The Baillieu government is determined to build the east-west road link, and a tunnel, toll road and off-ramps are all in the mix. But can it raise the money to pay for it? Adam Carey and Tom Arup report.
IT WAS a neat if unintended argument for fixing the chronic congestion that chokes the intersection of Hoddle Street and the Eastern Freeway. As federal Opposition Leader Tony Abbott stood near the Hoddle Street overpass earlier this month and publicly backed the proposed east-west link, a heckler in a passing car leaned out of his window and shouted: "Put your Speedos on, Tony!"
But the slow-moving traffic suddenly stalled, and instead of making a clean getaway the heckler had to sit and be eyeballed by the assembled media pack.
If elected, Abbott has promised that a Coalition government would give $1.5 billion to the Baillieu government to help build the east-west link, an 18-kilometre road that would connect the Eastern Freeway with the Western Ring Road via CityLink.
He reaffirmed that pledge on the footpath of Melbourne's most famously congested road. "This is the number one major project that Victoria needs right now," he said.
There is no doubting the Baillieu government's serious intent to build the link.
In July, the Baillieu government held a closed-door briefing on the road project with construction and finance companies.
According to several sources who attended the meeting, the briefing opened with an address by Transport Minister Terry Mulder, who said the east-west link was the key project for Victoria.
Participants were also told the government had no preconceived plan for the exact design of the project and was open to ideas on how to deliver it and how to reduce costs.
But there were preferred options. Tunnelling under the Melbourne Cemetery was an obvious precondition. A rough route was outlined. The meeting was also told the government had decided the eastern end, between the Eastern Freeway and CityLink, was the priority due to traffic problems and the need for better port access.
With the government already set on the project, the Department of Transport and the Linking Melbourne Authority is preparing a business case for it, which is expected to be completed by the middle of next year.
It is understood the government wants to call for tenders in the market next year. Construction could begin in 2014 and is expected to take four to five years.
Linking Melbourne Authority chief operating officer Geoff Rayner told The Age more than 40 groups had expressed interest in meeting about the project, many of them from overseas. Rayner, who worked with Sir Rod Eddington on his 2008 report, says the fact that all options are being considered, including building off-ramps, is not inconsistent with the spirit of Eddington's report.
"I don't want to pre-empt what the conclusion would be, but obviously if you started with a tunnel at Hoddle Street and took it all the way through, that is one option," he says.
"That has the least impact in terms of surface impact, but tunnelling is expensive. So you need to look at the range of options and ultimately draw a conclusion about what's the best outcome."
But Rayner said when major projects were built in Melbourne, authorities had historically sought to preserve the environment and amenity of affected areas.
"So I think the same sort of assessments will come into looking at east-west," he says.
Rayner says off-ramps hold engineering challenges that would need to be resolved before making decisions about their potential impact on communities.
"If you think about a tunnel being a tube, if you create an entry or an exit from that tunnel, then you have to widen out that tube and that becomes a fairly costly challenge," Rayner says. "And then, of course, you've got the operational aspects. You don't want to have traffic queueing back into a tunnel."
Last week, Eddington estimated that road congestion would suck $4 billion from the Victorian economy this year.
BUT the east-west link is not the only potential solution to the Eastern Freeway/Hoddle Street bottleneck being considered.
As the thick Hoddle Street traffic edged past Abbott that morning, it only had to travel a few hundred metres down the road to see two giant billboards spruiking another, completely different, proposal for easing congestion along the Eastern Freeway: Trains Not Tolls.
A group of seven eastern suburbs councils, which have formed the Eastern Transport Coalition, are pushing for a railway line to Doncaster to solve the congestion problem.
"We believe that you can build a train line at considerably less cost, that every train can potentially take about 800 cars off the road and that would substantially reduce the amount of congestion at the Hoddle Street end," says City of Yarra mayor Geoff Barbour.
The state government is awaiting the findings of a $6.5 million feasibility study of building Doncaster rail, which was one of its 2010 election promises. But action on the railway line is now captive to the government's far greater determination to build the east-west link.
Until the results of geotechnical drilling indicate which path the link tunnel should take, it will not be possible to settle on even a theoretical alignment for a railway line to Doncaster.
It is estimated the east-west link will come with a price tag of about $10 billion. Federal funding would cover a fraction of that, with most of the rest likely to be be sourced from private investment.
But potential investors are uncertain about the road's commercial viability, even those with a long history of investing in major transport infrastructure.
A discussion paper released today by the Association of Superannuation Funds of Australia says the east-west link's merits are difficult to assess, because there is high potential for vehicles to use other roads, thereby cutting into any toll-based revenue.
"The potential for road users to use other options in non-peak periods makes projecting traffic flows particularly challenging," it says.
"If investor concerns around independent traffic forecasts, financing and construction risk can be satisfied, then it will be possible to finance the east-west link."
The paper also argues that the extensive tunnelling likely to be involved would generate significant construction risk, with past experiences having left investors to cover cost overruns. But the association did not rule out investing in the project.
Gordon Noble, the association's director of advocacy and policy strategy, also warns that "the experience of superannuation funds investing in toll roads has been mixed, with some very public disasters". CityLink in Melbourne was a boon, but other projects in Sydney and Brisbane have been bad for investors.
In each case the key was traffic volumes. Where there have been losses, traffic numbers have been estimated at 30 per cent above what eventuated. In many cases, the successful bidder for the project had been the one that predicted the most traffic, so independent traffic modelling for new toll roads is critical, Noble says.
Professor David Hensher, the director of The University of Sydney's Institute of Transport and Logistics Studies and the author of a major review of Australia's toll roads, says virtually all toll roads built in Australia have benefited road users but few have been good for investors, who too often fell into the trap of over-estimating traffic volumes.
Hensher has been subpoenaed in a court case in which funds manager AMP is attempting to recoup losses it sustained from the poor performance of Sydney's Lane Cove tunnel.
"I feel sorry for the traffic engineers and the consultants on these projects because they're more or less told by the consortia, and banks in particular, to find high numbers to justify these things," he says.
"My general formula is, whatever you come up with, halve the patronage and double the cost and you're getting close to the truth."
But where private consortiums have lost out, it has been something neither they nor governments have been eager to acknowledge, for fear "that if they did, these projects might not happen", says Hensher.
Federal Transport Minister Anthony Albanese touched on the same theme at the International Transport Forum in Leipzig, Germany, in May, when he told an audience that public-private partnerships had helped deliver many projects of benefit to Australia, but investors had often lost out due to their "overexcitement".
"Private sector bids have lost money because they've invested in roads expecting 10 million cars and they've got 3 million cars through, so hence haven't got the return on their investment," he said.
"So I think it's a matter of making sure that we get forecasting, patronage risk, those issues done right."
Despite past troubles, the operator of one of Melbourne's existing toll roads has strongly endorsed the east-west link, saying the road would fix what he describes as the state's worst traffic bottleneck. But Dennis Cliche, managing director of EastLink operator ConnectEast, says the road would need to have tolled off-ramps into the city to make it financially viable as a public-private partnership.
"You are going to have to, in my view, put exits into the city . . . because it does have to get commuters to the city. It is not just a bypass as [Infrastructure Australia chairman] Eddington recommends," he says.
It was Eddington who raised the idea of an east-west road to solve Melbourne's growing traffic congestion when his transport plan was released in 2008. The east-west link was crucial to ending the city's reliance on the West Gate Bridge as the sole major Yarra River crossing, he argued.
But importantly, he did not propose building off-ramps to funnel traffic into the city centre, stating that "there were sound operational, functional and strategic reasons for this section to act as a northern city bypass".
The freight industry is also pushing for a second Yarra River crossing, saying the city's growing volumes of freight traffic will eventually become unmanageable without one, which would hurt national productivity.
The Port of Melbourne processes about 2.6 million international containers a year, and that is projected to rise to 8 million by 2050.
"The roads we've currently got are certainly not going to be able to cope," says John Begley, chairman of the state government's ministerial freight advisory council.
Yet there is another economic consequence less easily quantified that a new off-ramp into the city could bring. Funnelling more traffic through suburbs such as Carlton and into the city could potentially damage Melbourne's much-vaunted liveability.
Professor John Stanley, who works with Hensher in the Institute of Transport and Logistics Studies, insists the east-west link will be good for Melbourne only if it were built as a bypass. Off-ramps risk directing more traffic into the city than its roads can cope with.
"The knowledge economy, which is where the growth is, depends on highly talented people, and liveability attracts those people," he says.
"The liveability of Melbourne is really fundamental to its international brand and I'm just a bit concerned that if we add too much additional pressure on the road system, that will choke it up and mitigate against growth in the inner area, employment and so on."