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Australian PPP failures a warning for Transmission Gully |
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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
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