politicians have a long and proud history of collectively blowing
billions on white elephant projects. But this week’s revelations about
the Darwin-to-Alice Springs rail project and the Sydney-to-Devonport
Spirit III ferry service are particularly notable new entrants.
was one of the few critics of the Darwin-to-Alice rail project as
nation-building jingoism made politicians and a variety of observers
all misty-eyed. Now it seems that a $459 million taxpayer subsidy was
not enough to make it viable, and another $40 million is being sought
from shareholders in a bailout.
Leighton Holdings is an expert
at building white elephants for governments – although in the case of
Melbourne’s Spencer Street station redevelopment they have taken a
haircut of more than $100 million. As the biggest beneficiary of the
construction work on the $1.4 billion Alice-to-Darwin rail project,
Leighton agreed to become a 15% shareholder in the grandly
titled Asia Pacific Transport Consortium. The value of that stake has
just been written down by $7.4 million to $42 million and Leighton is
looking to sell.
Another seller is McMahon Holdings, which put
$31.5 million of equity in for a 7% stake, but is now looking
to sell and would be lucky to get anything near that figure. Who would
want to buy it?
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Revenue in the first year of operation is only
expected to reach $50 million, and prices have already clearly been
slashed because forecast freight volumes of 380,000 were easily
surpassed when 600,000 tonnes made the journey in 2004.
sunk all this capital into the project, there’s obviously no option of
closing it down or pulling it out. But the same can’t be said for the
troubled Sydney-to-Devenport ferry service which the Tasmanian
Government has decided to continue subsidising to the tune of $115
million until near the end of 2008.
Tasmanian Premier Paul
Lennon could have pulled the plug and enhanced his tough guy
reputation, even though it would have arguably been an act of
disrespect to his late mate Jim Bacon.
Instead, he’s soldiering
on, feather bedding one of the biggest lemons going around as
Sydneysiders decide they don’t want to get seasick on the way to seeing
the Tasmanian Symphony perform when they can fly for less than half the
Tasmania is already the most subsidised Australian
state, having received a litany of sweetheart deals over the years
ranging from the subsidised Melbourne-to-Devenport ferry service to
Brian Harradine’s huge Telstra capital investment programs.
also receive more per head in federal grants than any other state. But
if the Tasmanian government has so much money that it can wilfully
throw so many millions overboard like this, why should the rest
of the country continue to pay the price?
At least Lennon is now
calling in the Auditor-General to have a look at apparently conflicting
advice over Spirit III, as you can see this ABC Online report this morning.