East-west link would not return state costs   

Date
    February 13, 2014


Further doubts have emerged about the economic case for the east-west link, with the Napthine government's secret business case revealing the benefits to Victoria could be overshadowed by the cost of building and operating the road.      

The state government's own estimates show Victoria could recoup a loss-making 80¢ for every $1 spent on the project if so-called ''wider economic benefits'' are excluded from the analysis.

Although the government has long said that the benefits of the $6 billion-to-$8 billion tunnel far outweigh the costs, it has refused to provide details, insisting the project will produce a return of $1.40 for every $1 spent.

But The Age can reveal this represents a best-case scenario, relying heavily on a controversial branch of analysis known as ''agglomeration economics'', which holds that increased urban density linked to transport projects adds to business productivity.


Infrastructure Australia head Michael Deegan told a Senate committee that the government's unpublished business case also provided an alternative estimate, showing a benefit-cost ratio of 0.8 when ''wider economic benefits are not included''.

Under this scenario the project would return just 80¢ for every $1 spent, suggesting an economic loss if the ''stock-standard'' analysis preferred by Infrastructure Australia is used.

In a robust response, state Treasurer Michael O'Brien said the project would create 3200 jobs and it was entirely appropriate to consider wider economic benefits when assessing it.

''Tunnelling is an undoubtedly more expensive way of delivering this project but the alternative - creating a freeway at grade - would devastate Royal Park, the Melbourne General Cemetery as well as hundreds of additional properties including schools,'' Mr O'Brien said.

''The lived experience of Victorians has been that major transport projects such as CityLink, EastLink and the Western Ring Road have led to significant wider economic benefits for business and the broader community that should be taken into account in assessing the value of these projects. It is no different for the east-west link".

In a submission to a federal infrastructure inquiry, Infrastructure Australia targeted Victoria for failing to submit a ''robust'' business case for the east-west link, singling the project out as an example of why the public are cynical about ''big ticket'' infrastructure announcements.      

Infrastructure Australia's 11-member council - which includes transport expert Sir Rod Eddington and federal Treasury secretary Martin Parkinson - is understood to broadly recommend only those projects with benefit-cost ratios of more than 1.5.

A June 2012 study by Victoria's Transport Department said the costs and benefits of transport go well beyond the direct user. It said businesses become more productive when urban density increases, but conceded that in Australia ''robust data'' is not available to make an accurate financial assessment.

Opposition transport spokeswoman Jill Hennessy accused Premier Denis Napthine of inflating the benefits of the project, while failing to invest in public transport.

"Instead of meaningful investment in public transport, Denis Napthine's only priority is spending $8 billion on a dud road tunnel that won't do much,'' she said.   

University of Melbourne planning professor Alan March said the evidence increasingly suggested the project did not add up, particularly after considering the opportunity costs.

''There are many other ways of spending money that would produce a much greater return for Melbourne, and public transport is one of them. This is wrong-headed.''       

Read more: http://www.smh.com.au/national/eastwest-link-would-not-return-state-costs-20140212-32ihr.html#ixzz2t8ogzgVZ

Campbell newman is an expert tunneller. brisbane may soon collapse to below sea level.
i will send him down to victoria to sort out your problems.

cant help you with desalination plants though. Anna bligh built our billion dollar one which has never been turned on.
beattie built a water recycling plant for $ 2 billion that uses 12 stages of filtration (paris uses 5). anyway, he couldnt sell the idea to the public so it pumps $1000000 of pure fresh water into the ocean every day.  Go figure.

its why i wouldnt let govt build anything
NBN   no
Superclinics  no
High speed rail  no.

the private sector is always best 
We pay better , have better morale, a better work ethic and we get things done

aquascoot wrote on Feb 13^th, 2014 at 7:36am:

It also costs more because the private sector always ensures it extracts profits for wealthy shareholders.

Bam wrote on Feb 13^th, 2014 at 7:39am:



This is simply untrue. i was talking to a police inspector who was involved in building a 35 square police station (brick and tile) at the same time he was building a new home himself of almost exactly the same size.

His personal home cost $195,000 in construction costs.
The new station (the brick and tiles less the fit out ) cost $850,000 courtesy of the state dept of public works being in charge.

he said he could see no extra features on the government shed but did note it took about 3 times as long to build and the brickies on his personal home started at sunrise each morning and RAN with the wheelbarrows of concrete.

Private is always cheaper.
Period.
You sir, are speaking through your arse

Quote:



Hes a positive guy.
Hes motivated
Hes inspirational
He wouldnt really approve of your many 'tales of woe"
I will recommend he takes you on as a mature age "work experience" project crook. 
You will be reporting back in glowing praise of your epiphany

aquascoot wrote on Feb 13^th, 2014 at 7:36am:


true, he's a real Ferret Newman is ... his specialty is tunnels that no one uses . 

aquascoot wrote on Feb 13^th, 2014 at 9:44am:

yeah, cause the libs never waste money on vote buying exercises 

the way the drought is spreading across QLD, that desal plant just may come in handy
which equestrian centre? Hope Island?

aquascoot wrote on Feb 13^th, 2014 at 10:10am:



so just because you have no need, the rest of the SE Qld can get stuffed?