Memo to The Age: Mass immigration equals expensive infrastructure

By Leith van Onselen

Another report has come to light about how Victorians are being gouged by hidden infrastructure costs:

Victorians are paying billions of dollars to a private consortium for a major road [Peninsula Link] that was contracted to be built for just $651 million nine years ago…

Treasurer Tim Pallas was roads minister in 2010 when he signed a 25-year deal to build the road with the Southern Way consortium, made up of eight international banks and Lendlease.

The expected cash cost of construction at the time was $651 million. The government said then that, if inflation and other costs were factored into the deal’s 25 years, the road would ultimately cost $849 million.

But the leaked document shows Southern Way will get more than four times that amount, reaping $2.75 billion over two and a half decades…

[The report] shows taxpayers have already paid Southern Way $780 million – easily enough for VicRoads to have just built the road without any future obligations besides maintenance costs…

Peninsula Link mirrors the shenanigans of the WestGate Tunnel, which will also see Victorians paying many times the cost of construction to private toll road company Transurban, according to the Parliamentary Budget Office:

The report shows, by 2044-45, tolls on the new West Gate Tunnel and on the existing CityLink would be worth $7.5 billion in today’s dollars.

In nominal terms not adjusted for inflation, the report estimates toll revenue from the CityLink extension and new tolls on the West Gate Tunnel would generate $37.3 billion in 2044–45.

It shows motorists who use CityLink five days a week, for 48 weeks a year, will be paying an extra $15,000 a year.

“The present value of tolls paid by the intensive user to 2044–45 would rise from $36,227.80 to $51,873.60, in 2018-19 dollar terms, an increase of $15,645.90 or 43.2 per cent,” the report said…

Separately, columnists at The Age are shaking their fists at the extraordinary cost of Melbourne infrastructure projects:

Melbourne has never had a transport construction boom such as this. Toll roads, underground rail lines, level crossing removals, railway stations, all built at a pace that would have been unimaginable a few years ago.

But it isn’t coming cheap…

Soon, the most expensive transport project in the state’s history, the North East Link toll road, will begin construction at a cost of $15.8 billion – enough to build 790 new primary schools.

And yet Premier Daniel Andrews says it will be dwarfed by the Suburban Rail Loop, a 90-kilometre rail line around Melbourne. Price tag? $50 billion…

By the end of the financial year, they [the Labor State Government] will have spent $47 billion on major works…

Melbourne’s population is growing like never before, and there is widespread agreement: we need bigger, better infrastructure.

But are we getting value for money, and why do we pay so much for the projects politicians say we need?

Victoria’s three key projects – the North East Link, the West Gate Tunnel and the Metro Tunnel – have a collective cost of $33.5 billion. It will take multiple generations to pay these projects off.

There are multiple reasons for the escalation in the cost of Melbourne’s infrastructure projects, which are being mirrored in Sydney.

Tacit corruption and lack of due process are obvious reasons that are well knows. A bigger reason is that it is inherently very expensive to retrofit a built-out city like Melbourne to cope with a much larger population:

The reason is simple: there is a lack of greenfield land. This means that new infrastructure projects require expensive technological solutions like tunnelling alongside land buybacks, which dramatically raises their cost.

To illustrate these costs, check out the below chart showing that road construction through undeveloped greenfield land (blue) is many times cheaper than tunnelling under existing brownfield land (red):

More recent examples are equally stark. The WestConnex project in Sydney will reportedly cost $17 billion for 33 kilometres ($515 million per kilometre) while Melbourne’s West Gate Tunnel is expected to cost $6.7 billion for 5 kilometres of highway ($1.34 billion per kilometre). In contrast, the 155 kilometre Woolgoolga to Ballina highway upgrade , costs $4.9 billion, or just $31 million per kilometre (approximately 11 times less than WestConnex, and 29 times less than the West Gate Tunnel, on a “per lane” basis).

The same goes for water, whereby technological solutions like water desalination and recycling is many times more expensive than dam water:

In short, growing Melbourne’s (and Sydney’s) population via mass immigration will necessarily dramatically raise the cost of infrastructure. If The Age columnists do not like this, then they should argue for lower immigration and population stabilisation.

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Comments

    • GunnamattaMEMBER

      A weird mixture of Hindi and Cantonese becomes the state language.
      Dan Andrews becomes premier for life
      Citizens of Victoria wake up one day to discover they cant access Google, the Guardian or Bloomberg
      Indian rail bids for and wins the right to operate Victorian trains on the premise that can treble capacity with no new rolling stock.
      Media pages become cluttered with apologies from celebrities for commenting on Chinese social issues, after they have spent 6 months of quality time in a state reeducation facility

      • John Howards Bowling Coach

        Mandarin NOT Cantonese. The vast majority of current and arrivals in the past 20 years from Chinese backgrounds are Mainlanders who speak the CCPs language not that of the Hongkies and their ilk in the Pearl River Delta.

  1. John Howards Bowling Coach

    It’s killing us from the Left and Right. A people now beholden to a beast of government creation, Transurban. All the while the ALP are beholden to the Unions who are ensuring their members in Vic are way overpaid all on the bill of the taxpayer. Halt all immigration, return all the projects to government management to ensure the rent seekers are starved to death.

  2. Jevons ghostMEMBER

    I left Melbourne, my birthplace, nearly 50 years ago. Returning occasionally, I never cease to be amazed by the mule-like like acceptance of the on-again, off-again ripping up of roads and the desecration of entire precincts in and around the CBD. People by and large accept this lunacy as being the norm, sitting back and staying mum while one hare-brained scheme after another is hatched at one level or another by the apparachiks of a feckless bureaucracy, hooked on the idea that imposing continual change on the built environment is a natural part of life. Growth, vibrancy, diversity and progress are soothing words that dominate their lexicons, and they seem to work a treat.

    And now for something to make you sit back and ponder just a little about the craziness of it all.

    https://kunstler.com/eyesore-of-the-month/february-2019/

    https://www.bloomberg.com/news/articles/2018-11-26/builder-of-200-million-turkish-chateaux-project-goes-bankrupt

    • I can see the headlines10-15 years fron now.

      Melbourne, the Worlds Most Liveable Second World City.

    • John Howards Bowling Coach

      Every time I meet Premier Dan I am struck by how unimpressive he is as a person. It’s astounding that Victorians handed him such a resounding re election win last year when Premier Dan is such a poor performer and uninspiring excuse for a leader. It really says something about the quality of the alternative offered by the state LNP, Matthew Guy was no more attractive as an alternative leader than Bill Shorten.

  3. “Treasurer Tim Pallas was roads minister in 2010 when he signed a 25-year deal to build the road with the Southern Way consortium, made up of eight international banks and Lendlease.”

    So the State Government got into bed with no less that EIGHT International Banks …… because Bankers have proven time and time again that they are such wonderful people?
    I bet those responsible for getting the deal done were paid big fat bonuses meanwhile tax payers get stung for decades.

    • John Howards Bowling Coach

      Get ready for more of the same. Why do you think the former NSW premier headed directly back into banking. If Josh Frydenberg had lost his seat he would have also headed straight back into banking. The link between Pollies needing an announcement and banks cleaning up on funding these vote grabbers is a very direct one. Tim Pallas appears a very dull unit, I bet it doesn’t take more than than the work experience kid to put together a powerpoint presentation shiny enough to get him to approve any hair brain infrastructure tax payer rip off.