projects in Melbourne are plagued by ropey estimates with no guarantee of fair value, a lack of scrutiny and gross underestimates in growth forecasts, MAV’s Smart Urban Futures event heard on Friday.
William McDougall, a leading transport advisor employed as a contractor for key transport projects, told Government News on Friday that a string of transport projects in Sydney and Melbourne have been subject to incorrect cost benefit estimates, with most projects announced before “being properly scoped, costed or appraised.”
Among these are the $5.5 billion Westgate Tunnel, North East Link, East West Link and Suburban Rail Loop in Melbourne, as well as the $16.8 billion WestConnex project in Sydney, according to Mr McDougall.
Undertaking an independent review of the Andrews Government’s $5.5 billion Transurban Westgate Tunnel while employed as a contractor, Mr McDougall says he found the project’s touted benefits were rife with errors and inconsistencies. His concerns were raised in submissions to a senate inquiry in mid-2017.
Mr McDougall and a colleague, John Allard, who was also independently contracted on the project, flagged “major concerns” about the traffic modelling and economic appraisal of the project, which he says “was full of deliberate distortions and questionable assumptions.”
The benefit cost ratios of the Westgate Tunnel and Monash Freeway Upgrade, for example, were “considerably overstated,” he says, with the 1.3 figure quoted deserving a ratio of less than 0.7.
“There was a lot wrong with what was done – a lot wrong with the transport modelling, traffic forecasting and economic appraisal,” he said.
Secrecy and fishy numbers
This project, as well as a number of other projects in Melbourne, are riddled with “secrecy” because of an undue focus on “political promises” and consequently disproportionate cost benefit estimates, Mr McDougall says.
Another key Melbourne transport project, the Monash upgrade, had a cost benefit appraisal of 4.2 – a figure that Mr McDougall said should have been around 2.6.
The Westgate project, announced after the Andrews’ Government was elected, had its business case appraised by the same team who undertook the business case for Westlink, which was later scrapped, according to Mr Andrews.
The appraisal of the project was tainted by “optimism bias,” Mr McDougal said. The fact the project is subsidised by billions of dollars in public funds, including tolls, constitutes a “gross misuse of public funds,” he argues.
“If the Westgate Tunnel is a viable proposition, why are taxpayers contributing through the public purse as well as through paying tolls to Transurban?” he asked.
These project pipelines are often “inconsistent” with advice from Infrastructure Victoria and Australia, which is often ignored or used selectively, Mr McDougall said.
But this is not the only instance of misuse of public funds, according to Mr Andrews. He believes that in a number of transport projects, leaders driven by ideology have “distorted” any realistic measure of the cost benefit ratio of projects.
“There’s a lot of secrecy and deals done behind closed doors and I think wilful misuse of public funds throughout the whole process,” he said.
“The numbers that come up in many of these business cases don’t come under close scrutiny but if you take them as they are announced in the business cases you will get a lot of mixed messages and confusion.”
Planners have also grossly underestimated the rapid trajectory of growth in Melbourne, Mr McDougall says, leading to poor transport decisions.
“We also have a long history of underplaying future forecasting of growth. These forecasts are always underestimated. For the past 15 years we’ve got forecasting horizons that have gotten shorter and shorter,” he said.
Since 2004, published growth forecasts have been on a downward trajectory, he says.
Mr McDougall has also called out the state government for a lack of strategic direction around the environmental impacts of transport projects.
“There’s a complete disconnect again driven by political ideology. We are not looking at what we need to be doing to minimise climate change let alone address the impacts of it,” he said.
Time to rethink transport planning
Planners need to focus on rigorous, strategic transport planning which is backed by independent assessments to ensure that cost benefit ratios are fair and accurate, Mr McDougall says.
“Somehow we have got to find ways to depoliticise transport infrastructure planning and make it more transparent and justifiable,” he said.
Transport planning into the future needs to focus on mass transit needs in particular, Mr McDougall added.
“We’re running out of capacity really quickly even with Melbourne metro,” he said.
“Mass and active transport have to take up the majority of future growth. We need to set some targets linked to air quality, climate change.”
NSW Roads and Maritime Services told Government News that the WestConnex project was subject to rigorous, independent analysis to ensure fair value. This included a 2013 cost benefit analysis which generated a ratio of 2.55, followed by a 2014 audit which found there was nothing to lead to “significant concerns” in relation to the value for money of the project.
An Infrastructure Australia review of the project also found “a degree of comfort that the project will have net benefits”, a spokesperson said. A subsequent independent analysis under the Infrastructure NSW Major Projects Assurance Framework found a cost benefit ratio of 1.71.
“Major infrastructure projects in NSW are subject to rigorous oversight to ensure their validity and value for the tax payer. During the development stage of WestConnex the usual independent checks and balances were in place,” the spokesperson said.
“This included the development of strategic plans and application of merit basis tests, preparation of detailed business cases, independent assurance, development assessment and consent, and competitive tending to ensure value for money.
“WestConnex has been independently reviewed over the life of the project, with each finding the project benefits exceed the projected costs,” a spokesperson said.
Victoria’s Department of Transport said the government prepared a thorough and diligent business case before committing to the West Gate Tunnel Project and extensive modelling showed it would reduce congestion, cut travel times and return $1.30 for every dollar invested.
Modelling and appraisal of the project was conducted in line with Victorian standards and national Transport Assessment and Planning Guidelines and it was subject to rigorous peer reviews and a detailed assessment and cross examination through the Environment Effects Statement process.
“The West Gate Tunnel Project will deliver benefits for Victorians,” the spokesperson said.
“More than a dozen experts, most with decades of experience, worked on the modelling and economics that underpins this project – their work is world class and it unequivocally supports the project
“The business case was conducted in line with state and federal guidelines and it shows that the West Gate Tunnel will deliver benefit for Victorians.”
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