The Cross City Tunnel debacle is turning into a lawyers’ picnic and an important lesson for everyone involved in the scramble to get a slice of the infrastructure investment.
It also underlines the febrile and somewhat dishonest nature of the NSW Government. Premier Dilemma’s team immediate reaction to the tunnel hitting a financial wall is to promise not to buy it – never mind if it might be a good deal in a fire sale – and that no tax payers funds will be spent on it.
The last bit is simply untrue as the government is going to pay scores of millions of dollars, if not more, in compensation for the road changes it pushed through to try to save the higher salaries Labor Party members enjoy as ministers – and never mind the jobs they hand out to mates as well.
The tunnel company’s silence yesterday confirmed the Terror’s scoop that it’s dug itself into a very deep hole. Liz Knight explains it clearly enough in the SMH. The Terror’s new angle though is that the bankers to the farce are preparing to sue builders Baulderstone Hornibrook over traffic forecasts used to encourage investors to take part.
If the banks are getting in on that act, the occasional superannuation fund, including NSW State Super, might well consider something similar – but I have a vague suspicion another firm was involved in coming up with the traffic numbers.
What we do know is the underbidders on the project were working on much lower traffic numbers and believed trouble was inevitable from the start.
Despite the adverse publicity over this failed project, it is still early days in the infrastructure privatisation movement. At least the Cross City Tunnel might warn super funds that not all toll roads are bonanzas, that risk must always be carefully assessed and that the game has become harder as more funds seek more places to sink their money.