Dec 14, 2015

Auditor slams East West fiasco

Today’s Auditor General’s report into the funding of Melbourne’s East-West Link toll road has highlighted the complete collapse of proper process in funding major infrastructure projects under the Turnbull Government.

The report found that the government allocated $3 billion to the flawed toll road project without seeing a proper cost-benefit analysis or seeking input from the independent Infrastructure Australia.

That included a $1.5 billion advance payment to the Victorian Government which was paid in June 2014, in defiance of advice from the Department of Infrastructure and Regional Development, which noted the money was not needed at that stage and recommended payments aligned to progress of the project.

The money has since been sitting unused in a Victorian Government bank account, earning nearly $49 million in interest.

That payment came just months after the Coalition promised in the 2013 election campaign it would not fund infrastructure projects worth more than $100 million without the publication of a proper cost-benefit analysis.

The report said: “Neither stage of the East West Link project had proceeded fully through the processes that have been established to assess the merits of nationally significant infrastructure investments prior to the decisions of government to approve $3 billion in Commonwealth funding and to pay $1.5 billion of that funding in 2013-14.’’

The Government funded the East West payment by cancelling investment in projects like the Melbourne Metro, the M80 upgrade and the Managed Motorways program – all of which had been assessed and backed by Infrastructure Australia.

The former Labor Government created Infrastructure Australia to review cost-benefit analyses provided by states to satisfy the commonwealth that they represented value for money.

After Labor’s Daniel Andrews won the 2014 state election promising to scrap the East-West Link and instead fund the Metro, documents emerged showing a business case had been prepared but showed the project would return a pathetic 45 cents for every dollar invested.

The East West debacle provides the perfect template for how not to fund major projects.

Public money is scarce and it is critical that major investments are made on the basis of evidence, not on whims or, even worse, political calculations.

Labor has already announced key elements of its infrastructure policy for the next federal election.

Central to the plan is a commitment to return Infrastructure Australia to the centre of government, where it belongs, and to take its advice before committing to major projects.