West Gate Tunnel: Critical Infrastructure or Game of Mates?

One of the games in the Game of Mates is the Public-Private-Partnership.

PPP projects such as Citylink in Melbourne and the Cross City Tunnel in Sydney are financed and built by private consortiums with high, ongoing returns guaranteed by the government. In terms of how we pay for infrastructure, PPPs are essentially an accounting trick. They allow governments to ‘hide’ the future liability by moving debt off public balance sheets. However, private financing costs are higher compared to selling government bonds. Not to mention the opportunities for ‘grey corruption’.

So what shall we make of Transurban’s unsolicited proposal for a ‘vital alternative to the West Gate Bridge’? A couple of things about this infrastructure project reek of Game of Mates.

Not on Infrastructure Victoria’s radar

Infrastructure Victoria’s 30 year strategy does not preclude a new east-west freeway, but they recommend we do all the other things first. Then, once we have done all the other things, assess the demand for a new road link. What are all the other things? Urban consolidation; enlarging rail network; increasing rail capacity; adequate transport network pricing; facilitating modal shift (that’s planner speak for walking or taking PT instead of driving) etc.

Why? As IV explains: “[B]uilding more transport infrastructure to fix road congestion without managing demand is financially and environmentally unsustainable. Experience shows that building new roads attracts more users, until roads are congested once again.”

The good old Jevons Paradox. Try explaining induced demand to your Uber driver next time you’re on the (soon to be wider) Tullamarine Freeway.

Dodgy forecasting

Murray and Fritjers found that on average the PPP traffic demand forecasts were overstated by 40% compared with 6% for publically funded infrastructure.

Transport planners at Melbourne University warn that the models used to generate the ‘demand’ for the Westgate tunnel are suspect: “[t]he “need” for the tunnel exists only because of the presence of extra road and motorway capacity in the modelling assumptions – and… the absence of any estimates of the effect on car travel of improved public transport passenger and freight transport alternatives in Melbourne’s rapidly expanding western suburbs.”

Exaggerated forecasts may have something to do with the involvement of insiders in the role of consulting forecasters. But with government guaranteed returns, Transurban can afford to be wishy-washy. The taxpayer will make up the difference–so what does it matter if they don’t collect so many tolls?

Bigger than Ben Hur

The Transurban proposal includes expanding West Gate freeway to twelve lanes, an elevated tollway above the Footscray Road Boulevard, roads engineered for trucks up to 160 tonnes (currently illegal in Australian cities). At eighteen lanes, Footscray Road would become the largest capacity freeway in Australia.

The design neatly funnels traffic from tollway to tollway, including two lucrative exits to the city. More traffic flowing into the CBD will have system-wide congestion effects: not great news for the tram network. Melbourne City Council bluntly describes this project as a profit maximization strategy for Transurban.

MCC says the proposal will blight brownfield renewal opportunities at E-Gate and Dynon Rd. Central to Infrastructure Victoria’s strategy (and Plan Melbourne) is to get people’s homes within walking or cycling distance of their jobs.The West Gate Tunnel makes that strategy a lot less viable.

More traffic on the roads means more profit for Transurban’s monopoly.

1 Comment

  1. Karl Williams20-07-2017

    The mention of how the design funnels traffic from tollway to tollway takes me back to the revelation of how Jeff Kennett cut a secret deal with Transurban whereby Kennett would quietly arrange for select clearway on competing surface roads to be removed to cause so much congestion that motorists would be forced onto Transurban’s Citylink. What lessons have we learned about PPPs?

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