Feb 12, 2015

Auditor-General to probe East-West fiasco

The Commonwealth Auditor-General will conduct a formal investigation into Tony Abbott’s reckless decision to pump $3 billion of public money into Melbourne’s discredited East-West Link toll road without a proper cost-benefit analysis.

The inquiry will examine what steps the Abbott Government took to protect the public interest before committing the funding – a decision that defied Mr Abbott’s election promise not to fund infrastructure projects worth more than $100 million without proper cost-benefit analysis.

In last year’s Federal Budget, Mr Abbott committed $3 billion toward the toll road, including a $1.5 billion advance payment handed over in June, 2014.

But after the defeat of Victoria’s Napthine Government last November, the incoming Andrews Labor Government released the business case, which showed the road would return only 45 cents for every dollar invested.

This is a pathetic, negative return for taxpayers’ investment.

Mr Abbott funded East-West Link from money taken away from other Victorian road projects, including the upgrade of the M80, the Managed Motorways program and the Melbourne Metro project.

These projects had been recommended by the independent Infrastructure Australia as good investments with much higher public returns than the East-West link.

Indeed, Infrastructure Australia found that the Managed Motorways Project – involving the provision of smart signaling devices to make better use of the existing motorways – would have returned more than $5 in public benefit for every dollar invested.

In December I wrote to the Australian National Audit Office asking it to inquire into this matter. Auditor-General Ian McPhee has since confirmed to me in writing that he will conduct a full inquiry and report by the Spring session of Parliament (letter attached).

The office advised it would adjust its work program to bring on its investigation given the amount of money involved and the importance of proper processes to establish the merits of nationally significant infrastructure investments.

I’m pleased the inquiry will proceed.

Major infrastructure projects involving billions of dollars must be subject to the highest levels of scrutiny and I hope the audit will get to the bottom of what appears to have been a complete failure by Mr Abbott to safeguard public money.

Taxpayers deserve to know what due diligence process Mr Abbott undertook before deciding to fund a project that now appears to have been a dud from day one.

Based on documents released by the Andrews Government, the Napthine Government sought to conceal its business case from the Commonwealth and then attempted to cook the books to make the East-West project look worthwhile.

It also appears Mr Abbott did nothing to satisfy himself that the project represented value for public money.

The Auditor-General’s inquiry follows a report late last year by NSW Auditor Grant Hehir pointing to serious deficiencies in planning and quality assurance processes concerning another of Mr Abbott’s favoured toll roads – Sydney’s Westconnex project.

Mr Hehir’s report found that “the preliminary business case submitted for gateway review had many deficiencies and fell well short of the standard required for such a document’’.
The report said there were not “clearly separate roles and responsibilities for delivery, commissioning and assurance’’ nor “robust processes and procedures to manage the conflicts’’ that arose from this lack of separation.