West Gate Tunnel: Another costly 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, tunneling, 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 was revealed last month 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… 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…

“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…

Mr McDougall… 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…

Today, The Age reports that the Andrews Labor Government is trying to keep Victorians in the dark about the West Gate Tunnel Project by keeping an expert’s report critical of the modelling confidential:

The report by New Zealand transport expert John Allard is critical of traffic modelling done by project builder Transurban and the government.

That modelling helped Premier Daniel Andrews justify his support for the toll road, and to claim it would return $1.30 to the Victorian economy for every $1 spent building it.

Despite Mr Allard’s report and equally negative findings of another government-appointed consultant who reviewed the plan, the road is proceeding.

The move to keep the negative report confidential leaves government-appointed experts in the unusual position of having to decide whether to force its release.

…the Andrews government last year released a near identical transport assessment – this time for the business case behind the Melbourne Metro Tunnel rail project. That assessment, also done by Mr Allard, made positive findings…

The [Melbourne City] council wants the Allard report released, believing it will bolster its argument that key aspects of the toll road do not stack up.

Its barrister, Nick Tweedie, SC, told Planning Minister Richard Wynne’s experts that the peer review documents should be released so the road project could be properly assessed.

“We can’t see any benefit to the state or to the public interest in continuing to suppress them”…

The traffic modelling behind the project was crucial, and any document questioning it should be made public, he said…

Those traffic projections – which helped Mr Andrews label the East West Link a “dog of a project” – were done by the same company, and even commissioned by the same transport department officer now overseeing the West Gate Tunnel…

We witnessed similar shenanigans with the East-West Link farce, which ended up being scrapped by the incoming Labor Government at a cost of $1 billion to taxpayers.

More broadly, the 2013 Productivity Commission (PC) final report on An Ageing Australia: Preparing for the Future 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 turbo-charged 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. It seems to me that no matter what facts are exposed to the public on this whole immigration and ponzi rort nothing can stop it. Not enough people care. More interested in gay marriage and latest royal baby. Humans are just rubbish.

    • Can you provide any evidence that the lack of interest is due to gay marriage etc? No, didn’t think so.

      • I was referring to the general ignorance of most people to the immigration issue Dennis. Most people i know have little understanding of the population ponzi but seemingly not lacking an opinion on gay marriage and other social justice issues. The evidence is that they keeping voting these clowns in.

      • Most people i know have little understanding of the population ponzi but seemingly not lacking an opinion on gay marriage and other social justice issues.

        Neoliberalism has controlled the economic and political narratives for pushing two generations now. Might have something to do with why it.

        Most people have been convinced low taxes for the rich and union-busting is good, as well.

    • Every billion dollars wasted on ludicrously expensive infrastructure schemes where tunnelling, bridging, acquisition of heavily-developed property, etc would have paid for a LOT of infrastructure on cheap greenfields, able to accommodate a lot more population and business growth for the money.

      http://www.thenewcityjournal.net/2017_2_more_thoughts_on_deindustrialisation_in_sydney.html

      The industry and jobs will go where the land is available and cheap, same as the workforces. Dispersion of both in tandem is the norm, “increased commuting distances” is a made-up problem based on long-since obsolete monocentric-city assumptions. In fact most “urban planning” departments “sophisticated” computer models of the urban economy, are still “monocentric”. This is so incompetent, sackings and prosecutions for the harm done, are justified.

    • $1B wasn’t wasted, their mates did very well out of it don’t you know, however they do need a top up hence the dodgy tunnel

  2. Good to see people starting to understand that doubling times are a simple result of dividing 72 by the growth rate.
    Mere 2% growth in population means doubling the infrastructure in only 36 years
    That means that all in the next 36 years we have to build as much infrastructure as we have built over the past 200 years, and we have to do it while replacing about half the existing infrastructure as well over the same time because it is either worn out or inefficient, and while maintaining all existing and new infrastructure.
    But it is not only infrastructure, What happens to services, parks, air quality, water quality?
    And where do you put the water storage capacity?
    And what happens to food security?
    The population ponzi is madness!
    It is a fraud on existing citizens!

  3. No matter how obvious it is the vested interest brigade is like the emponymous vampire sucking squid with its tentacles in every aspect of government making sure nothing changes

    • Nothing changes?
      Why would any self interested vampire squid squib out on such a cheap and lucrative deal? A few pennies tossed into political party pockets, entitles so much useful influence.
      What could possibly go wrong? Nothing changes!

  4. “…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, tunneling, as well as disruptions to existing infrastructure…”

    EXACTLY. “Compact City” ideology is based on a pack of lies, and “savings on infrastructure costs” (relative to spreading out) is just one of those lies.

  5. one km of a tunnel in Sydney (located on a solid rock that is easy to carve) is $0.5b – multiple times more expensive than tunnels in the the most expensive places in the world like Switzerland or Norway and 4 times more expensive than tunnels running through the mud of London the only place that in past were rivaling Australia in corruption and rent seeking.

      • How long is a piece of string? (not being a smart alec)

        What weather do you like
        What are your skills
        What lifestyle do you want
        Can you keep current job and work remotely
        What sports do you want to do (if any)
        Proximity to airport
        etc etc

        We exited stage north approx 1800km.

      • @Hadron
        Somewhere relaxed, warm, and uncongested, work in IT though could contemplate retiring if houses were reasonably priced. An airport with direct flights to Melbourne would be good.

  6. “… would return $1.30 to the Victorian economy for every $1 spent building it.”

    Bwahahahahahahaha. Not only that, the tunnel will bring ‘world peace’ and end poverty for good. Lolololol. Where do they find these idiots.

  7. It’s a boondoggle. There are parallels here with the public infrastructure boom in Japan in the 1980-90s. Plenty of tunnels, bridges, land reclamation projects, paving of water-courses, etc….followed by economic stagnation for the next 20 years.

  8. During the East West tunnel saga I noticed that here in London Tunneling for Crossrail was a third of the cost per km or so compared with the quoted cost for East West! And this in the centre of London where space is so tight and every now and again you have to stop to allow medieval graves to be dug up. At the time I emailed Michael West at Fairfax and despite the time diff he responded immediately as he was in the middle of exposing East West at the time (what an own goal by the Elites thinking that making him redundant would get rid of him, eh).

    Apart from whether they are any use or not, why do earth moving projects in Straya’an cities cost so much more than in even more dense cities?