Infrastructure Australia was created to ensure that investment in nation-building infrastructure was determined by productivity, not politics.
This week’s release of documents related to the East West Link project in Melbourne reinforces the importance of this process. It is now clear that the Napthine and Abbott governments sought to subvert this proper process by funding the road.
Former Victorian premier Denis Napthine had a cost-benefit analysis showing that for every dollar invested in the East West Link, there would be a return to the public of 45c.
In the scheme of big infrastructure projects, a cost/benefit ratio of 0.45 is pathetic and makes it unworthy of funding.
The government documents released this week show that the Victorian government response to this evidence was to hide the analysis.
In fact, one document conceded that if the analysis was handed to Infrastructure Australia it “may be used as a justification for not supporting the project’’.
This was a backhanded compliment to the integrity of Infrastructure Australia under its respected former chairman, Rod Eddington.
Dr Napthine knew the project would not meet Infrastructure Australia’s standards in terms of delivering value for public money, so he hid the analysis before attempting to cook the books to make the project look more attractive. Tony Abbott was complicit in this process.
Just days before last year’s federal election, Mr Abbott told the National Press Club he would not contribute funding to any major infrastructure project without a proper cost-benefit analysis reviewed by the independent experts at Infrastructure Australia.
But when push came to shove, the Prime Minister ignored his promise and handed Dr Napthine $3 billion in funding, including an advance payment of $1.5bn in this year’s federal budget.
No business case. No evidence. No facts — just wilful avoidance of a process that would have established the truth. This lack of rigour is unacceptable.
What is even worse is that Dr Napthine and Mr Abbott shifted money to the East West Link project from other projects that had been properly reviewed by Infrastructure Australia and found to have genuine economic benefit.
That included $3bn cut from the Melbourne Metro project, which had already had $40 million invested in planning.
Hundreds of millions were also cut from the M80 road project and the Managed Motorways project on the Monash Freeway, which had been found to offer an economic return of $5.20 for every dollar invested.
Taxpayers deserve better. They deserve transparency over spending decisions on major projects. Indeed, this is why Labor created Infrastructure Australia in 2008.
We wanted to disconnect the infrastructure provision cycle, which is by its nature long term, from the short-term political cycle.
The plan was for Infrastructure Australia to prioritise projects according to their potential to boost national economic productivity.
Dr Napthine’s efforts to avoid Infrastructure Australia scrutiny show that the Infrastructure Australia model works.
The problem here is not with the process, but with Mr Abbott and Dr Napthine. They knew the East West Link did not stack up, so they simply ignored proper process.
The former Labor federal government had backed the Metro, based on the evidence-based advice of Infrastructure Australia. It was a no-brainer.
Part of the problem here is Mr Abbott’s irrational and counterproductive contempt for funding public transport, which saw him withdraw all commonwealth funding for urban rail after his election.
Efficient cities require properly integrated transport systems that include both road and rail.
In national terms, the East West Link debacle proves that, despite Mr Abbott feigning support for the Infrastructure Australia process, he actually holds expert advice in contempt.
Infrastructure investment is long term, which is why it must be separated from the political process. It requires public confidence, which can only be attained by transparency and proper process.
Now we know the East West Link had a return of less than half its investment and would take 56 years to pay off, we have a great example of what not to do.
We also know that Mr Abbott’s credibility on infrastructure has been obliterated by his contempt for proper process.
Anthony Albanese is the Shadow Minister for Infrastructure, Transport and Cities.
This article appeared in The Australian. http://bit.ly/13zmxdy