Last month, the ACT Government signed the $710 million contract to build a 12-kilometre light rail line connecting Gungahlin in the north and Civic, thus locking taxpayers in to paying for the project.
As I noted at the time, signing the contract only months before the Territory election is due was a highly cynical move by the Labor Government that has similarities to Melbourne’s dodgy East-West Link project, whereby the contracts were signed just prior to an election being announced, before being cancelled by the new Government at great cost to taxpayers.
Given the highly controversial nature of the ACT Light Rail Project, the Labor Government should have instead used the election as a referendum on the issue, and attempted to gain a mandate, rather than locking taxpayers in to what is a very costly project with dubious benefits.
Yesterday, the ACT Auditor-General released a damning assessment of ACT Light Rail Project, claiming that the cost-benefit analysis used to support the Project was chock full of erroneous assumptions and spurious benefit inclusions, and is unlikely to provide net benefits to Canberra residents. From The Canberra Times:
The government calculated a cost-benefit ratio of 1.2, meaning $1.20 of benefits for every $1 spent. But auditor Maxine Cooper said almost 60 per cent of the “benefits” were wider economic and land benefits whose inclusion was debatable. The transport benefits amounted to just 49 cents for every $1 spent…
The government had changed the figures significantly in versions of the business case in August and September 2014 before it was published in October. Transport benefits had been cut 26 per cent, land-use benefits boosted 17 per cent, and wider economic benefits boosted 17 per cent, with insufficient documentation to explain the rationale…
On the cost-benefit analysis in 2014 (the construction costs have since been revised), Dr Cooper said costs had been estimated at $823 million (present-day 2014), against $984 million of benefits – broken down to $406 million in transport benefits, $381 million in wider economic benefits and $198 in land use benefits (essentially benefits to land owners and developers from higher-density housing).
But Infrastructure Australia’s approach was to use wider economic benefits to add “texture” but to consider them separately. Commonwealth guidelines also urged caution, noting “serious measurement difficulties”, and Dr Geoffrey Clifton from the University of Sydney said such benefits had “traditionally not been included in economic impact analysis and they are still not uniformly included”.
The Auditor-General’s negative findings follows similar damning assessments by the Productivity Commission and the Grattan Institute, which both found that investing in bus rapid transit could have delivered the same benefits but at around half the taxpayer cost.
Including the “wider economic and land benefits” in the cost-benefit analysis is also dodgy as they would arise by changing the ACT’s planning framework to ensure higher density along the proposed line (at the expense of development in other areas). They actually have little to do with the Light Rail Project and could just as easily occur with an expansion of the existing bus network.
We should not forget that the Light Rail Project only came to fruition because Labor lacked the numbers to form government and needed to gain support from the Greens sole MLA, Shane Rattenbury, who held the balance of power. And Light Rail was the ‘price paid’ for the Greens’ support.
Hopefully, ACT voters will remember this waste and mis-management when they vote in the upcoming Territory election.
