The Livable Blog

Will anyone be surprised if high fuel costs and other factors lead to ongoing revenue shortfalls for the Port Mann and Golden Ears toll freeway projects? The Port Mann deal was put together by Macquarie Bank - an Australian company. It seem that many Australian P3 freeways are little better than billion dollar ponzi scams.

It seems like our Auditor General may be worried about exactly this.

Lane Cove Tunnel in receivership

Australian Broadcasting Corporation

Broadcast: 21/01/2010

Reporter: Bronwyn Herbert

Sydney's Lane Cove Tunnel has gone into receivership, with a $1.1 billion bond debt. Transport analysts blame the widely optimistic traffic forecasts for the project’s failings, and some are now asking if it’s a setback for the controversial public private model.

Video at http://www.abc.net.au/7.30/content/2010/s2798318.htm

Transcript
TRACY BOWDEN, PRESENTER: It's the latest in a number of debt-heavy Public Private Partnerships in toll roads around the country to hit financial difficulties, Sydney's Lane Cove Tunnel meant to be a boon for the city's long suffering drivers is in the hands of an administrator after falling more than a billion in the red.

Transport analysts say the project was doomed because it's financial viability was based on wildly optimistic traffic forecasts. What does the setback mean for the controversial public private model?

Bronwyn Herbert reports.

BRONWYN HERBERT, REPORTER: It had a shaky start, a roof collapsed during construction, forced residents to evacuate and predictions of more pollution and smog hit the raw nerves of local residents.

PROTESTER: From today we are at a greatly increased risk of asthma, cancer, heart attacks.

BRONWYN HERBERT: But Sydney's billion dollar Lane Cove Tunnel, that opened with much fanfare in 2007, has crashed into receivership.

TONY SHEPHERD, INFRASTRUCTURE PARTNERSHIPS AUSTRALIA: The traffic was far less than estimated, and of course, they then ran into the GFC and the highest petrol prices we’ve ever had.

LEE RHIANNON, NSW GREENS MP: There's no surprise that the Lane Cove Tunnel financially collapsed. There's been warnings about this for a long time.

BRONWYN HERBERT: Lane Cove Tunnel's financial woes centre on its foolish traffic forecasts a problem mirrored in other debt-heavy toll roads around the country. From Brisbane airport link known as BrisConnect, to Melbourne's ConnectEast Motorway, and Sydney's controversial Cross City Tunnel, which also went into receivership

LEE RHIANNON: The Public Private Partnerships model is really a spin that was brought forward by the industry, by the Government to try to make out that there's partnership. But all the time what we see is the public are the losers.

TONY SHEPHERD: This is one project out of 10 road projects that I’m aware of that’s had some problems; most of the rest of them did extremely well. So I don't think it kills the model, I think the model will be modified.

BRONWYN HERBERT: The Lane Cove Tunnel debacle raises questions of why a tollway in one of the most congested parts of Australia's busiest city could go bust. The full blow of the financial fallout is still to be felt. Some market analysts have valued the tunnel at between $400 and $600 million, far below the $1.6 billion tag it cost to build. The tunnel's owners Connector Motorways has already written off all their equity in the project and it's in the hands of receiver KordaMentha.

DAVID CAMPBELL, NSW TRANSPORT MINISTER: The question here is how did the private sector get the numbers so wrong. The private sector did their own due diligence.

MICHELLE ZEIBOTS, UNIVERSITY OF TECHNOLOGY: The culture of failure is something we inherited from the days when motorways were just being built by governments, and basically we had environmental impact statements, but once again, there's no requirement for the science in any of those statements to be robust. And I think that that, I guess, you know, that cowboy type attitude towards the science has been carried over into these provides sector ventures.

BRONWYN HERBERT: Dr Michelle Zeibots is an urban transport planner, specialising in traffic growth in new urban motorway, and says repeated failures of toll roads show it's time for an independent authority to investigate.

MICHELLE ZEIBOTS: We’ve seen the developments fall over, and until somebody in Government decides that this needs to be regulated more strictly, then I don't think we'll see particular change in the way that this is done.

BRONWYN HERBERT: Dr Michelle Zeibots says governments are giving the green lights to projects that use unrealistic forecasts. Connector Motorways predicted up to 115,000 vehicles a day in the Lane Cove Tunnel, yet last month the average daily hit was barely half that mark. [snip]

Full text and video at http://www.abc.net.au/7.30/content/2010/s2798318.htm