A textbook case of infrastructure pork

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ScreenHunter_06 Jun. 06 09.33

By Leith van Onselen

The Canberra Times is today running an article on cost blowouts relating to the $600 million light rail project connecting Gungahlin in the north and Civic, which is expected to commence construction in 2016:

ACT government figures show the staff bill for Canberra’s light rail project will soon hit $45,000 a week now that the hunt is on for an executive to stop the project’s cost from blowing out...

The soon-to-be filled $230,406-a-year job of director of finance and economics involves providing the ”prosecution of an agreed financial strategy in the negotiation of delivery agreements”…

The government is also paying economic and commercial advisors from Ernst & Young and an Arup-led consortium, which includes six local specialist consultants to provide technical advice…

Opposition transport spokesman Alistair Coe said the light rail was an expensive strategy Labor used to get the Greens – whose sole MLA Shane Rattenbury, holds the balance of power – to keep them in government.

Anyone who has spent a large amount of time in Canberra (I lived there for three years) would recognise that it is totally unsuitable for a dedicated (and costly) light rail service. Canberra is the most decentralised city in Australia, with its small population spread-out around five primary employment centres: Civic (the tiny CBD), the Parliamentary Triangle, Belconnen, Woden, and Tuggeranong. Gungahlin in the far north is also emerging as the city’s sixth node.

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Canberra’s housing and employment lacks density. It is also serviced by the nation’s best road system. Accordingly, the overwhelming majority of Canberrans drive their cars to/from work. Yet, for those that require it, Canberra’s bus system (Action) operates well given the capital’s geography and demography.

In short, Canberra lacks the population base or density to make such a light rail project viable from either an economic or social perspective.

If policy makers in Canberra are truly interested in improving public transport access to Canberrans, they should look to expand bus services across the entire city, rather than focusing on one costly project that benefits only a tiny minority of the population (those located in the narrow northern corridor between Gungahlin and Civic), and is likely to be grossly underutilised.

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These are exactly the types of politically motivated vanity infrastructure projects that Australia doesn’t need.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.