Abbott’s East-West tantrum goes nuclear

By Leith van Onselen

Tony Abbott just doesn’t know when to exit a losing battle. After backing his flawed paid parental scheme into oblivion, he now won’t concede that the East-West Link Project – you know, the one whose cost-benefit analysis yielded a disgraceful 45 cent return for each dollar invested – is dead, locking away $3 billion of federal government funding for the project. From The Australian:

“Yesterday was a bad day for Australia, a terrible day for Victoria, because … the Victorian government spent at least $640 million of taxpayers money not to build a road,” he told reporters. “My pledge for the people of Melbourne, and Victoria, is that the $3 billion of Commonwealth dollars pledged to East West Link will remain in a locked box for the first Victorian government that is prepared to build this absolutely necessary piece of infrastructure”…

East West Link was “absolutely not” dead, Mr Abbott said.

“I think the Andrews government might be dead but I think the East West Link project is necessary, absolutely necessary, because Melbourne needs a second crossing.”

Here’s a question for you, Mr Abbott. Do you want to be known as the “Infrastructure Prime Minister” or the “Prime Minister of Pork”. If it’s the former, you must only choose projects that yield positive returns to taxpayers after undertaking transparent cost-benefit analysis, not shady deals like East-West Link, which was shrouded in “commercial-in-confidence” secrecy and was deemed to be welfare destroying by the full business case.

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Unconventional Economist
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Comments

  1. Go get em.

    Can we have some more on Pork Barrelling – the very worst example in all of human history is the LNP MTM NBN FTTN – now demonstrated to be costing twice as much, to deliver nodes to the street corner, for potential maximum speeds of 100mb/s with no other users on line – with 100 billion being spent renting the Tesltra copper network which we will not even be owning at the end and is beyond repair.

    Compared to 43,000 Gb/second down AND UP to the home.

    Look forward to it – since we are now discussing pork barrelling and insidiously ridiculous infrastructure decisions by the LNP.

    Have at it MB !!

    • That is the THEORETICAL maximum PER STRAND of fibre.

      If Malcom is going to claim that his THEORETICAL maximum of 1 GIg (unproven and shared between ALL USERS) then I am going to claim the PROVEN theoretical of a single strand.

      • Right, OK, got it
        My fibre just clocked 200 down, 100 up – just wanted to know what you were talking about.

  2. I wonder if the East West forecast revenue numbers were also based on the sydney cross city tunnel forecasts, which today still havent been hit.

    • LabrynthMEMBER

      Lol the cross city tunnel, from Moore Park to Ultimo its $11.

      I go through there at 6pm peak time and it is dead, like seriously they would make more money by charging $50 a pass but no speed limit. It would be super popular, our very on race strip under the city.

  3. When in doubt blame labor. But mostly it looks like a transparent ploy to salvage some of Joe’s budget by saving 3 billion otherwise pledged to pork^h^h roads
    Infrastructure PM, yeah right. When you rule out any public transport from the start I don’t think you can claim to be actually interested in infrastructure, just roads.On no wait. Publically transport (or schools or hospitals) would be Socialism, can’t be having with that.

  4. Come on! You lot would have opposed the Snowy Mountain Scheme, the Harbour Bridge and the Opera House. It’s not as if EWL is a nationwide tech project about to be usurped by…tech.

    • Then let the private sector fund it as they are the recipients of its capital expenditure at the end of the day.

    • Go on – name me any tech which will surpass Fibre and ill laugh your Luddite arse out of the room.

      Single strand of Fibre is 43,000 GIG / Second – nothing on this planet has even come close to that outside a lab over distances verging on 10 Plancks.

      Go look up Planck Luddite.

      By the way – how are all those fancy predictions of Iron Ore saving Australia going ? So far – you wrong on everyone. You wrong Mr Wrong.

      • Saved us the years of GFC recession endured by so many others, still managing to save our bacon on the export front, just, even tho prices have plummeted.

        Are you Dudley, you share a similarly hostile tone.

      • Recession is preferred & needed. Nothing has been gained from this “saving” except epic housing & banking & debt bubble. Manufacturing toast and too many think their shit don’t stink (the real life reusa’s).

  5. You guys missed the best quote from that presser:

    QUESTION:
    Can you rule out any changes to negative gearing?
    PRIME MINISTER:
    Yes.

    Looks like another opportunity for sensible tax reform bites the dust…

    • KOD is about the only good thing for the Libs… pending FIRB outcomes of course.
      Mr Rabbit’s own goals need some extra digits added to the scoreboard.

  6. UE – be careful about throwing around terms such as yield for roads, rail etc. They are service avenues, etc. They are never meant to supply a financial return! NPV is not to be used for services. Check assumptions! Give us some analysis and in particular some assumptions behind the costings rather than headline numbers. They don’t actually tell you anything. We can read those anywhere.

    The reason why you are battling up hill on this one is that if a city of 3-4m in a First World nation, cannot justify a cross city tunnel to alleviate traffic congestion, then the fact is you would never be able to justify anything, no road, rail, anything!!!!

    The logic of your argument is not apparent.

    • Some truth to this, but there may be better transport projects available for the money. At $1B a KM it was to be the most expensive road project in the world.

      Decision is not whether to do something or nothing, its which something(s) to do.

      • Absolutely. Weigh-up the various options and choose whichever one yields the highest return. What I want is proper due process and transparency, not the rubbish that occurred with this project.

      • This is not about yield. You cannot talk about yield unless you have or know the assumptions behind them… and compare to equivalent projects – from a guy who has modelled (seemingly countless projects, some pretty big). Moreover – we must be the only country in the world modelling on yield with public services anyway!!! I have raised this argument before – what is the yield on health, education and defence??? there is none. Likewise, if we cannot find benefit on a cross city tunnel on a city the size of Melbourne – then we have clowns running the analysis.

        In regards to cost Dave – I have compared numerous big like-for-like multi-billion projects around the world, and it is amazing how costs are similar like-on-like basis. There is in fact remarkably little variation. So if a project costs a billion per kilometre – I can assure you that global competition will dictate that this is what it is going to cost, whether it be here, Germany, France, Canada. I have seen this relationship time after time, benefit of global competition I suppose.

        The point being (which I have made before) this is a good project, a project Melbourne needs, will have a life time of hundreds of years. Its social benefit (which is what most other countries model infrastructure upon) is obvious. You quote $0.45 per dollar – which quite frankly appears like utter bollocks. I know you are taking this on good faith, you appear to be an honest shooter – but there must be something wrong here… and I raise this point because you may be being had on this topic!

        If we cannot discuss the parameters by how this project is “yielded” by yourself versus other projects – then this is like comparing FMG (favourite topic on this site) with an ANZ, or HSBC. Utterly pointless. We have no basis of comparison or analysis. This has to be based upon facts and figures. Likewise – you yourself UE cannot unequivocally state, uncategorically, that your numbers are in fact correct!!! Simply because you are in no position to know.

        I reiterate, if this project was in any country other than Australia, they would have spent twice as much for half the benefit. I have seen tunnels built in Switzerland just to miss two vineyards. Not a great use of funds granted…and I would never advocate that – but by comparison this discussion is devoid of fact, it beggars belief. And you guys know it…

        Good discussion to be had – but we need assumptions…

    • Leith won the argument at the ballot box. It is you pushing up hill. Nobody is saying there don;t need to be solutions only that they need to come through appropriate process.

      Instead, Abbott tried to bribe the electorate then blackmail them as well and both backfired.

      • That means nothing H&H, and you know it… do we want to be run by the mob?

        When you do analysis, do you get consensus and stick to the middle – or do you do your own thought profile?

        Just saying… you have a franchise here, a seriously good one in such a short time, don’t waste it. You have fund managers following your words closer than top rated analysts. Just saying.

    • They are not service avenues, they are common carriages and as such the public private funding imbroglio has shown conclusively whom takes a bath.

    • Almost anywhere else in the world and this would be built. But not in Australia, least of all Melbourne, which is drowning in its own hipsternimbyism.

      • Almost anywhere else in the world, they’d build a rail tunnel for half the price. It’s a dog of a project.

      • 3D has decided to stop arguing with the ‘lefties’ who reside only inside his mind, and is instead taking on the ‘hipsternimbys’, who also reside only in his mind.

        In the meantime, a piece of badly conceived infrastructure, whose development reeks of corruption and back-room dealing, has been averted.

        Australians have seen what comes of these kinds of processes (Sydney cross city tunnel), and to their credit voted the mob of clowns responsible out in this instance.

        Get rid of the corruption, fix the process, and you’ll see a lot more public support.

        By the way, this post is for everyone but Mr 120 a tonne 3D1K. 3D will never change, being the George Costanza of political economy; wrong on everything. Stuck in 2006, still dreaming of the Howard years, jet skis, and lime green Maloos.

  7. Fortunately the Victorian Auditor General has already indicated they will be going after this mess. The AG is newishly appointed and has a particular interest in public infrastructure.

    There are a whole lot of issues around this mess, not just the shifty behavior of the last government. There should be some senior public servants sweating too, as the accountability just has not existed, especially for the cronies that often fill senior roles in various government authorities set up for such exercises.

    Hard infrastructure construction is a puzzle in Australia and few can work out why. It is staggeringly expensive, often not well designed and too many vested interests are making easy money off it. Much of the problem comes down to poor design and scoping, and messy government arrangements that make for a politicisation of the process while also reducing accountability. Transport planning and policy especially has become fixated on issues relating to specific projects, rather than a whole sector and its operations, thus efficiency and the public interest are forgotten.

    This being said, too much store is placed in studies that claim a return on investment, when it is shot in the dark stuff and based on all kind of vague aassumptions. No single ROI figure can ever provide the justification or not for such a complex asset with such a long life span.

    The LNP thought that they could get this done without having to do the politics, because they are lazy. A smarter approach would have been to argue that the link was all about freight and the transport industry. Victoria has the country’s biggest port, it is the freight capital, so for growth etc, the link needs to be built. This would have been a better basis to argue the case rather than hiding the costs and studies and conjuring rubbish about commute times being reduced. And commit and start work on public transport at the same time and present it as an integrated sector.

    Only solution that comes to mind on this is a ban on pollies wearing hard hats and fluro vests. They love such photo opps so much that policy is often determined on the number of such appearences generated.

    • “This would have been a better basis to argue the case rather than hiding the costs and studies and conjuring rubbish about commute times being reduced. And commit and start work on public transport at the same time and present it as an integrated sector.”

      Yes. And if they hadn’t lied by promising not to build the tunnel both before and after their election win, that might have helped as well.

    • Completely fallacious assertion “Only solution that comes to mind on this is a ban on pollies wearing hard hats and fluro vests.” Leighton has an abysmal record with wrt political fraud and private ram rod-riding [soccer stadium for starters].

      Skippy.. tell penny I said bottoms up…

  8. GunnamattaMEMBER

    The Torynuffs are appalled that the tenderers have backed off for 600 million (all up) because they are terrified there will be further ramifications of any sort of look at what unfolded in the deliberation (sic) stage, and the processes involved in particular.

    For Testostertone the haunting suspicion is that he has to run feral on this to divert attention from some of his own process bete noirs – lets start with the Submarine issue he needs to explain to SA or the Japanese, more than a few other military tendering processes in the offing, the TPP (which is being run seemingly deliberately as to avoid any contemplation by the public), and the Tory incarnation of the NBN. Within the foreseeable future there will be other decisions made by these venal people which they similarly will not want any public awareness of.

    But most terrified Torynuff of all is the current Victorian State opposition leader who, when not touting the Oligarch junta running Ukraine, has approved (as planning minister in the LNP government that so spectacularly couldn’t run the state for 4 years) an awful lot of apartments for some somewhat seedy developers, which may not have a commercial basis when examined under scrutiny, and who wasn’t backward in smudging concerns about them in that approval process.

    While the State ALParatchiks will no doubt be keen to push the political advantage they can get for it, the simple fact remains that the taxpayers of Victoria were bound and gagged to a project by the Napthine Government, with Matthew Guy front and square, to a project which was not justified to them, and remain bound and gagged to dealing with the consequences of an awful lot of Guyscrapers defecated into the Melbourne skyline which voters will be asking questions about for a generation.

    The Torynuffs have form here. The reason they are throwing tantrums is because they know if they go quietly even once they will find themselves doing it with such regularity that they may find themselves looking at a disability allowance (and then we might really have questions).

    • Hay Gunna why not just do the Miami thingy… snort your way to multiple story CBD projects… oops… Aussie hair dressers on fire… which intern beget barter card… silly me…

  9. ceteris paribus

    Abbott has made Daniel into everything he is today. More Tony temper tantrums will make Daniel into a Premier of Bolte’s longevity.

  10. “deemed to be welfare destroying by the full business case.” – That is the function of gubbermint.

  11. Hahaha! Pork directed to Labor cronies instead of Liberal cronies and out come the crocodile tears and no Commonwealth pork with state Labor ministers.

    Are people so stupid they don’t realise how inherently corrupted governments in Oz are?