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Australian PPP failures a warning for Transmission Gully

22 November 2012

Australian PPP failures a warning for Transmission Gully

New research shows that Public-Private Partnerships (PPPs) are a recipe for expensive, white elephant highways, Green Party transport spokesperson Julie Anne Genter said today.

Recent research from Australian Professor John Goldberg shows that PPPs are a bad investment that routinely grossly over-estimate traffic volumes and, therefore, the economic benefit of PPP projects. Professor Goldberg concludes: "The public-private partnership concept has failed in Australia”. Additionally, analysis conducted for the Green Party confirms a legacy of cost blow-outs and low traffic volumes.

“The failure of the PPP model in Australia should be a lesson for New Zealand. Yet the National Government is repeating the same mistakes by announcing a PPP for Transmission Gully,” said Ms Genter.

“Private consortiums in PPPs know that they have an effective taxpayer guarantee on their investment. That results in over-hyped projects that end up costing billions more than expected and fail to deliver the promised traffic volumes.

“In Australia, ordinary investors have lost their shirts and taxpayers have been saddled with multi-billion dollar bills, while the investment banks and developers walk away with enormous profits.

“The companies operating Cross City, Clem7, and Lane Cove PPPs all failed soon after their projects opened and the Brisconnections company is heading the same way. New Zealanders would face a similar debacle if the Transmission Gully PPP goes ahead.

“National has already acknowledged that borrowing for the construction of Transmission Gully rather than paying for it out of the National Land Transport Fund will add $300 million in interest to the cost of the project before it even opens. If the Australian experience is anything to go by, this would be just the first of many cost blow-outs.

“Public-Private Partnerships have proven to be a very costly failure across the Tasman. Why would we repeat that mistake here?” said Ms Genter.


Summary of major PPP roading projects in Australia

Australia PPP Roading Projects

Project

State

Initial Forecast Cost

Actual Cost

Traffic Forecast

Actual traffic

Clem 7 Tunnel

QLD

$1.2 Billion

$3 Billion

Opening 60,000

34,705 (2010 peak during lower toll period)

100,000 (2012)

28,086 (Feb 2012)

Lane Cove Tunnel

NSW

$1.1 billion

$1.6 Billion

110,000 (2007)

40,000 (2007)

120,000 (2010)

66,694 (2010)

 

67,795 (2011)

WestLink M7

NSW

1.856 billion

$1.9 billion

150,000 (2006)

100,000 (2006)

225,000 (2010)

128,973 (June 2010)

 

135,691 (June 2011)

Cross City Tunnel

NSW

$620 million

$1 Billion

87,600 (2006)

34,000 (2006)

Melbourne City Link

VIC

$1.5 Billion

$2.15 Billion

730,000 (2011)

710,483  (2010)

 

747,021 (2011)

Go between bridge

QLD

$120 million

$342 million

12,800 Oct 2010

11,700 (Sept 2010)

17,500 2011

Peak 15,783 ($1 reduced toll)

Brisconnections

QLD

 

$4.8 billion

135,885 (August 2012)

81,470 (August 2012, no toll for account holders)

 

 

 

 

53,172 (October 2012)

Eastern link

VIC

$2 billion

$2.5 billion

300,000 (2012)

200,000 (2012)

250,000 (2009)

158,900 (2009)


Compiled by the Parliamentary Library

ENDS

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