The steps in the process that lead to uneconomic infrastructure projects in NSW are as follows The CBA of the project as required under the NSW Environmental Planning and Assessment Act 1979 is falsified by the proponent. The false CBA is accepted and endorsed by the NSW Department of Planning and Infrastructure. This endorsement of the false CBA is potentially illegal because it contravenes section 283 of the Regulation 2000 to the 1979 Act which states that it is an offence to use false and misleading information in any document relating to project consent. The Minister for Planning declares that a project is State Significant Infrastructure (SSI). This declaration means that the Minister is of the opinion that the project is essential for the State for economic, environmental and social reasons, pursuant to section 115V of the E P & A Act. This declaration of SSI essentially allows evasion of responsibility for economic performance. Four case studies illustrate this process in practice. Expansion of the Northern Sydney Freight Corridor (NSFC), a public sector project Widening of the M2 Motorway, a private sector project. NorthConnex, a public private partnership currently in development. . WestConnex, a proposed public private partnership to be announced. Three examples of risk allocation are given in relation to the financing of the above cases Patronage risk involved in road projects Financial risk due to failure to take into account the time value of money. Financial risk to the State and Federal governments through an alliance with the private sector The submission concludes with comments on the probity issue raised by the Productivity Commission in its recent Draft Report (page 381). A new Infrastructure Act is proposed with penal provisions which would have the effect of removing
proposed road projects such as WestConnex discussed below. This study also showed the importance of taking account of uncertainties in all key variables, not only the discount rate 1.2.1 The Transurban economic analysis for the M2 upgrade The cost benefit analysis (CBA) for the M2 upgrade was prepared by Transurban and is published at Appendix E of the M2 Upgrade EIS. (Hills M2, 2010) The results of the author’s peer reviewed analysis (Goldberg, 2010) cannot be reconciled with the Transurban result. The detailed reasons for the very large discrepancy [BCR = 0.27 (Goldberg)] as against [BCR = 3.4(Transurban)] have now been analysed in detail and reveal a systematic attempt by Transurban to incrementally misrepresent all key numerical factors in the analysis. In legal terms such misrepresentation could be termed “innocent”, but the overall intention is unmistakeable. The results of the two analyses are tabulated in Table 1 below. The results of the author’s analysis and its uncertainties are qualified statistically. Transurban’s unqualified results are given as they appear in its Road User Cost Benefit Analysis (RUCBA). The detailed reasons for the gross differences are given in the notes related to the specified quantities in Table 1. . TABLE 1. Comparison of Transurban’s results with those of the author. Quantity Author’s value over 36 years (95% fiducial limits) Authors mean value Transurban’s value (over 30 years) Notes (see below) Travel time savings $77.1m to $299,1m $188.1m $1609.0m (1) Savings in accident costs $0.27m to $1.05m $0.65m $33.0m (2) Savings in vehicle operating costs -$8.36m to -$69.3m --$39.6m $41m (3) Total $149.15m $1683.00m CAPEX=$500m BCR 0.29 3.4