Passenger Rail

Rail Wars Episode III: Revenge of the Liberals?

COMMENT: The Queensland Government’s disregard for Infrastructure Australia advice could soon force Australia’s politicians to ‘learn’ an expensive lesson for the third time in as many years, Oliver Probert writes.

 


Infrastructure is not a sector for the impatient. Hospitals, railways, roads, airports — these are all long-term developments. They remedy long-term needs; they take years to build; they often take decades to pay off.

If there’s a portfolio of government spending that should, ideally, transcend the political cycle, it’s infrastructure.

But what we have in Australia is the precise opposite of that; an infrastructure agenda so directly tied to politics, it literally decides elections, time and again.

In 2014, Victorian premier Daniel Andrews was elected in what his party called a ‘referendum’ to cancel the East West Link toll road project, which was hurriedly awarded to a private consortium by the outgoing Liberal Government, just weeks before the election. Andrews cancelled the road, in a saga which wasted hundreds of millions in taxpayer funding.

The 2016 Australian Capital Territory election saw voters choosing between one party promising to build the Canberra Light Rail narrowly defeat another party promising to scrap it.

And then earlier this year, West Australians elected a Labor leader promising to tear up contracts for the Perth Freight Link toll road, a promise he has since followed through with.

Now in Queensland, Premier Annastacia Palaszczuk has run out of patience with the Turnbull Government, this week tearing up a funding MoU with the Commonwealth and accusing the Liberal National Party – at both the state and federal level – of opposing a good project.

Procurement will soon begin for a consortia to deliver the various aspects of the $5.4 billion project, which Palaszczuk is stubbornly saying will be built, even if it has to be entirely funded by the state.

So now may be a slightly awkward time to mention that the Queensland LNP are paying just $1.75 at the bookies to kick Labor out at the next state election, which must take place between now and May 5, 2018.

To summarise: In the most recent elections in Victoria, the ACT, and WA, we saw a major infrastructure project, already awarded to a private consortium, facing the threat of cancellation by the challenging party. In two of those three cases, contracts were indeed cancelled, an embarrassing and harmful series of events for Australian projects in the eyes of the private sector multinationals who deliver them.

Now in Queensland, we could be hurtling head-long into Episode III: Revenge of the Liberals.

What is there to save us from this damaging trend?

In this case, our caped crusader is supposed to be Infrastructure Australia, the independent body tasked with considering business cases for projects all around the country, putting them through rigorous cost-benefit analyses, among other tests.

Projects whose business cases are approved by IA’s board are granted High Priority Project, or Priority Project status. Politicians around the nation are directed to prioritise (it’s right there in the title) projects that are on those two lists.

More importantly, politicians are supposed to hold off on making major funding decisions on projects that are yet to qualify for either of these lists.

Two past iterations of Cross River Rail were described as “ready to proceed” by IA, in 2012 and 2013.

But a lot has happened since then, and the most recent version of the project was recently rejected by IA, with the independent body finding Queensland’s passenger forecasts overblown, calling into question the benefit-cost analysis of the project.

Prime Minister Malcolm Turnbull has repeatedly said his Government will work to fund, or facilitate funding for a project once it reaches High Priority Project, or Priority Project status. To his credit, many of the 18 projects currently on the priority lists are receiving support from the Commonwealth.

Shadow transport minister Anthony Albanese, who often takes credit for fostering the independence of IA, frequently uses its lists to back up his support for projects like Melbourne Metro Tunnel, Inland Rail, the Western Sydney Airport, the Murray Basin Rail Project, and the Adelaide-Tarcoola Rail Upgrade.

It doesn’t suit politicians like Albanese, however, to consider that the Perth Freight Link, a road project he campaigned strongly against, was also listed by IA as High Priority Project when it was cancelled by the new WA Government.

Or that Cross River Rail, a project he is vehemently in support of, has just received a negative review from the board.

Albanese, a friend of Rail Express, certainly isn’t the only offender here.

Former Liberal PM Tony Abbott couldn’t care less if IA approved a rail project – it wasn’t getting funded – and WA Premier Mark McGowan was implicit in the cancellation of the IA-approved PFL in Western Australia, as a pair of examples.

The issue here is not as simple as good or bad infrastructure projects getting funding, or not getting funding. The issue is the total disregard many politicians seem to have for IA, when IA’s list doesn’t back up whatever they think will win them an election.

Whether it’s a road project, a rail project, or another piece of major infrastructure, if you take IA’s advice on one, you must take their advice on them all.

And all this doesn’t have to come at the cost of elections.

In fact, with a little change in rhetoric, voters may be ready to elect politicians who are committed to following independent advice, over those who discriminate against worthy projects that don’t fit their political agenda.

Stranger things have happened.

 

This is an updated opinion piece, taken from the original published in Rail Express’ August Issue, available in digital format here.

3 Comments

  1. The only thing is this: Infrastructure Australia insists on doing its analyses at a 7% real discount rate which has been out of touch with reality since the GFC and it likes the residual worth of the project to be valued at tax accounting depreciated value at the end of the evaluation period (even if the project has much ongoing worth after that point), which for CRR was 30 years post-construction. That is a harsh test for a public rail project nowadays.

    So I would ask: what would their analysis have concluded if these harsh conditions did not apply?

    Brisbane definitely needs modal shift off roads onto rail, so they may be right in questioning CRR’s rail patronage assumptions, but if this isn’t the right project, are they prepared to stick to the same strict conditions in evaluating the Liberal Party’s very fast rail ideas?

  2. just like last nights script for Utopia, with names changed obviously. We need truly independent body as IA was intended to be to have the final say on project priority. Too long (as Utopia script) this subsumed by Board political and always roads lobby appointments.