Business leaders cheer as Abbott drives agenda

One of the world's many hypocrisies is the manner in which captains of industry tend to be highly critical of the capacity of governments to resolve the problems of the world - but then, when governments come up with ideas that suit their short-term interests, the captains back them in blind.
By · 2 Nov 2013
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2 Nov 2013
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One of the world's many hypocrisies is the manner in which captains of industry tend to be highly critical of the capacity of governments to resolve the problems of the world - but then, when governments come up with ideas that suit their short-term interests, the captains back them in blind.

More on this idea later. But first, it was pats on backs all round this week as the finance and construction industry assembled for a slightly closer look at Australia's biggest infrastructure project - one of the most lucrative gigs around for the next decade or so.

Tony Abbott is determined to be known as an infrastructure Prime Minister. He doesn't believe in public transport, so he'll jag the infrastructure tag by jollying along some mega road projects, one each for Australia's eastern capitals.

In Sydney, the big dig - and it really is big - is the WestConnex motorway. In Melbourne it is the east-west link, in Brisbane, the Gateway Motorway.

But it was in Sydney that Abbott's road builders, Infrastructure Minister Warren Truss and parliamentary secretary Jamie Briggs, ventured for an industry briefing and the announcement of a new board to head up the WestConnex Delivery Authority.

"I rate it as the best board for the best road project in Australia," gushed NSW Roads Minister Duncan Gay of his own handiwork.

The board is headed up by business gadabout du jour Tony Shepherd.

Shepherd knows road projects. He was behind Sydney's Harbour Tunnel and headed up Melbourne's EastLink project for Transfield. He's now chairman of the Business Council of Australia and the Abbott government's Commission of Audit.

Helping Shepherd with the workload are three public servants, two construction industry veterans - Peter Brecht, formerly of Lend Lease and Abigroup, and Rod Pearse, formerly of Boral - and Robert Hamilton, the co-founder of Mirvac.

So lots of business experience then. Which invites the question: what are these people doing?

None of them seem to be raising what is quite a large elephant in the room: that WestConnex is the biggest urban infrastructure project in the country - with $3.3 billion of taxpayers' money already committed to it - and hardly anything is known about it.

Taxpayers across the country do not know how many cars are expected to use this motorway. They do not know its estimated impact on local roads. They are yet to be told its precise route. They're in the dark on construction methods.

Even the need for the WestConnex is not known. It is certainly true Sydney's roads are inadequate. But this does not mean that the precise model of WestConnex is the solution.

It might be that Sydney motorists want to drive in directions other than where WestConnex will direct them. In any case, we do not know if this has been tested.

We do not know if lots of things have been tested.

Take the cost. WestConnex is really a connection of three motorway projects the NSW government says will cost about $11.5 billion together.

One of the three projects - the second to be built - will be another M5 East Tunnel in southern Sydney and connecting road to Sydney Airport. The state says it will be able to build this for $3.6 billion to $3.8 billion, with construction starting in 2016 and finishing in 2020.

This forecast - presented with no justification to back it up - appears heroic at best.

When the former NSW Labor government appealed to the federal government for funding for pretty much the same project in 2010, it put a $4.5 billion price tag on it (with inflation, that would probably be close to $6 billion by 2020). Even then the federal government's adviser Infrastructure Australia said the $4.5 billion figure was likely to be understated.

So on what basis are Tony Abbott and Barry O'Farrell now so confident that they can do the job for billions less than their predecessors?

The public servant running the project to date, Paul Goldsmith, was asked about the difficulties of the southern section of the WestConnex at this week's industry briefing once journalists were moved along to a press conference in another room.

"When we started the business case we recognised this as a very difficult place to build a motorway," Goldsmith said. "It's a very expensive place to build a motorway, and this is why we developed a couple of industry partners to have some input into developing solutions for that part of WestConnex.

"We haven't got a fixed solution, but we have a whole bunch of ideas and we've got some shortlisted solutions to that area."

In other words, the government is sure it can build this section of motorway for $3.8 billion, but it either does not know how or will not say.

The reason taxpayers and Sydney residents should be concerned, and the reason business leaders don't do anyone any good by signing up as uncritical cheerleaders for projects like WestConnex is that when governments husband information they tend to make mistakes.

This should not be a radical concept. Businesses tend to be sceptical of the capacity for governments to get things right: why would they assume they're doing the right thing just because they're sympathetic to the initiative?

What would be useful would be if business leaders like Shepherd insisted on transparency. They could insist the government reveal the workings, analysis and assumptions of projects such as WestConnex, in the same way they would if governments proposed massively expensive new welfare, disability, education or health programs.

Ross Gittins is on leave.
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