Victorian Transport Budget - Part Two

Fire.gif

East West Link funding remains uncertain

In PART 2 of our pre-budget analysis, Andrew Herington exposes the funding gaps undermining Napthine's infrastructure ambitions. 

Plus read more about Napthine's public transport promises and why they may not live up to the hype.

 

By Andrew Herington

The Napthine Government has recently made a series of major road funding commitments but it is far from clear which of these will appear in the Victorian budget on May 6th.

The largest is Stage 1A of the East West Link Freeway. This was notionally costed in last year’s budget as “$6-8 billion” but only $224 million was actually brought to book.

Surprisingly, it is likely that nothing new will be said in this budget – despite the staggering weight that will fall on the State Budget in the future. The Napthine plan is to delay any financial disclosures until the contract is signed – sometime after August this year..

Napthine also needs the $1,500 million Tony Abbott promised to be passed in the Senate. This is likely to be tricky!

The Victorian Government insisted the East West Link Business Case must remain secret and handed a shortened version to Infrastructure Australia too late to be assessed. Tony Abbott pledged to stop the political allocation of capital funding and will have difficulty explaining to Parliament how such a large commitment should escape the normal process for scrutiny.

Victoria may also be disappointed that this money will be stretched out over the life of the project and not paid up front. Joe Hockey has been particularly critical of the States failing to spend infrastructure money advanced to them and has committed to making  future road funding in retrospective instalments.

The State will be collecting all the toll revenue, and taking the risk that the optimistic traffic projections made for the freeway will be met. A series of tunnel projects in Sydney and Brisbane have gone bust because the roads failed to meet their initial traffic projections. 

Victoria has kept the 2021 East West Link traffic estimates secret and relied on forecasts for what the road might carry after 10 years. However it has admitted that routes chosen by motorists are highly sensitive to the toll levels, which have yet to be disclosed.

Moreover, once a contract is signed, the Auditor General requires the whole cost of the project to be brought to book along with the revenue forecasts and the risks associated with it. By not disclosing this in the Budget the Government hopes to keep these figures secret until the Pre-Election Budget Update (PEBU) – which is released 10 days into the campaign.

The Government also has to disclose in its Budget any “contingent liabilities” that it has incurred. The toll revenue and construction cost risks it has taken on under the proposed arrangements represent massive potential liabilities. This issue also has to considered in detail in PEBU – which is written by Treasury officials rather than the Government of the day and provides greater disclosure.

The Opposition has called for the Auditor General to examine the proposed contract and report on whether it represents good “value for money”  and the basis for the claim of a return of $1.40 for every dollar invested.

The same point is being raised in the Supreme Court action launched by Tony Murphy last week. It will be interesting to see whether the Government is brought to book by the mechanisms of the State and Federal Parliament, Auditor General and the Courts. That is how democracy is meant to work.

EWL Second Stage

Undeterred the Napthine Government has moved to double its bet on freeways by pushing ahead with both Stage 1B (Royal Park to the Port) and Stage 2 (Port to Western Ring Road) of the East West Link. 

The  Federal Government has agreed to fund $1.5 billion towards this project, which is estimated to cost a further $8-10 billion. Wisely they have placed limits on the offer, requiring a Business Case to be prepared first but still predicted it would commence construction by the end of 2015. Having set a speed record of 2 years for design and approval of a new freeway for Stage 1, it seems that the plan is to slash the process even further to less than 18 months

This money has come at the expense of funding committed last year for the Ring Road to be widened to be completed – meaning the northern and western suburbs miss out again.

The planning for Stage 1B was part of the recent CIS process but it left more questions than were answered concerning the impact on apartments in Flemington, the reason other routes weren’t considered and why the western suburbs has to put up with freeway viaducts when the eastern suburbs get tunnels.

Citylink

The situation has become even more confused with the announcement of the widening of Citylink (north and south of the proposed EWL interchange) and the expansion of the heavily congested interchange at the junction of the Westgate Freeway and Citylink. 

In the hearings, the difficulty of fixing these capacity constraints were given as the reason why Stage 1B was needed. Now we are being told they will be fixed first. The $850 million Citylink upgrade and is the product of the negotiations with TransUrban known as Project Zebra

The critical element is that the State has apparently given up its rights to the Transit Lane under the original Concession Deed to create a total of 5 traffic lanes north of Flemington Rd and 4 over the Bolte Bridge. This should be strongly resisted and the (unenforced) transit lane should become a dedicated bus and taxi lane with fines for other motorists.

The funding for this will partly come from the undisclosed settlement of the various disputes with Citylink about their obligations for past upgrades which have benefitted them. There will also be an increase in truck tolls and a one year extension of the highly lucrative Kennett era contract. Critically, the State is looking for Transurban to not exercise the clause that protects it from rival roads being built (Part 1B runs parallel to Citylink south)

Eastern Freeway widening

No announcement has been made yet of the funding to widen the Eastern Freeway from Yarra Bend Rd to Tram Rd. This was part of the original announcement and apprently included in the announced budget. These "associated works" were excluded from the planning approval process

  • an additional lane on the Eastern Freeway from Yarra Bend Rd to Tram Rd;  Cost TBD  - project not yet announced but critical for EWL to work
  • The $108 m announced on 9th February for the Hoddle St buslane and DART upgrade ($47m), the tram route upgrades ($29m) and the "Alexandra Pde boulevard " ($32m).

Possibly this widening will be used as an excuse to introduce a toll to fund this section

Tullamarine Freeway upgrade

The announcement also includes a $250 million widening of the Tullamarine freeway north of Essendon. Victoria wants the Federal Government to pay 80% of this cost but no agreement has been reached. Labor supports this project which was part of Project 10,000.

Interestingly the Abbott Govt committed 80% of the $3.5 billion roads package for access to Badgerys Creek announced last week by Tony Abbott. $1.2 billion of this will flow over the next four years, another $1.7 bn over the following four years with the State adding 20% to both figures.

A key issue is whether there will be a dedicated bus lane on the widened road to fix the delays impacting northbound SkyBus services.

SUMMARY OF TRANSPORT BUDGET COMMITMENTS SO FAR

 

State

$m

Federal

$m

Tolls/ private

$m

TOTAL

$m

East West Link stage 1A

Eastern freeway to Tullamarine

1,500-3,500 a)

1,500

3,000

6-8,000

East West Link stage 1B

Tullamarine to Port

1,000

1,500

500

2,000

East West Link stage 2

Port to Western Ring Road

2,000-4,000

3,000

6-8,000

Eastern freeway upgrade b)

   500

 

New toll?

  500

Citylink upgrade

0

0

  850

  850

Tullamarine widening

     50

200

 

  250

Main Rd grade separation

     50  c)

150

 

  200

Southland station

     21  d)

0

0

    21

Dandenong transformation

2,000- 2500

0

0

2-2,500

Airport Rail Link

2,000

0

1,000 e)

3,000

TOTAL

   9,121-13,621

3,350

8,350

20,821- 25,321

(Announced numbers in boldestimates in italics)

Notes:

  • Includes funding to upgrade DART/ bus lane in Hoddle St ($47 m) Tram upgrade ($29 m) and Alexandra Pde Boulevard ($32 m)
  • Assumes Burnley tunnel equivalent, $6 toll with similar proportion of Operating/ Maintenance expense as Citylink
  • Eastern freeway widening is committed but yet to be announced
  • Claimed to be funded by “savings on RRL”
  • Funded but not disclosed in the 2013 Budget
  • Assumes $10 fare capital element to private operator (10 m pax/annum) $20 total fare
  • The M80 Ring Road project (prioritised by Labor) has lost $500 million and now presumably won’t proceed for some years
  • Federal funding is likely to be over 8 years and is similar to the recent commitments made in Sydney for new roads to Badgerys Creek airport (80% of $3.5 billion over 8 years)

Other potential announcements in the May Budget include:

  • up to 100 additional E Class tram (provided for in Labor’s contract)
  • Restructure of Yarra tram routes ($50 m)
  • Grade separations at North Rd, Burke Rd and possibly Bayswater
  • Additional bus services

Big Picture Problems 

What’s missing?

There is a notable shortage of public transport initiatives for regional Victoria, very little for buses and no sign of the desperately needed funding for the additional 100 E Class trams provided for in Labor’s original order.

The tendency to focus on mega projects means many small things that need to get done are being overlooked.  Top of the list should be increased frequency for buses and funding for long promised extensions – such as the buses for the Aurora estate in Epping which has bus stops but no service.

There is also a suspicious bias in favour of marginal seats. The Main Rd and Furlong Rd level crossing in St Albans have long been at the top of the most dangerous crossings – with the problem getting worse since the electrification of the Sunbury line. Yet once again they are likely to miss out as the Government prioritises North Rd Bentleigh and Burke Rd – the first being highly marginal and the second in the Treasurer’s electorate.

Commuters well remember the five broken Coalition promises in 2010. Failed studies into the Doncaster, Rowville, Avalon and the “regional rail revival” rail lines and the Flinders St design competition show that vague promises count for little and the 2014 Budget may just contain more empty promises for the next term.

A new Transport Plan?

How does all this fit together? Nobody seems to know and there is no clear narrative  from the Government apart from its advertising slogan that it is “Moving Victoria”.

Section 63 of the Transport Integration Act says the Government must have a transport plan and assess priorities against key decision making principles. The Coalition has always rejected this being mandatory and derided the 2008 Victorian Transport Pla as an “unfunded wish list” – despite $32 billion being earmarked over 10 years for implementation.

Most of the projects opened over the last four years and the new commitments made by the Coalition for rolling stock, level crossings and other improvements have been funded from within that envelope.

The surprise packet for this year’s Budget could therefore be a reversal by the Coaltiion to present their collection of commitments as a “new transport plan”. The overdue network development plans for trams and buses are completed but yet to be released – as is the final version of Plan Melbourne.

So watch out for the Budget putting a gloss on the Coalition’s strategy for the next term by creating a new umbrella “Transport Plan”. Sadly the foundation stone will remain their commitment to the East West Link freeway as the first before any other project.

Do you like this post?