Super funds wary of east-west road link

The east‑west link is a proposed 18‑kilometre road that would join the Eastern Freeway with the Western Ring Road via CityLink. The article estimates the build cost at around $10 billion.

Superannuation funds say they won’t invest unless the Victorian government can demonstrate the road will be profitable. Their reluctance stems from difficulty predicting traffic volumes, the risk of lower usage outside peak periods, and past poor returns on some toll road investments.

Traffic forecasts drive toll revenue projections. If forecasts are overly optimistic — for example, not accounting for fewer users in non‑peak periods or drivers choosing alternate routes — actual traffic and toll income can fall short, reducing returns for investors.

Yes. The superannuation industry has provided crucial financial backing for most toll road projects, but has sometimes seen poor returns when aggressive bid forecasts led to overinflated traffic projections. That history makes funds more cautious now.

Eddington’s 2008 plan found that about 60% of traffic leaving the Eastern Freeway turned south into the city rather than continuing west toward CityLink and beyond — a finding that raises questions about how much traffic the east‑west link would actually attract.

According to the article, super funds want clear evidence the project will be profitable. That includes reliable traffic forecasts and risk controls — for example, independent oversight of bidding and forecasting to reduce the chance of optimistic projections.

The government has indicated a preference to build the eastern section first. The stated reasons are to ease traffic problems in Melbourne’s east and to improve access to the Port of Melbourne.

The discussion paper proposes establishing an independent body to oversee bids for projects like the east‑west link. The aim is to remove the risk of traffic forecasting errors by providing more reliable, independent assessments.