West Gate Tunnel: Another expensive infrastructure waste?

By Leith van Onselen

I have noted previously that one of the key reasons why Australia’s high population growth (immigration) is lowering the living standards of existing residents is because of the strain that it places on infrastructure, which inevitably leads to more congestion on roads, public transport, as well as more expensive housing.

Basic math (and commonsense) suggests that if you double the nation’s population, you need to at least double the stock of infrastructure to ensure that living standards are not eroded (other things equal).

And if you don’t build-out the infrastructure efficiently to match the population influx, then productivity and ergo living standards will be reduced, as explained previously by Ross Gittins:

What economists know but try not to think about – and never ever mention in front of the children – is that immigration carries a huge threat to our productivity.

The unthinkable truth is that unless we invest in enough additional housing, business equipment and public infrastructure to accommodate the extra workers and their families, this lack of “capital widening” reduces our physical capital per person and so reduces our productivity.

Think of it: the very report announcing that our population is projected to grow by 16 million to 40 million over the next 40 years doesn’t say a word about the huge increase in infrastructure spending this will require if our productivity isn’t to fall, nor discuss how its cost should be shared between present and future taxpayers.

In practice, however, the solution is not that simple. In already built-up cities like Sydney and Melbourne, which also happen to be the major magnets for new migrants, the cost of retrofitting new infrastructure to accommodate greater population densities can become prohibitively expensive because of the need for land buy-backs, tunnelling, as well as disruptions to existing infrastructure.

In the case of Sydney, we have already witnessed these diseconomies of scale with: 1) the North West Rail Link, which is expected to cost an astounding $8.3 billion; 2) the WestConnex road project – the $17 billion 33 kilometre motorway under construction that is more expensive per kilometre than the Chanel Tunnel; and 3) the F6 freeway extension in southern Sydney, which is estimated to cost an insane $14.5 billion.

Not only are these projects hideously expensive, but they often create major indigestion for Sydney residents during the construction phase. Moreover, in the case of WestConnex, existing free public roads like the state-owned M4 (that have already been paid off) will be tolled to help fund the project, raising costs for residents.

The story is similar in Melbourne – whose population is expanding at an unprecedented rate – with expensive projects like the $11 billion Metro Tunnel and the $5.5 billion West Gate Tunnel currently under construction.

Regarding the latter project – the West Gate Tunnel – is has been revealed today in The Age that an expert was cut for voicing concerns about the efficacy of the project to Victorian Treasurer, Tim Pallas:

A transport expert employed by the Andrews government to assess Transurban’s proposed West Gate Tunnel was moved off the project immediately after raising his concerns about it directly with Treasurer Tim Pallas, a Senate hearing has been told.

Transport modelling and economics expert William McDougall gave evidence to a Senate inquiry into the nation’s toll roads in Melbourne on Thursday.

Mr McDougall was employed by the Victorian transport department in 2015 to assess Transurban’s planned $5.5 billion toll road through Melbourne’s west…

Mr McDougall was auditing aspects of the business case being developed to justify this proposed public expenditure.

So alarmed was Mr McDougall by what he believed to be the weak economic case for Transurban’s toll road that he personally contacted state treasurer Tim Pallas to raise his concerns.

He told the Senate inquiry he contacted the treasurer directly after unsuccessfully raising his concerns within the transport department.

“I raised my concerns at a higher level and it was about a week after that I was unexpectedly taken off the project,” Mr McDougall said…

He was due to give open evidence at the Senate hearing on Thursday.

But Labor senator and inquiry chairman Chris Ketter​ agreed to the Victorian government’s request that most of Mr McDougall’s evidence on Thursday be kept secret…

Mr McDougall was allowed to give only a short public testimony before most of his evidence was heard by senators behind closed doors.

He told the public part of his hearing that he and another expert employed to review the project, New Zealand transport planner and strategist John Allard, “were both extremely concerned” about both the economic and transport modelling behind Transurban’s proposed motorway…

Opposition roads spokesman Ryan Smith said there were growing concerns the West Gate Tunnel project would do little to combat road congestion. He said Thursday’s testimony should make Victorians “very concerned” about how Daniel Andrews was spending public money.

In November 2013, the Productivity Commission (PC) released its final report on An Ageing Australia: Preparing for the Future, which projected that Australia’s population would swell to 38 million people by 2060 [since upgraded to 40 million] and warned that total private and public investment requirements over the 50 year period are estimated to be more than 5 times the cumulative investment made over the last half century:

Total private and public investment requirements over this 50 year period are estimated to be more than 5 times the cumulative investment made over the last half century, which reveals the importance of an efficient investment environment…
ScreenHunter_15679 Oct. 25 14.39

Blind Freddy can see that running a high immigration program requires massive investment and costs a lot, and that these costs are made worse by the diseconomies of scale and political incompetence discussed above.

Clearly, the most obvious and least cost policy solution to mitigate the big cities’ infrastructure woes is to significantly dial back Australia’s immigration program and forestall the need for costly new infrastructure projects in the first place. Because under current mass immigration settings, expensive solutions like the ones mentioned above will be required over and over again as rapid population growth continually outstrips the supply of transport infrastructure.

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Comments

  1. I just moved to a nice new place in Canberra. I now live on the western side of town and work on the eastern side. I got every green light a few days ago and it took me 15 minutes to get to work. Generally it takes less than 20 minutes.

    Wait…hang on…that was a complete lie…driving in Canberra is far worse than Sydney or Melbourne, and residents of those cities should stay where they are if they know what’s good for them. The infrastructure here is terrible.

  2. Great article. Melbourne still needs East-West link and it got turned into a political football when it should not have been. As for the Westgate tunnel, something does need to be done infrastructure wise as the Westgate and Eastlink are indistinguishable car parks.

    Andrews and Guy are both too busy virtue signalling over level crossings and metro tunnel to realise these projects will be useless by the time of their expected completion, if the immigration rate is the same. What’s another 1.2 mill people in Melbourne by the time Metro is completed?

    Moar stations, moar sardine challenges!

    • St JacquesMEMBER

      edit: I used to do lot of driving for my job and knew inner Melbourne well enough to get around (most) traffic jams, so I am familiar with that area, especially as I’m still a frequent Eastern Freeway. What you say is based on a lack of knowledge. The head of VicRoads traffic modelling Doug Harley, a road engineer of more than 20 years experience, resigned a few years back on the East-West. He sent a note around to all his colleagues to warn them of the legal danger of signing off on the private consultancy modelling of traffic, pointing to its, in his view, extremely dodgy assumptions. The project is a massive rort, and politically driven. In the decade up to 2012, traffic on the city end of the Eastern, Alexander Parade, actually DECLINED according to VicRoads own stats.

      If there is a road that is needed, then it is the missing NORTH-EAST link in the orbital road. Anyone who knows Melbourne, knows that it is much bigger in the east and even more so in the south-east than in any other direction. At the moment, trucks coming down the main interstate links, like the Hume/Newell, the Calder Freeway, and from Melbourne airport and the main country highways have to funnel down City Link through inner Melbourne, then out again on the South East (a massive truck nightmare) and the Eastern (very few trucks, loads of inner city bound commuter cars). Very little traffic actually wants to communicate between the East and West, and about as much wants to head for the airport. Most traffic on the Eastern is commuter traffic heading to or from the inner city area. East-West will simply change its on-off ramps around the inner city and they’ll turn into massive bottlenecks, but you’ll be paying top dollar for the experience. Filling in the north-east link will pull allow truck traffic now congesting the inner city freeways/tollways to swing around Melbourne’s outer suburbs to the highways..

      • St JacquesMEMBER

        Finally, if inner/middle Melbourne is becoming more densely inhabited (see the multi storey apartments in Doncaster) then build the bloody railway on the existing RAILWAY reservation up the middle of the Eastern and tunnel under Doncaster/Templestowe. The plan for that railway goes back to about 1890 !

  3. I think these guys should consider building that kind of “pressurized air pipe” public transport from Futurama… It would probably cost just as much, be just as useless as the tunnel, but at least it would be a tourist attraction.

  4. Every time I see that face, I’m reminded of the Dr House episode where the guy comes in saying he feels shit and House’s first words are something like

    H: “That’s not your biggest problem. Your wife is cheating on you.”
    P: “WTF?! blah blah you’re a dick I’m reporting you blah blah”
    *week later*
    P: “How the fuck did you know she’s cheating on me?”
    H: “You’re orange. She hasn’t noticed = she doesn’t care = she’s getting it elsewhere.”
    P: “!”
    H: “Stop eating vitamins. Your colour will go back to normal”

  5. Northern Beaches tunnel in Sydney now as well. Seems to be actually going to happen. Another 14-17bn. North Shore NIMBYs already having a sook over smoke stacks.

    Australians paying to take it in the butt. Reverse prostitution. Paying for stupid house prices, paying for infrastructure that will just keep commutes the same, hour each way, paying 600bn odd in government debt to keep the ponzi going.

    But everyone is such an Aussie and that’s all that matters. We take pride in how much we disrespect our elite. It’s easy that’s all you gotta do and you have freedom.

    • Ronin8317MEMBER

      The Northern Beach tunnel is a solution looking for a problem. None of the nre immigrants can afford to live there, and there is no chances that they’ll be rezoned high rise residential.

      Someone stands to male billions from it though.

      • I’m in the area and unfortunately the high density around the new Frenchs Forest Hospital is about to get worse. The tunnel will justify massive high rise and we will be back to square one – ugly cities, no amenities and infrastructure that can’t cope. As NIMBY as it sounds the answer is no tunnel and no high rise and reduce immigration. It’s happening everywhere – this is just the latest example that will get pushed through to keep developers happy.

      • There’s been a lot of immigrants come into the northern beaches. But also some of them travel all the way from way out west just to work at Coles or whatever. Even living like that is a big upgrade from their old countries I suppose.

        I don’t think there’s one bit of infrastructure that isn’t justified. Its just sad that it’ll cost probably 6-8 bucks each way. I still remember the harbour bridge only being twenty cents, we took a long term view towards paying it off, now it’s all about gouging. Trump admires it from afar.

        But the left never does shit so wtf. Literally proud of incompetence, also looking to sell out to get big jobs like Carr and the QLD premier did.

    • Moar tolls. Life is a toll (in Sydney, Melbourne and Brisbane). Ever greening of the concession agreement means moar tolls. The joys of playing infrastructure catch up.

      • St JacquesMEMBER

        Big fat bastard stroking his long haired cat, sitting in a huge chair, in an enormous high tech bunker, surrounded by scurrying technicians looking at screens of traffic jams and maps and toll payments and toll share values, and manipulating traffic signals for maximum havoc:
        “Purrrfect”.

      • oliver47MEMBER

        In the early 1980’s the GBP 6m loan to build the Sydney Harbour bridge was about to be completely repaid from the toll revenues. So bridge users were naively expecting the toll to disappear; but Govt’s don’t ever give up a revenue stream and the Habour tunnel project kicked off and the bridge toll raised to underwrite it.
        From memory the toll was 20c in 1980, $3.30-4.00 now.

  6. Why cant we build a brand new city somewhere in Australia, surely with the technology we have and lessons learnt from other poorly planned cities a brand new city could be DESIGNED and built.
    If cost of housing was reasonable and jobs were available I would certainly get out of the hellhole that Sydney has become.

    • Quelle naivety! You should wait for Godot if you expect something like that from our ruling class. Can I sell you an apartment with really nice looking cladding.

  7. How apt that the ad running in the side-bar on this page was a Vic Gov ad telling us about the Chandler Hwy upgrade and to plan ahead and allow more travel time.

    Only in Vic could you take a defunct 1890’s railway (Outer Circle line), turn part of it into a road, then build over other parts of it rendering the reserved space as useless.

    Meanwhile spend billions trying to route a new line from North Melb under Parkville. For fucks sake there is a rail tunnel coming straight off Royal Park Station! Then consider the area around the Chandler. A potential rail line to Doncaster (and beyond) could have easily been factored into the redevelopment of the AMCOR site and re-alignment of the bridge/s. I am stupefied at how the Vic Roads engineers and Government have come to the solution they are running with. All development should have occurred on the AMCOR side of the road.

    Victoria is grinding a halt. As of this weekend I relocate to regional Geelong. Not exactly looking forward to standing room only on V/Line. Hoping I can negotiate some work from home days.

      • more correct to say a cutting and underpass under Royal Parade. The fact remains this was an easy way to tunnel toward Melbourne Uni. But then i guess there was less scope for a windfall gain to all the politically connected savvy investors who bought into Arden/Nth Melb.

    • Agree with main point, but it is a deep cutting rather than a tunnel in Royal Park.

      I haven’t seen re-using the old city circle rail route for a train line suggested lately. Instead down the centre of the eastern freeway is the main proposal for a train line to Doncaster. When the Government of the day, ALP under Cain I think, built some housing on the inner city circle route 20 (?) years ago IIRC there were protests about how that would prevent it ever being reused for trains. More myopia.

  8. oliver47MEMBER

    Infra costs for next 50 years @ 5x cost for past 50 years, presumably in constant $ terms. Seems that its the cost of urban land resumption which is the multiplier, even when Govt’s short change property owners on resumption. Latest example:
    http://www.asx.com.au//asxpdf/20170804/pdf/43l5b22hfkr5ry.pdf
    These infra costs should be recovered by an appropriate value uplift capture (land tax) mechanism, not regressive tolls!
    Is anybody looking at the urban economics of new green-field cities vs our current exponentially-expensive urban growth model?
    Surely, honest “Big Australia” proponents would argue for new cities, unless their closet urban land-owning profiteers

  9. “West Gate Tunnel: Another expensive infrastructure waste?”

    What a ridiculous question. Virtually every dollar the government spends is a waste. Average intellects plus no skin-in-the-game bureaucrats = f#cking disaster every time. And when the media covers these topics there is an element of surprise in the tone of their articles, as if they just couldn’t believe these gurus could get it all wrong.

    #WeAreDoomed

    • St JacquesMEMBER

      For all the flaws that are inevitable in any large organisation, public or private or worse, those in between, the old Melbourne Board of Works, like the old State Electricity Commission and the old Gas and Fuel of Victoria, were stacked with people, of all skills, not just admin and legal but engineering and practical daily operations, and massive depth of experience and had very long term planning timelines, and knew bullshit was approaching at a hundred paces.