As expected, the release of the East-West Link business case by the new Victorian Government has revealed the project never stacked-up, producing a negative return to taxpayers once dubious “wider economic benefits” were excluded. From The AFR:
[New Treasurer, Tim Pallas] said the East West Link business case showed deception and “public malfeasance and fraud of a massive scale”. But he was unable to point to a specific lie by the former Napthine coalition government. The original business case for the East West Link showed a return of just 45¢ on the dollar and sent the Napthine government back to the drawing board.
It produced a revised business case in June 2013, that showed a return of 80¢ in the dollar – or $1.40 including “wider economic benefits”…
The updated business case included the benefits of other projects, such as widening the Tullamarine and Eastern Freeways and boosting public transport.
Talk about one giant example of malinvestment, which would rank alongside Victoria’s hideously expensive desalination plant and its Myki public transport ticketing project.
I have argued consistently that well targeted infrastructure investment can offer the double dividend of supporting growth and jobs as the mining investment boom fades, whilst also expanding Australia’s longer-term productive base and improving living standards.
However, in order to be successful, such infrastructure investment must pass rigorous and transparent cost-benefit analysis, to ensure that it delivers the biggest returns to society. Otherwise, taxpayers will be left carrying the burden of expensive white elephants that offer only limited productivity/social value, and whose investment could have delivered much bigger returns elsewhere.
It is despicable that the former Liberal Government failed to follow due process on the East-West Link, and then hastily proceeded to sign the contracts on the project to beat the artificial November election deadline. Now unwary Victorian taxpayers will be left to pick up the tab, either through proceeding with the project or providing financial compensation to the consortium tasked with building the road/tunnel.
Let’s hope the new Labor Government can do better on infrastructure than its Labor and Liberal predecessors.