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

More evidence that perseverance and grassroots organizing pays off. Congratulations to the Council of Canadians and particularly Paul Manly from Nanaimo who contributed so much to the campaign!

The SPP was about facilitating trade at the expense of the environment and human rights, goals rather like the federal Gateway strategy.

The SPP is dead, so where's the champagne?

By Stuart Trew | August 19, 2009

"The Security and Prosperity Partnership of North America (SPP) is no longer an active initiative and as such this website will act as an archive for SPP documents. There will not be any updates to this site." - Disclaimer from the U.S. government's SPP website.

In October 2007, Globe and Mail reporter John Ibbitson predicted that a then two-year-old effort to deepen and expand NAFTA called the Security and Prosperity Partnership (SPP) would die unless North American leaders put some backbone into it.

Too much of the discussion was happening behind closed doors, wrote Ibbitson, himself a big supporter of the SPP and one of the only journalists to ever write about it in the Canadian media. "If you're going to negotiate freer trade," he said, "sing it from the rooftops.

Keep the media informed. Make it a Big Deal."

Well governments didn't sing (or not loudly enough), barely informed the media, and it fell to alter-globalization and social justice movements in Canada, Mexico and the United States, including the Council of Canadians, to highlight its many flaws. As a result, the NAFTA-plus agenda died in Guadalajara, Mexico last week. We killed it. And we should be singing it from the rooftops.

[snip]

It's time to regroup and rethink, for sure. But please let's do it with a bottle of champagne -- even if it's one from the cheap shelf.

The SPP is dead and we killed it.

Let's recognize what we have achieved and then get back to work.

Stuart Trew is trade campaigner for the Council of Canadians.

Full text at http://www.rabble.ca/news/2009/08/spp-dead-so-wheres-champagne

The University of Greenwich Business School has published a startling report on the crisis in Private Public Partnerships (P3s), which in the UK are more accurately described as Private Finance Initiatives (PFIs).

The long and short of it is that in the present economic situation PFIs just don't make any economic sense because governments can now borrow money much cheaper than private corporations. In addition, many previous PFI toll freeway schemes are unraveling.

This has major implications for the province's freeways expansion schemes (the Port Mann has already reverted to public finance and ownership), but much more for the private power industry. It no longer makes any economic sense at all to go to the PFI/IPP(Independant Power Producer) model. It always cost more to use private financing, but not it costs WAY more.

But crooked politicians never let the business case stand in the way of their friends dipping into the public purse.

(Thanks to Susan Jones for pointing this report out!)

Crisis and public services note 2. January 2009.

A crisis for public-private partnerships (PPPs)?

January 2009

David Hall

Andy Rose, the executive director of the UK’s PFI unit, said in November 2008 that PFI projects can no longer rely on their previous method of raising bond finance, and are now dependent on bank loans which are only available at much worse terms:
“the bond market, which has been the financial structure of choice for large PFI projects over the past 10 years, is now effectively closed to new transactions. This has increased reliance on the banking market…and increased the strain on the project finance banking model…….funding availability is limited and credit margins have moved up… many banks are indicating that the tenor of loans might be shorter.”

John Tizard, the director of the new Centre for Public Service Partnerships at Birmingham University, says that this has already halted finance for PFI schemes and may make them unattractive for the foreseeable future:
“At the time of writing, there is no – or next to no – capital available to finance any PFI deal that has not already been closed.”

[snip]

Tizard suggests that the obvious response is to revert to traditional government borrowing, which is in any case cheaper:
“If the cost of capital and/or debt increases or becomes more difficult to secure, the value for money equations, which are undertaken on PFI deals, may tip over against the use of PFI. …In these circumstances, all other things been equal, it might be appropriate to consider financing through models such as the Credit Guarantee Scheme and other forms of funding through government bonds and public finance. Government can borrow more cheaply than the private sector.”

[snip]

Australia has made considerable use of PPPs, especially for road schemes, but a number of projects have not delivered results and the credit squeeze threatens the future. In January 2009 an article in The Australian summarised the position:
“The brutal reality is that most private sector toll operators are a shambles. Most have overinflated their traffic forecasts, financed them with a slice of equity from the public markets, then geared up, and paid investors back their own capital in distributions (which enticed them into the float in the first place). As the debt markets worsen and most listed infrastructure funds have fallen apart, a new model is needed to help finance the estimated $800 billion the country needs to spend on infrastructure in the next decade….. The Infrastructure Partnerships Australia chairman Mark Birrell said that: "Otherwise, we could find that projects simply won't attract a suitable level of interest in the much-changed global economy," he said.”

Construction companies themselves are pointing out the advantages of the traditional model, whereby the government borrows money itself and then invites tenders for simple construction contracts, rather than attempting to construct PPPs in the context of the credit crisis. Mark Binns, the chief executive of a major Australian contractor, Fletcher Construction , told an enquiry in New Zealand:
“If the aim was to bring projects to fruition quickly, making them PPPs would be a retrograde step, as so much time is involved in setting up the legal framework between participants in the project, he said. He also questioned whether private sector funding would be viable in the current credit environment without Government guarantees, which nullified the transfer of risk to the private sector…..Sometimes the benefits of transferring the risk of PPP projects to the private sector were illusory, it said, citing the British Government's bailout of Metronet, the private operator of the London Underground…. if the transfer of risk was not complete, the true benefits of PPPs came down to an analysis of the funding costs, and there was a strong argument that the Government would be better off just raising debt, potentially through infrastructure bonds, to do the project using other traditional methods of contracting.”

The simple alternative is the traditional method of financing public infrastructure - through government borrowing to raise finance, issuing construction contracts, and then operating the facility, whether through direct labour or contractors.

This remains perfectly feasible. Governments are still able to borrow the necessary money: their credit is not affected in the same way as private companies. Traditional procurement is also simpler and quicker than PPPs: attempts to maintain PPPs as a core method of funding risk delaying infrastructure projects. The desired level of infrastructure investment can thus be achieved without any use of PPPs at all.

A recent PSIRU paper contains a detailed discussion of the choice between traditional procurement and PPPs.

Read the full report at http://www.psiru.org/reports/2009-01-crisis-2.doc

Wow. The arrogance of Falcon's overpaid flunkies is just astounding:

http://www.straight.com/article-219860/translink-schedules-annual-general-meeting-election-day?

May 9, 2009

TransLink schedules annual general meeting on election day

By Charlie Smith

I thought it was sneaky of the Vision Vancouver-controlled city council to bring forward a late-distribution report on social housing on provincial budget day. It ensured minimal coverage.

I also thought it was sneaky of the Vision Vancouver-controlled city council to deal with cycling lanes on the Burrard Bridge during the last week of a provincial election. The timing of the May 7 vote reduced the amount of media attention.

But these two instances of political weasel-like behaviour are nothing compared with TransLink's plan to hold its annual general meeting on the morning of election day next Tuesday (May 12).

On election day, the media will be working late shifts. The entire province will be riveted on the results, and not on a TransLink annual general meeting.

And well-meaning citizens who attend the annual general meeting will be overlooked by most media outlets--which is probably precisely what the directors of TransLink intended by choosing May 12 for their annual general meeting.

The meeting will take place from 9 a.m. to 11 a.m. at the Firefighters Hall (6515 Bonsor Avenue) in Burnaby.

I've scheduled all of our reporters to work election night, which means we won't have staff there that morning. Anyone who plans to make speeches to the board is welcome to e-mail copies of them in advance to contact@straight.com. If they're of interest to a wider audience, I will try to ensure they are posted on this site.

We have a comment space below. [at the website] I would love to read some explanations by the directors of Translink why they think it's a good idea to hold an annual general meeting on the morning of a provincial election day.

It's not as if nobody knew about this. B.C.'s fixed election date has been in place for years.

Perhaps one of the speakers at the annual general meeting might decide to mention that the Croatian city of Zagreb is providing free bus service in the downtown core. You can read the announcement here.

By scheduling the annual general meeting on election day, TransLink directors have reduced the likelihood of this type of information being conveyed to people who live in Metro Vancouver. Shame on them.

“Whose Government is it Anyway? Privatization vs the Public Interest.” Or, “What You Should Know Before You Vote, May 12th.”

Public forum on key election issues including BC Rivers and Independent Power Producers, Affordable Housing, Health Care, and the Gateway Project. Speakers: Rafe Mair, Save Our Rivers Society; Laura Stannard, Citywide Housing Coalition; Colleen Fuller, BC Health Coalition; Ben West, Wilderness Committee.

Introduction: Blair Redlin ( CUPE) , and warm up at 7.15pm with the Raging Grannies.

Date: Wednesday April 22nd.

Where: Van Dusen/Kaye rooms at the Downtown Vancouver Public Library

Doors open 7pm. Speakers at 7.30pm

Sponsored by the Vancouver/Burnaby Chapter of the Council of Canadians.

Contact: 604-263-1005