The case against the NSW Government’s road building agenda in the Sydney region

Moreover, if Transurban collapses the government in office may have to compensate the shortfall. There has been no published financial risk assessment of NorthConnex. We do not know if there are any hidden agreements over funding. I was recently informed by the NSW Auditor-General's office that there are no plans to investigate NorthConnex at this time.

WestConnex

WestConnex is part of a wish list of roads enunciated by Infrastructure NSW. The economic case for it is entirely unconvincing. Its operation after construction is claimed to return $2.55 of benefits including travel time savings, for every $1 spent on construction. These benefits have been greatly inflated by including non-standard contributions such as "productivity" and "reliability".

How can a long road tunnel be economically productive when it leads to dispersion of economic activity, the very antithesis of the agglomeration needed for increasing economic activity?

How can a tunnel enhance travel time reliability in the presence of congestion as it must interconnect with other parts of the road network which may be congested? I refer the reader to the already explained analogy of traffic flow to fluid flow in a system of interconnected pipes.

No competent practitioner in cost-benefit analysis would have included such items as "productivity" and "reliability". It is understandable that there was no mention of the likely role of induced traffic in curtailing these "benefits". The WestConnex project has incurred severe criticism from the NSW Auditor-General (The Sydney Morning Herald, 18/12/14). There was no risk analysis of traffic projections, project cost, economic benefits and financial analysis. I agree with this criticism and have given independent evidence to the Productivity Commission at hearings in April 2014 that to fund WestConnex would be a serious misallocation of scarce capital.

The Auditor-General's report suggests that the NSW government and the WestConnex Delivery Authority seem unable to come to terms with the complexities which have been created by the proposal. Given the history of toll roads in Australia, this is not surprising.

Concluding remarks

I conclude this article with the following two questions for both the present and future NSW governments.

Is the flawed road building agenda described here being driven by a fear of the economic and political consequences if employment in the construction industry is not maintained?

Is the agenda also being driven by the desire to convince the electorate that effective remedies are being implemented to alleviate traffic congestion in the Sydney region?