Today the Andrews government released reams of documents marked “cabinet in confidence” aimed at supporting the business case for the 18-kilometre East West Link, a planned $8 billion road tunnel under inner-northern Melbourne.
Work on the project has been frozen since December 12, when Premier Daniel Andrews ordered it halted and announced the business case, often the subject of a game of hide-and-seek by the former Napthine government, would be released.
A 225-page East West Link business case cabinet document was posted on the Herald Sun website overnight. The document is dated June 30, 2013, and appears to be a draft.
The document shows the project would cost 56 times as much as its expected annual return in tolls of $112 million, due mainly to the expanded construction cost per kilometre, but that doesn’t mean it would pay itself off in 56 years. Unless tolls were increased over time the road project wouldn’t pay for itself in 100 years, if at all, based on traffic flow estimates of about 190,000 on a tolled road by 2031.
Melbourne University principal fellow Nicholas Reece, who lectures in public infrastructure policy, says the project was not ready to be built. “There will come a day when this project needs to be built, but this business case would suggest that this time is not now. Governments need to make choices and there are other projects that should be given a higher priority,” he said.
Using industry parlance for the time it takes for a project to pay its own way, he said: “For a project to take over five decades to wash its own face is quite extraordinary. It would need to be bathing in the fountain of youth.”
VicRoads’ own statistics on current road use in its annual average traffic data of July 2014 showed use of the Eastern Freeway at Hoddle Street was well under the East West estimates, and the numbers had plateaued by 2013. Eastbound daily traffic rose from 27,000 in 2003 to a peak of 34,000 in 2012, which then fell back to 33,000 in 2013. Westbound traffic dropped from 46,000 in 2003 to a low of 43,000 in 2012, rising to 44,000 in 2013. The increase in expected traffic flows in the business case is due to the addition of three lanes to the Eastern Freeway.
The document also shows that a third of morning eastbound traffic is going into the city. Only about 5% of traffic is going towards the city from the west in the mornings, and during the day there is a “high bi-directional demand,” and a “high off-peak demand,” the document states.
The document sets expected peak time tolls at $5.50 for cars, $8.80 for light commercial vehicles and $16.50 for heavy trucks.
Expected net toll revenue over the operation period of the eastern section of East West Link after subtraction of administration fees was $841 million at 2014 value, short of the construction cost estimate of $6.5 billion.
That is why the business case offered other methods of paying for the East West Link, by tolling an array of other major roads in Melbourne, including the Westgate Bridge, currently Melbourne’s only east-west road connection linked in to the M1 freeway system.
The document’s writers approached the two companies charged with running Melbourne’s other tolled freeways, Transurban and Connect East, with a plan to increase tolls on their roads.
On ABC radio this morning former treasurer Michael O’Brien said the Napthine government had “ruled out” tolling other roads as it was a break from government policy. “The reason I ran surpluses as treasurer is so that I could afford, so that the government could afford to invest in major projects including an East-West Link. There’s no need to toll existing roads because we managed the state’s budget well enough that it funded projects like East West Link without needing to look at tolling existing roads.”
“Unless you’re giving people something new, why should they be paying extra for something that’s already been built?” O’Brien said.
Greens leader Greg Barber says O’Brien is “trying to win the 24-hour news cycle and acting like a government in exile”.
He says the document shows the road is “a lemon.” “The road construction industry wants a bloody big road to build, their demands are insatiable, but there’s no business case for it,” he said.
Any mention of the project by its legislative chauffeurs the Linking Melbourne Authority has been obliterated from its website, including some of Napthine’s attempts to sell the project to journalists with a shortened document he called a business case. The truncated form still offered a fairly weak but positive benefit cost ratio of 1.4 and only lead to further queries about why the real thing was being hidden.