Lies, damned lies, and Treasury costings
29 February 2010
“Well, a famous victory!” said the old colonel when I went down to the Brushtail Café for evening drinkies. A swag of the locals had assembled for an impromptu celebration.
The old boy was referring, of course, to Kristina Kerscher Keneally’s decision to abandon metro and go ahead with the light rail extensions.
“A great victory, but we’re not out of the woods yet”, I muttered, as I ripped the top off a cider. “Did you see the costing they’ve put on the rail projects. Nobody sane and responsible reckons that the light rail extensions could possibly cost more than $250 million – after all, half the track is already there – but they’re setting aside double that for the project.
“And then there’s the North-West Rail Link. They say the full 22 kilometres will now cost $6.7 billion! That’s over $300 million a kilometre.”
“That does seem extraordinarily high”, somebody muttered.
“High. Are you kidding?” said Old Possum, who was brandishing a fat manilla folder. “Look, here’s an interesting comparison. The estimated cost of the California High Speed Rail project is just $4.5 billion US – roughly $5.3 billion Australian.”
“Less than the CBD Metro? How long is it going to be?” Joadja asked, from behind the bar.
“Fresno to LA. Three hundred and sixy kilometres. That’s about $14 million a click. The naysayers are indignant because they reckon it’ll be twice that. So they’d put the real cost per kilometre at $28 million – great value in NSW terms. Strangely enough, neither of those opinions are out of the ballpark of the $20 million a click the French pay for high speed track for their famous super-fast TGV.”
“Shit. What the hell is going on in NSW?” asked Tarkis, who was nursing a champagne.
Old Possum had them in. “Well, in my opinion”, he went on, warming to his topic, “certain folk in Treasury, who are known to be rabidly opposed to public transport users getting anything other than motorways and buses, get the wink from certain like-minded ministers in the NSW Cabinet and they just double the estimates, and, if necessary, double them again. That way, they calculate, the projects will get cancelled because they’re absurdly expensive.”
“But that’s horrific, Machiavellian. That’s a crime against the people of NSW.”
“Doubly so, because either we don’t get the infrastructure we need, or, in the unlikely event that the project gets through Cabinet, we pay two, three, four, times as much as we should.”
“Which, of course, wouldn’t ruin the prospects of said politicians and bureaucrats getting a nice little sinecure from a construction company when they leave the service of the great unwashed”, muttered Joadja. “So what do they base these huge over-estimates on? They have to have some evidence.”
“Well it certainly isn’t comparable overseas examples … here’s another ugly story. When the metro enthusiasts were first trying to get some traction for their campaign, the government hired a big mob of international rail builders, Connell Wagner, to do a secret metro feasibility study. I got hold of a copy. The Connell-Wagner scheme was to have had four fully-tunnelled lines converging on the CBD. The whole shebang was around 50 km of double track with about 40 stations. On the basis of recent overseas projects – which they cite in their report – they put a price tag at $8.1 billion on the whole scheme, or just over $160 million a kilometre. That seems pretty conservative, if you compare it to the Airport Rail Line which cost about $100 million a kilometre ten years ago, or the Cross City Tunnel which cost about $160 million a kilometre – and it’s a very big tunnel indeed, much bigger than a rail tunnel.
“But by the time John Watkins, who was the transport minister at the time, announced the so-called North-West Metro – from the CBD to Top Ryde – the government was putting the cost of just that one bit, a quarter of the whole scheme, at $12 billion. That’s more than the entire metro scheme as estimated by Connell Wagner!”
“So they dropped that metro project and shot Morris Iemma. Watkins walked away and then we got Version Two – Nathan Rees’ CBD Metro. But the story doesn’t end there. Look at this.”
He pulled a quarter-page newspaper adverisement from his folder.
“This thing, titled ‘A better deal for NSW families’, appeared in the Herald on 29 September last year, addressed to the Commonwealth Grants Commission.
The lead signatory – and no doubt the drafter – is NSW Treasurer Eric Roozendaal. And there’s the usual suspects including NSW Business Chamber, Sydney Chamber of Commerce, Urban Taskforce, and, of course, the Civil Contractors Federation.
“It’s couched in the usual claptrap about ‘working families’ and it’s an appeal to the Commonwealth for NSW to receive a larger share of GST redistribution. Its central argument is that ‘Sydney is Australia’s only global city and faces challenges and costs which other Australian centres do not experience’ and the only substantive evidence of this is, remarkably, the cost of tunneling.
“According to the treasurer, ‘the cost of tunneling through Sydney sandstone is $400 million a kilometre’. Really Eric, since when? Remember, the Cross City Tunnel only cost $160 a kilometre and that’s the widest type of tunnel we’ve ever built here. Eric was lying through his teeth.”
Old Possum took a swig of his cider and let the full horror sink in. “Holy cow, we’re not just talking about ripping off NSW, we’re talking about the state government trying to rip off the taxpayers of Australia”, somebody muttered.