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Rural and Regional Affairs and Transport Legislation Committee
INFRASTRUCTURE AND REGIONAL DEVELOPMENT PORTFOLIO
- Committee Name
Rural and Regional Affairs and Transport Legislation Committee
Conroy, Sen Stephen
Sterle, Sen Glenn
Gallacher, Sen Alex
Ludlam, Sen Scott
Rhiannon, Sen Lee
Edwards, Sen Sean
Lines, Sen Susan
Back, Sen Chris
ACTING CHAIR (Senator Sterle)
Dastyari, Sen Sam
Cameron, Sen Doug
O'Sullivan, Sen Barry
McLucas, Sen Jan
Urquhart, Sen Anne
Whish-Wilson, Sen Peter
Peris, Sen Nova
Johnston, Sen David
Colbeck, Sen Richard
- Sub program
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Rural and Regional Affairs and Transport Legislation Committee
(Senate-Monday, 26 May 2014)
INFRASTRUCTURE AND REGIONAL DEVELOPMENT PORTFOLIO
Department of Infrastructure and Regional Development
ACTING CHAIR (Senator Edwards)
ACTING CHAIR (Senator Sterle)
Australian Transport Safety Bureau
Civil Aviation Safety Authority
- Department of Infrastructure and Regional Development
- INFRASTRUCTURE AND REGIONAL DEVELOPMENT PORTFOLIO
Content WindowRural and Regional Affairs and Transport Legislation Committee - 26/05/2014 - Estimates - INFRASTRUCTURE AND REGIONAL DEVELOPMENT PORTFOLIO - Infrastructure Australia
Senator CONROY: Just for simplicity's sake, the way we are allocated over here, individuals will ask about different states. I am doing Victoria and the ACT and other senators will be asking you about other states. Just to assist you with answering the questions, that is the process we are going to go through.
Mr Mrdak : Certainly.
Senator CONROY: I am going to start in Victoria, my home state.
Senator STERLE: An excellent place to start.
Senator CONROY: An excellent place to start, you are right. Geelong live there, don't they?
Senator STERLE: They certainly do.
Senator CONROY: It is a Geelong tie you are wearing, isn't it?
Senator STERLE: Victoria is a part of Geelong, I thought.
Senator CONROY: My mistake. I wanted to ask about the minister's budget media statement. I just wanted to systematically go through it. Have you got a copy handy?
Mr Mrdak : I will get that in front of me, Senator.
Senator CONROY: It is a fairly lengthy document with attachments. Good to go?
Mr Mrdak : Good to go, Senator.
Senator CONROY: Great. Has Infrastructure Australia seen a full business case for East West stage 1 yet?
Mr Jaggers : I understand Infrastructure Australia has seen a business case for stage 1 of the East West Link. In the 2013 infrastructure priority list that project was listed as having real potential.
Senator CONROY: Can you just take me through that again? You have seen a state government report?
Mr Jaggers : I am not from Infrastructure Australia, but I understand the 2013 priority list included the eastern section of the East West Link on that priority list as 'real potential'.
Senator CONROY: Because this is not my area, I am not quite as familiar as you with Infrastructure Australia. I understand there is a priority list. That is about all I know.
Mr Jaggers : Sorry, Senator; Infrastructure Australia's priority list.
Senator CONROY: They rank them in order, though, don't they? Isn't that how it works? So from the highest priority down to not quite as high priority?
Ms O'Connell : In the Infrastructure Australia priority list there are four categories of priorities—
Senator CONROY: Thank you.
Ms O'Connell : the way that they have traditionally treated their priorities. They have assessed them and placed projects in different categories.
Senator CONROY: Okay. East West stage 1 was on the list. I will come to where, but it was on the list.
Ms O'Connell : Correct, Senator. Earlier evidence said that it was in 2013 that it was published on the list.
Senator CONROY: Which category? Can you just help us here? Is category A the top one down to D or is it category 1 down to 4 or 4 down to 1? Which way does it work?
Mr Jaggers : The four categories are 'early stage', 'real potential', 'threshold' and 'ready to proceed'. Infrastructure Australia's priority list, as it is updated, includes projects in each of those categories.
Senator CONROY: Where did East West stage 1 go?
Mr Jaggers : It was listed in the 2013 list as 'real potential'.
Senator CONROY: 'Real potential'. In the way you describe these projects that sounded like the third ranked without having got to the title of 'threshold achieved'. Is that what it was called?
ACTING CHAIR: 'Threshold' and 'ready to proceed'.
Ms O'Connell : 'Threshold' or 'ready to proceed'.
Senator CONROY: 'Ready to proceed'.
Ms O'Connell : Two higher.
Senator CONROY: So it was not in the 'ready to proceed' category?
Mr Jaggers : Not in Infrastructure Australia's categorisation, Senator.
Senator CONROY: Right. It was in 'real potential'. There was 'threshold'?
Mr Jaggers : Yes.
Senator CONROY: What was the fourth one?
Mr Jaggers : 'Early stage'.
ACTING CHAIR: 'Early stage' is the first.
Senator CONROY: Thank you.
ACTING CHAIR: Can I just clarify, so there is no confusion, because you threw me out then, Mr Jaggers, that No.1 is 'early stage'; it is not No. 4. That is what you said earlier.
Ms O'Connell : Senator—
Senator CONROY: That is why I am asking. I am just trying to get a sense of the order of readiness, priority, whatever.
Mr Jaggers : The way Infrastructure Australia publishes its list from left to right on the page has 'early stage', 'real potential', 'threshold' and 'ready to proceed'.
Senator CONROY: Great. This one was in 'real potential'?
Mr Jaggers : Yes, Senator.
Senator CONROY: Which is not ready to proceed?
Mr Jaggers : That is the categorisation—
Senator CONROY: By mutual exclusion?
Mr Jaggers : That is the categorisation that is used, Senator.
Senator CONROY: It is not classified as ready to proceed?
Mr Mrdak : Someone is busting to answer a question here. I can see the lips moving but nothing is coming out. There is a bit of head shaking.
Senator CONROY: It is a factual yes or no. Either it was classified as ready to proceed or it was not classified as ready to proceed.
Mr Jaggers : I have answered that. It was not in the 'ready to proceed' categorisation on Infrastructure Australia's priority list.
Senator CONROY: Within those categories are there rankings or no rankings inside those categories?
Mr Mrdak : No, there are no rankings in those categories.
Senator CONROY: Once you are into the category, you are all equally meritorious?
Mr Mrdak : That is correct. Infrastructure Australia may have views on individual projects within that category, but essentially they do not rank them within a category in their public presentation.
Senator CONROY: I have some questions here. I just need to know whether or not you are able to answer them or I should save them for Infrastructure Australia.
Mr Mrdak : We have Infrastructure Australia here with us.
Senator CONROY: Infrastructure Australia has arrived. Sorry, Mr Fitzgerald, I did not see you sneak up to the table there. Welcome.
Mr Fitzgerald : Thank you.
Senator CONROY: Just to confirm: East West Link stage 1 was not ready to proceed in your categorisations?
Mr Fitzgerald : That is right. It has been listed as 'real potential'.
Senator CONROY: Has Infrastructure Australia seen a full business case for East West stage 1 yet?
Mr Fitzgerald : Not the entire full business case.
Senator CONROY: So Infrastructure Australia has not seen the full business case?
Mr Fitzgerald : No.
Senator CONROY: Have you reviewed what you have received?
Mr Fitzgerald : What has been received has been reviewed, yes.
Senator CONROY: Can I call you IA just for short?
Mr Fitzgerald : Certainly.
Senator CONROY: What problems has IA identified that East West stage 1 will solve?
Mr Fitzgerald : I do not have that detail in front of me. The solving of the objectives of the project is something that is iterative and develops as the business case is developed. We would not have it.
Senator CONROY: You would not expect to have seen the problems it is trying to solve yet because it is only in the 'real potential' stage?
Mr Fitzgerald : We would not fully understand that yet.
Senator CONROY: So Infrastructure Australia cannot identify what problems will be solved by East West Link stage 1 yet?
Mr Fitzgerald : That discussion is still happening with the Victorian government and we are still working through that process.
Senator CONROY: So you are none the wiser as to what problems you are trying to solve?
Mr Fitzgerald : I cannot respond to that, I am sorry, Senator.
Senator CONROY: Has IA done any independent calculation of a BCR for any part of East West stage 1?
Mr Fitzgerald : I would have to take that on notice.
Senator CONROY: You must have known if you have done your own. I am not talking about whether the Victorian government have given you information. I am asking you have you done your own and you must know about it.
Mr Fitzgerald : I do not know the answer to that clearly. I have been in this position for a very short period of time so I am not across most of these projects.
Senator CONROY: Is there anyone with you today who would know the answer to that?
Mr Fitzgerald : Yes.
Senator CONROY: Come on down, we say. You are the big person that does these things—funding and financing. It sounds like you're the man.
Mr Roe : Just to clarify your question—
Senator CONROY: Have you done any independent calculation of a BCR, benefit-cost, for any part of East West stage 1?
Mr Roe : No, not an independent calculation.
Senator CONROY: So all you have got is the Victorian government material at this stage?
Mr Roe : Yes, we have got the Victorian government material. We have not undertaken an independent cost-benefit analysis.
Senator CONROY: I understand, just because I read the papers about this—it is not my area of expertise—that there have been a number of different methodologies supplied to you; from what I have read publicly. I am a Victorian so I follow this closely, as closely as any average Victorian.
Mr Roe : Yes. A cost-benefit analysis was provided to Infrastructure Australia.
Senator CONROY: With a couple of different methodologies. I understand there is a controversy around what methodologies were used.
Mr Roe : There was a core benefit-cost ratio calculated consistent with our templates.
Senator CONROY: A core and a non-core?
Mr Roe : Yes, consistent with the templates. There was also a wider economic benefit calculation which was calculated separately from the core benefit-cost ratio.
Senator CONROY: So the Victorian government did two parts. You have not done any independent assessment at all?
Mr Roe : We have not undertaken a cost-benefit analysis, but we have looked at and assessed—
Senator CONROY: You have assessed that the numbers correctly add up. An assessment usually is you make a judgment about the variables in the calculations.
Mr Roe : Yes.
Senator CONROY: So two plus two equals four. You have confirmed that two plus two equals four.
Mr Roe : Let me just be clear. You asked whether we had undertaken a separate cost-benefit analysis, which means—
Senator CONROY: To which you said no.
Mr Roe : Yes, that is right. But we have undertaken an assessment of the material provided to us by the Victorian government in relation to the cost-benefit analysis.
Senator CONROY: What was the core BCR ratio?
Mr Roe : The core, as presented, was 0.8.
Senator CONROY: Could you explain what that means to me? It has been a long time since I studied these at university.
Mr Roe : Yes. The core benefit-cost ratio, as presented, was 0.8, which means that for each dollar of cost there is 0.8, or 80c, of benefit.
Senator CONROY: Helping me there, could that be characterised as a negative outcome, a negative benefit?
Mr Roe : No, it would not be. It is still a positive benefit, 0.8 for each dollar of cost.
Senator CONROY: But it does not recover costs?
Mr Roe : Not for the core benefit-cost ratio.
Senator CONROY: It does not recover costs?
Mr Roe : As presented, yes.
Senator GALLACHER: I did not go to university. Does that mean that a dollar in and 80c out?
Senator CONROY: Yes, 80c back.
Mr Roe : For the core benefit-cost ratio. There is the consideration of wider economic benefits as well which—
Senator CONROY: I appreciate when you start adding in apples, oranges and pears and everything else you can make something look good. But is that why at this stage you have not got it characterised as ready to proceed, because you do not have enough information and you have not completed your own BCR?
Mr Roe : Yes. So with our assessment approach, we do not undertake a separate benefit cost-ratio calculation. We assess the material presented to us and make a judgment call on whether it creates economic value.
Senator CONROY: By definition then, you have only—
Mr Roe : We have not received the full business cases, as the infrastructure coordinator, mentioned. There would be one consideration in terms of—
Senator CONROY: You have not been able, with all the information you have got so far, to classify it as ready to proceed?
Mr Roe : That is correct.
Senator CONROY: You are not planning on doing a BCR for—
Mr Roe : We do not undertake a separate benefit-cost ratio or a cost-benefit analysis for any projects. We just assess the material that is provided to us.
Ms O'Connell : The emphasis there is that IA's role is in reviewing cost-benefit ratio and cost-benefit analysis rather than developing their own cost-benefit analysis.
Senator CONROY: Sorry, you have not got a name tag in front of you. It helps me to remember to address you correctly. They are able to at least chuckle about some claims that might come forward in a state document?
Mr Roe : Sorry?
Senator CONROY: You could always chuckle at some of the claims? You do not just have to go: yes, two plus two equals four?
Mr Roe : We undertake a thorough analytical review of information presented.
Senator CONROY: But without testing any of the assumptions?
Mr Roe : We test the assumptions. We undertake the analysis of the veracity of the assumptions.
Senator CONROY: You have done all that and you still have not got it in the 'ready to proceed' categorisation?
Mr Roe : Yes. It is not at 'ready to proceed'.
Senator CONROY: Yes, it is not at 'ready to proceed'. Have you calculated the net present value of East West Link stage 1 or any part of it?
Mr Roe : That would have been presented as part of the templates in the information provided to us.
Senator CONROY: But you have not calculated it?
Mr Roe : We review that as part of our—
Senator CONROY: You have made sure that whatever the net present value calculation is, two plus two equals four?
Mr Roe : Yes. But also, as you mention, we question the veracity of the assumptions going into the model.
Senator CONROY: You have agreed with all of the modelling assumptions?
Mr Roe : For the East West Link.
Mr Fitzgerald : I think there is a clear distinction here when you are looking at a business cost ratio. One is the arithmetic, whether the numbers add up, which is a much simpler exercise. The other is actually having a view around the assumptions that are used and, in projects like this, varying the assumptions by a small amount can have a significant impact. That is the work that is yet to be completed.
Senator CONROY: I absolutely understand that game. Has IA calculated a short-term or long-term productivity gain from the project or any part of it?
Mr Roe : No. Wider economic benefits is a measure of productivity. To the extent that is presented and provided in the submission—
Senator CONROY: That is in the second part, not in the core? That is in the wider benefit?
Mr Roe : Yes. It is part of the broader cost-benefit analysis. It is not in the core benefit-cost ratio but it is presented in a cost-benefit analysis as a separate benefit.
Ms O'Connell : So the productivity measures include travel time savings, for example, which are particularly amplified when you look at the wider economic benefits for the project.
Senator CONROY: Now just help me here. Do you recommend that funding be spent? Is that part of your process? You say, 'It is ready to proceed. Therefore X dollars is needed to make this project match.'
Mr Roe : Infrastructure Australia provides advice on infrastructure project priorities and informed priorities. We do not fund projects.
Senator CONROY: I appreciate you do not fund them. But if this is a project that on this cost-benefit analysis is wider than everything else and requires $50 billion to proceed, you say, 'Yes, we agree, that is what it needs to proceed.' You have come out with these calculations and these benefits. Therefore you agree that that is the dollar figure that needs to go towards it being a success, on the basis of the calculations that you have done? You would not say, 'Spend a dollar on it. Here is a $50 billion project. We agree that it comes out at point A. We agree that it comes out at 1.7 but only put a dollar into it.'
Mr Fitzgerald : Senator, the government is responsible for the decision on the amount of funding.
Senator CONROY: I appreciate that. No, I am not saying that you are responsible. What I am saying, though, is: when you say to move it into the 'ready to proceed', you are accepting the funding package that is part of it—not that you are recommending it. Perhaps I have given you undue concern by saying that. A proposal comes to you with X dollars recommended to be spent to create this amount of economic value. You then test the amount of economic value based on the dollars that were being put forward. I am just trying to understand that process.
Mr Roe : Yes. So the cost-benefit analysis is calculated independent of who funds—
Senator CONROY: No. I appreciate that. I am not talking about who funds it. I am talking about the quantum. You would not recommend that you build half a road, would you?
Mr Roe : No.
Senator CONROY: You are not going to get all of those benefits if only half the road is built or if only one lane is built?
Mr Fitzgerald : So the link to funding is the cost of the project and the—
Senator CONROY: There is a dollar cost involved in cost.
Mr Fitzgerald : There is a dollar cost. That could be funded by either users or government or a combination of both.
Senator CONROY: I appreciate you are not recommending it. You do not say, 'Put a toll on it,' or you do not say, 'The state should pay 50, the Commonwealth should pay 100.'
Mr Roe : In this case it is being funded by both users and government.
Senator CONROY: It can be any one of those things but you do not make any judgment about that at all?
Mr Roe : No.
Senator CONROY: Just to clarify, you do not make any judgment?
Mr Fitzgerald : That is correct. If it is ready to proceed, then it is ready to proceed on the basis that is being presented.
Senator CONROY: Sorry, if you could speak up a little, Mr Fitzgerald.
Mr Fitzgerald : When it gets to ready to proceed, then it is, from IA's perspective, ready to proceed on the basis of the proposal that was presented.
Senator CONROY: The proposal that was before you which was presented, by definition, if it is a $100 million project or a billion dollar project. If I could just ask this last one, Senator Sterle, before you jump in: at no stage has IA recommended to proceed with $1.5 billion of Commonwealth funds being spent on East West Link stage 1? Sorry, it is a yes or no question. There is a proposal of $1.5 billion, I understand, for stage 1.
Mr Roe : Yes.
Senator CONROY: You at no stage have said it is ready to proceed?
Mr Roe : That is not the role of IA. We do not—
Senator CONROY: No. I am saying that it has not moved into your categorisation that it is ready to proceed, to spend $1.5 billion.
Mr Roe : The project is not at 'ready to proceed' in that categorisation.
Senator STERLE: I cannot hear, sorry.
Senator CONROY: You have got to lean forward a little, sorry.
Mr Roe : The project is not at 'ready to proceed' in our categorisation. Decision on funding is made by government.
Senator CONROY: No, the government are putting in $1.5 billion, stop. Please answer my question, not one you want to answer. The government has put forward a proposal of $1.5 billion for a project that Infrastructure Australia does not classify as ready to proceed?
Mr Fitzgerald : At this point in time it is still listed on Infrastructure Australia's priority list as 'real potential' but as I said earlier—
Senator CONROY: That is not even at threshold level.
Mr Fitzgerald : We are receiving—
Senator STERLE: Be brave, Mr Fitzgerald. Just go 'yes' or 'no'. Be brave. The project is still listed—
Senator CONROY: The truth is always a defence in the senate committee, you will find, Mr Fitzgerald.
Senator STERLE: You will not get hung for telling the truth, not by us.
Senator Johnston: Can I just have a chance to—
Senator STERLE: Anyway, thank you very much.
Senator LUDLAM: In all fairness, Chair, we ask the same question. A simple 'yes' or 'no' is all we need, not bureaucratic words to try to avoid the answer.
CHAIR: I have never heard 'yes' or 'no' in my lifetime here. Thank you, Senator Ludlam.
Senator CONROY: Fair comment.
Senator LUDLAM: My questions relate almost entirely to the proposed Perth—
Senator CONROY: Sorry, I am just doing Victoria at the moment. We had a discussion earlier—sorry, before you go on—but if you have to come and go for a particular time, then I am happy to cede to you.
Senator LUDLAM: I do. I am certainly leaving Victoria, though. I am going west.
CHAIR: We just wanted to finish Victoria.
Senator CONROY: I am all right with it, Chair.
CHAIR: When do you have to come and go, that is all?
Senator CONROY: No, I am all right with it, Chair.
CHAIR: Senator Back has got questions on the west.
Senator CONROY: There will be a lot of questions on the west. I would like to finish Victoria.
Senator STERLE: Sorry, through you, Chair, we did have an arrangement that we would go through state by state. No-one is arguing—
Senator CONROY: You were out of the room.
CHAIR: I appreciate that. You have been going for 26 minutes.
Senator STERLE: I have sat here when you have gone for hour after hour.
Senator CONROY: It is a lot of money.
CHAIR: How long until you are finished with Victoria?
Senator CONROY: We have got until 3 o'clock on this section. That is all we have got left.
CHAIR: You can come back to it. These people have other commitments.
Senator CONROY: You never gave a damn about their commitments when we were in government.
CHAIR: No, I am happy to—
Senator STERLE: Who cares! We have a system going here.
Senator LUDLAM: If there was a prior agreement to go state by state I am happy to roll with that. That is fine.
Senator STERLE: Yes, there was, definitely.
CHAIR: Senator Conroy, can you give us an estimate on how much longer? If it is hours we will break it up. Senator Back, I will go to you.
Senator RHIANNON: We have some Victorian ones, too.
Senator STERLE: Hang on! We have been sitting here since 9 o'clock, Chair. Through you, we had an arrangement. You just cannot come in at five minutes to the smoko break and then demand to have a—
Senator RHIANNON: He is not demanding anything.
CHAIR: We are going to be congenial and share. Senator Ludlam, have you got some Victorian questions?
Senator LUDLAM: No, I am from WA.
CHAIR: Senator Rhiannon, have you got Victorian questions?
Senator RHIANNON: Yes.
Senator CONROY: I am halfway through a train of questions on one project.
Senator RHIANNON: I am just flagging that I want to come in after that.
CHAIR: How long until you finish your one project, Senator Conroy?
Senator CONROY: Maybe five or 10 minutes.
Senator CONROY: Thank you. I then move on to the second stage but I am happy to—
CHAIR: We will break that up.
Senator CONROY: I am happy to be of assistance to the chair. I wanted to clarify one point that has been in the public domain. Is it the case that the Victorian assessment of East West stage 1 was 0.8 but IA thought it should be 0.5? It is just a factual question. I appreciate Senator Rhiannon is leaning forward. It is just the way the table is shaped.
Mr Roe : No, not to my knowledge. My understanding is that there was a 0.5 BCR put forward for that corridor at a very early stage.
Senator CONROY: No, I am talking stage 1.
Mr Roe : For stage 1, no, the answer is no.
Senator CONROY: The corridor you are referring to?
Mr Roe : It was the East West Link overall corridor. I think there was a 0.5 number which was put forward in an early submission in 2008 or 2009 when the concept was at an indicative stage. But the 0.8 number was calculated—
Senator CONROY: It was after they tidied it up a bit.
Mr Roe : Well, there was more—
Senator CONROY: They changed a few assumptions and—
Mr Roe : Yes, the detail was developed and it is a more robust number.
Senator CONROY: Miraculously the benefit increased when they added more detail?
Mr Roe : Through time you actually learn more about the project as you undertake project development work. In that case, I would have more confidence in the 0.8 than I would in that initial 0.5.
Senator CONROY: Mr Fitzgerald, you mentioned you have only had this job for a short period.
Mr Fitzgerald : Yes.
Senator CONROY: You are acting. So what is your actual other job?
Mr Fitzgerald : Acting full time in this role, Senator.
Senator CONROY: Where did you come from? Were you inside the organisation? I have not seen you before.
Mr Fitzgerald : No, I was not. Prior to this position I worked for a consulting firm in infrastructure. And prior to that I worked for the Victorian government for 11 years, in the Departments of Treasury and Finance.
Senator CONROY: So you are from the Victorian government. When did you finish with the Victorian government?
Mr Fitzgerald : 2011.
Senator CONROY: So you would be familiar with the early stages of the development of this process, East West?
Mr Fitzgerald : At a very high level.
Senator CONROY: Was it your own consultancy when you left the Victorian government?
Mr Fitzgerald : No, I worked for a consulting firm.
Senator CONROY: What was the name of the consulting firm?
Mr Fitzgerald : KPMG.
Senator CONROY: Did they do work for the Victorian government on any infrastructure projects?
Mr Fitzgerald : They work for all governments.
Senator CONROY: No. I asked if they did any work for the Victorian government.
Mr Fitzgerald : Yes, they do.
Senator CONROY: I know who KPMG are and I am aware of their portfolio of interests. Did KPMG do any work on Victorian infrastructure projects?
Mr Fitzgerald : Yes, they have.
Senator CONROY: Which ones?
Mr Fitzgerald : There is a long list of—
Senator CONROY: The East West Link?
Mr Fitzgerald : No.
Senator CONROY: What projects did you work on while you were at KPMG?
Mr Fitzgerald : I am sorry; you said 'East West Link'. They have done some work, not for the department, in Victoria on East West Link.
Senator CONROY: Who employed them to do work on East West Link?
Mr Fitzgerald : The secretary to the department of infrastructure in Victoria.
Senator CONROY: Help me out here. I asked you if they had done work for the Victorian government and you said no.
Mr Fitzgerald : Sorry—
Senator CONROY: And then you say they did work for the secretary. Did he put his hand in his pocket and pay for it out of his own salary?
Mr Fitzgerald : Could you repeat the question, please?
Senator CONROY: Did KPMG do work on East West Link?
Mr Fitzgerald : Yes, it did.
Senator CONROY: So you did work on East West Link for KPMG—
Mr Fitzgerald : Yes, I did.
Senator CONROY: So you were involved in the early stages of East West Link?
Mr Fitzgerald : Yes.
Senator CONROY: When you were with the Victorian government. You then left the Victorian government and went to work with KPMG.
Mr Fitzgerald : Yes.
Senator CONROY: You were hired by the department to do work on East West Link, on which you then did further work in your capacity at KPMG.
Mr Fitzgerald : At KPMG.
Senator CONROY: So you are very familiar with this project; is that correct?
Mr Fitzgerald : Yes.
Senator CONROY: Are you on permanent loan from KPMG? Are you going back to KPMG or have you—
Mr Fitzgerald : I have taken a leave of absence from KPMG.
Senator CONROY: This could be a very tricky question because you may not genuinely know the answer, but for how long have you taken leave without pay and for how long do you anticipate being the acting infrastructure coordinator?
Mr Fitzgerald : I anticipate being in this role for approximately six months.
Senator CONROY: Six months.
Mr Fitzgerald : That is what I say publicly.
Senator CONROY: Thank you for clarifying that. I appreciate that you misheard what I asked the first time. That must be funny because you are now negotiating with people that you used to work with, on East West Link. That must make it fun?
Mr Fitzgerald : I am not negotiating.
Senator CONROY: Mr Roe indicated, and you indicated, Mr Fitzgerald, that there are iterations going backwards and forwards between yourselves and the Victorian government.
Mr Fitzgerald : In terms of the information that they provide, that is correct, but I would not class it as a negotiation. The full business case that will come to IA will be a business case that we assess, but it will not be a negotiation with the state.
Senator CONROY: I thought Mr Roe said it was going backwards and forwards.
Ms O'Connell : That is iterative in terms of information that has been provided. As has been explained earlier—
Senator CONROY: Have they provided you with the full case? The answer is no. Are you telling them what you need, Mr Fitzgerald? You can look at me.
Mr Fitzgerald : Quite clearly and openly, I will be telling them what we need. So we need access and we will get access. I have had some discussions with them in the last couple of weeks. We will get full access to the business case.
Senator CONROY: Given both your previous roles, you would be very familiar with the individuals in the Victorian department?
Mr Fitzgerald : I know the individuals working in the department, yes.
Senator CONROY: You have pretty much been working on this for three years at KPMG. I am sure you did a few other things as well. I am sure you were not just there for this one. It is probably one of the largest.
Mr Fitzgerald : Perhaps I could be clear about that again, Senator. When I was at the Department of Treasury and Finance there was some work—
Senator CONROY: No, you said 'high level'.
Mr Fitzgerald : Yes, at a very high level. Since being at KPMG, it is one of many things I have undertaken or worked on at KPMG—and, in respect of this project, over the last six to nine months.
Senator CONROY: What problem are you trying to solve, Mr Fitzgerald? You are very familiar with the project. I asked earlier about what problem we were solving and no-one was able to help me. I think you were not able to help me. What problem are you trying to solve here?
Senator STERLE: It sounds like a political one to me. But it would be mischievous if I were to suggest that, Senator Conroy, so I will retract that.
Mr Fitzgerald : Primarily, the problem that is being solved is a traffic congestion problem.
Senator CONROY: I live in Melbourne too, so I am familiar with the traffic in Melbourne. I am conscious that other senators have questions, so I will move on.
Mr Mrdak : Senator, I think the debate has been held. The Victorian government has been very clear on its objectives for East West Link, both stage 1 and stage 2.
Senator CONROY: No, I am very familiar with the Victorian government's view of the world. What I am seeking to establish is the view of the world of Infrastructure Australia, a statutorily independent body. I am very familiar with the Victorian government's view of the world. I read it most days in the paper.
Mr Mrdak : I think you are asking questions which go beyond Infrastructure Australia. Are you asking for an opinion?
Senator CONROY: I am asking for the methodological discretion. I asked earlier: what problems has IA identified that the east west stage 1 will solve? And there was not an answer.
Mr Mrdak : With all due respect, I do not think you gave Mr Fitzgerald the opportunity to address that answer at the end about what he saw as the issues that were sought to be resolved by the—
Senator CONROY: I did. He said 'traffic'. I am moving on.
Mr Mrdak : I think you moved on without giving him the opportunity, if I may say, to fully understand that this is—
Senator CONROY: No, I have not asked you the question. Mr Fitzgerald can speak for himself, thank you.
Mr Mrdak : I have no doubt—
Senator CONROY: You cannot speak for Mr Fitzgerald. He is an independent statutory officer.
Mr Mrdak : I think you were asking a question and then moving on before giving the officer an opportunity to give his answer.
Senator CONROY: He said 'traffic'. I am not disagreeing with him. I said I live there. So I have moved on to my next question.
ACTING CHAIR: Senator Conroy, if you—
Senator CONROY: I am trying to speed along as fast as I can but I am being distracted by Mr Mrdak.
ACTING CHAIR: Could you please reframe your question. I will give Mr Fitzgerald the opportunity to answer it.
Senator CONROY: He answered it. I am not disagreeing with his answer. I am moving on. You can try to keep coaching him to give an answer that you want, but I am moving on.
ACTING CHAIR: I am not coaching anybody. I am just interceding in the interests of fair play. Next question?
Senator CONROY: Given the $1.5 billion of Commonwealth funds committed to this stage of the project, can you reassure the public that alternatives were considered by Infrastructure Australia and that the East West Link is the best option to address the problem it solves? Without being unkind, Mr Fitzgerald, at this stage you possibly have a conflict of interest, given you are employed by a consultancy. While you are on leave without pay, you have indicated you are returning to them. You might need to contemplate that or you might want to let Mr Roe answer the question. Given that you get a direct financial benefit through your consultancy, there is a conflict of interest issue here possibly for you. You are welcome to give me your opinion, but you are returning to the company that is currently contracted by the Victorian government and your income is partly coming from the Victorian government on this. So you might just want to say you accept that or we might disagree.
Mr Fitzgerald : I do not believe there is a conflict. The work that KPMG was undertaking on the East West Link has now finished, so the work that I was engaged with has finished. My only financial benefit was the remuneration that I was receiving at KPMG.
Senator CONROY: That is actually the definition of 'conflict of interest', just in case you were wondering—receiving money from the people you are now going to spruik for. That is the traditional definition.
Mr Fitzgerald : I am not spruiking for anybody.
Senator CONROY: I am now asking about Infrastructure Australia. You say you have only been there a few weeks. Can you reassure the public that alternatives were considered by Infrastructure Australia—you probably were not here; you may not be able to do this so Mr Roe might be able to help—and that the East West Link is the best option to address the problems it solves? Were there other alternatives, Mr Roe?
Mr Roe : Just to clarify the framework, the project was identified as 'real potential' on the infrastructure priority list. Just reading from our report—
Senator CONROY: 'Real potential' is not 'threshold' and it is not 'ready to proceed'.
Mr Roe : Initiatives in this category clearly address a nationally significant issue or problem.
Senator CONROY: That is right. I asked you what that nationally significant problem was and you could not answer.
Mr Roe : There has been a considerable amount of analysis of potential solutions. The answer is yes, there has been analysis of potential solutions.
Senator CONROY: Were there other options considered by IA?
Mr Roe : The reform and investment framework by Infrastructure Australia includes a full range of options to be considered, including road pricing and other reform approaches. The options analysis has been developed—
Senator CONROY: Could you not look down because the microphone—
CHAIR: Senator Conroy, last question for the time being.
Senator CONROY: I was just advising Mr Roe that if he looks down when he is answering, the microphone cannot quite pick him up.
Mr Roe : In order to achieve real potential we have confidence in the option being put forward.
Senator CONROY: You did or you did not consider alternatives to building the East West Link—not user charges, but you did or did not consider whether this was the best or the only option to solve the traffic problem that Mr Fitzgerald identified?
Mr Roe : Yes, alternative options would have been considered as part of it.
CHAIR: Did you give any thought to coming to live in Junee? We do not have these problems. I actually work one set of lights away from the office.
Senator CONROY: Which is 400 miles, just for the record.
CHAIR: It is 400 miles from the set of lights to home, but there is only one set of lights between my office and home.
Senator CONROY: Putting aside Senator Heffernan's helpful—
CHAIR: Thank you. Senator Rhiannon.
Senator CONROY: No, I would like the answer to the question. You actually interrupted him in the middle of his answer, Senator Heffernan. I am just waiting for him to finish.
Mr Roe : A range of options would have been considered as part of that project analysis. I was not directly involved in that project analysis, so I would need to come back.
Senator CONROY: Okay. I am happy to come back.
CHAIR: Senator Rhiannon, we will start with you and continue after morning tea.
Senator RHIANNON: Mr Mrdak, in previous answers you have confirmed that the Victorian government has stated that the benefit-cost ratio of the East West Link if the so-called wider economic benefits are not included is 0.8 to one. Has IA ever recommended funding for a project with a benefit-cost ratio of 0.8 to one or even lower?
Mr Mrdak : I would have to look at the IA categorisation. I am not as familiar with all of the projects. I would have to take that on notice.
Senator RHIANNON: Can anybody else help us here? It is one of the things that is obviously surprising—that something that has such a low ratio is still on the books.
Mr Mrdak : I would have to take that on notice, Senator.
Senator RHIANNON: Can anybody else pick it up? Mr Fitzgerald?
Mr Fitzgerald : No, I cannot.
Senator RHIANNON: Mr Roe?
Mr Fitzgerald : I think we should take that on notice, if it involves projects.
Mr Roe : So the question—
Mr Fitzgerald : No, we will take it on notice.
Senator RHIANNON: Is the East West Link still in the 'real potential' category?
Mr Fitzgerald : That is where it is currently listed in the IA.
Senator RHIANNON: Given that the Abbott government talks often about infrastructure projects with Commonwealth funding to be backed by a rigorous business case and benefit-cost analysis, can you confirm that you have seen a full business case proposed for the East West Link?
Mr Mrdak : Perhaps Senator Rhiannon was not in the room when—
Senator RHIANNON: No, I was not here, I am sorry.
Mr Fitzgerald : Infrastructure Australia has not seen the full business case.
Senator RHIANNON: When you have not seen a full business case, what do you do about it? Do you request it? Do you put things on hold? Can you explain what you are doing about it and the process?
Mr Fitzgerald : We expect to receive a full business case from the Victorian government.
Senator RHIANNON: When?
Mr Fitzgerald : I do not know exactly but it is imminent. We have in fact received more information—
Senator CONROY: That would be after the $1.5 billion is offered by the Commonwealth government.
Mr Fitzgerald : By definition, yes. We will work through that full business case with the Victorian government.
Senator CONROY: You will keep working on it until it actually shows a problem.
Senator RHIANNON: So you are going to hand over all of that money before you have got the business case and you are—
Ms O'Connell : Senator, as I outlined earlier, they are an advisory body to government. Government make decisions about funding and hand over the money. It is not IA.
Senator RHIANNON: Yes, I appreciate that.
Senator CONROY: That is the point.
Senator RHIANNON: I appreciate that but that is what is about to happen. The money is handed over and nobody within government, nobody sitting here, will have seen the business case; is that correct?
Mr Mrdak : The business case that has been developed to this point has been provided to Infrastructure Australia and the department.
Senator RHIANNON: When you say 'developed to this point' what do you mean? What has been developed to this point? How much is there? How complete is it?
Mr Mrdak : The information is reasonably complete. There are some areas which Victoria is now revising and reviewing. As Mr Fitzgerald outlined, he anticipates receiving that business case for stage 1, and also Victoria is now preparing the business case for stage 2, which will both be made available to Infrastructure Australia.
Senator RHIANNON: When you say 'reasonably complete' what sections are not there? And have you identified what you want?
Mr Mrdak : Infrastructure Australia, as Mr Fitzgerald has outlined, have gone back to Victoria and outlined some areas where they are seeking further information.
Senator RHIANNON: What are those areas, please, Mr Fitzgerald?
Mr Fitzgerald : I do not have that detail with me, I am sorry.
Senator RHIANNON: Do you mean you do not remember or you cannot—
Mr Fitzgerald : No. I have not been involved in the process between IA—I have had one discussion with the department, who sent some further information in the last few days, but I have not reviewed that information.
Senator RHIANNON: So back to you, Mr Mrdak. When you say 'reasonably complete', what are the sections that are not there? What are you after?
Mr Mrdak : I think Victoria are now reviewing in the light of what they are doing in terms of some of the planning issues and also the procurement issues which are now underway. As that is being updated, that information will be provided.
Senator RHIANNON: That is very wide ranging. That basically sounds like the whole business case.
CHAIR: We will come back to that after morning tea. Are you any relation of Rupert Murdoch, Mr Mrdak?
Mr Mrdak : No, I am not.
CHAIR: Mr Mrdak. We will take a break. The committee will have a quick private meeting.
Proceedings suspended from 10:46 to 11:00
CHAIR: We will resume.
Senator RHIANNON: Could you just outline what submissions have been received from the Victorian government that cover transport projects?
Mr Mrdak : Submissions? Sorry, how do you mean?
Senator RHIANNON: What requests for assistance, what projects have been floated with you, however you interact with Victoria outside the East West Link? Can you outline what other transport projects are on the books in any way?
Mr Mrdak : Certainly we have an ongoing engagement with Victorian officials. The Victorian government has made a number of submissions to the Australian government in relation to future investment programs. Obviously, as you are aware, the government made a series of commitments in the State of Victoria in the lead-up to the last federal election. Subsequent to that the Victorian government has put forward a number of proposals for changes and variations to the investment program, which have been reflected in this year's budget with a number of key decisions.
In the budget this year the government has announced its commitment to the East West Link, both stage 1 and stage 2. The government has also made some announcements in relation to a significant rail level crossing project, St Albans, and also some other variations to the program—
Senator RHIANNON: The question was: what has Victoria put to the government? What else have you received apart from East West, please?
Mr Mrdak : In relation to those other projects we have also received project proposals or at least indicative project information in relation to all of the Victorian projects which appear in the program as announced in the budget.
Ms O'Connell : Things like the duplication of the Princes Highway, for example.
Senator RHIANNON: So everything in the budget is what you received from Victoria? There is nothing additional? You are saying everything is in the budget?
Mr Mrdak : All of the projects that have been agreed with Victoria—
Senator RHIANNON: No, I know 'agreed'. The question was: has the Victorian government put forward any other transport projects?
Mr Mrdak : That are not reflected in the budget?
Senator RHIANNON: Yes.
Mr Mrdak : Clearly, like all jurisdictions, they have a list of projects they would like to receive Commonwealth funding for, some of which—
Senator RHIANNON: Can you release those, please?
Mr Mrdak : I would have to take that on notice. They are clearly a long list of projects that each jurisdiction would like to see Commonwealth funding for.
Senator RHIANNON: If you could take that on notice?
Mr Mrdak : Certainly.
Senator RHIANNON: Just going back to what we were talking about before with regard to the business case, when you do receive it for the East West, will that be publicly available?
Mr Mrdak : That will be a matter ultimately for the Victorian government and Infrastructure Australia, depending on the nature of it. But certainly the government has indicated that it certainly sees in the future that as much as possible Infrastructure Australia's assessment and material will be made publicly available, provided they are not matters which go to commercial-in-confidence that might affect procurement processes and the like, yes.
Senator RHIANNON: That is your understanding, Mr Fitzgerald?
Mr Fitzgerald : Yes, that is my understanding. I have the same understanding.
Senator RHIANNON: Is that the usual practice, that it is released publicly?
Mr Mrdak : As part of its reforms, Infrastructure Australia is looking for a greater level of transparency around the publication of materials. To this point Infrastructure Australia has published its priority list as well as, in the last few years, benefit-cost ratios against projects that are all available on its website. In future—
Senator RHIANNON: The question was, though, about the business cases. The usual practice is that the business case for a project that IA is involved in is publicly released?
Mr Mrdak : It has not been the usual case.
Senator RHIANNON: It is not?
Mr Mrdak : No.
Senator RHIANNON: So it has not happened in the past?
Mr Mrdak : Information has been released and Infrastructure Australia's website contains details of many projects, including their assessment. In the future the government has made a commitment to increase the amount of information that is available once the assessments have taken place, yes.
Senator RHIANNON: But not the full business case—a commitment has not been given?
Mr Mrdak : It will depend. There may be elements of the business case which are not publicly released where the Victorian government or other state governments or territory governments wish those matters not be publicly released because they may affect the procurement process that they have underway. For instance, information such as patronage forecast and the like may not be released in full because they may form part of a commercial negotiation with, say, a PPP proponent. So in those situations you may not publish all of the information, but certainly as far as possible the government is seeking to increase the amount of information available.
Senator RHIANNON: Who makes that decision on what will be released?
Mr Mrdak : Ultimately it will be Infrastructure Australia and the Australian government, if material was provided to the government.
Senator RHIANNON: So ultimately the minister?
Mr Mrdak : Ultimately the Infrastructure Australia council in the first instance would make judgments based on advice they receive from the proponents of the project.
Senator RHIANNON: I thought you just said 'and the government'?
Mr Mrdak : Where information is provided separately to the government, the government could choose—and I think may increasingly choose—to provide that information publicly.
Senator RHIANNON: You are saying IA can make their decision independently?
Mr Mrdak : IA can make their own judgments based on the request from the proponents as to what information can be made available.
Senator EDWARDS: I am happy to throw to Senator Conroy.
Senator CONROY: Can I have a go now? Thank you. Just returning to where we were at—
Senator CONROY: Yes, still in Victoria. What advice, if any, did Infrastructure Australia give the government in relation to the $1.5 billion allocated to stage 1 in the budget? Did you give the government any advice about the $1.5 billion?
Mr Mrdak : Sorry, are you referring to stage 1 or stage 2?
Senator CONROY: Stage 1 at this stage.
Ms O'Connell : In stage 1 there was a commitment from the government in terms of its election commitments; so not in the context of this budget. So stage 1 was committed to as part of election commitments.
Senator CONROY: In relation to the government's election commitment, have you given them any advice on stage 1 other than it is in its 'real potential' stage?
Mr Fitzgerald : I am not aware that IA has provided any advice to the government.
Senator CONROY: I appreciate Mr Fitzgerald has only been here for—six weeks, did you say?
Mr Fitzgerald : Four weeks.
Senator CONROY: So we will not try to torture you with your in-depth understanding yet. But thank you. You said no, Mr Roe?
Mr Roe : I am not aware of Infrastructure Australia providing any advice except for what is publicly available on the infrastructure—
Senator CONROY: Sure. Other than you, would anybody else proffer the advice? I appreciate you say 'I am not aware', which is all true, but would it come from someone else other than you, advice to the government? Mr Fitzgerald is not in a position to give us a comment. Would someone else in IA have been responsible for that?
Mr Roe : Normally within the office it is the infrastructure coordinator that deals with the office and provides information.
Senator CONROY: If you can take it on notice and see whether any information—
Mr Roe : The Infrastructure Australia council as well.
Senator CONROY: Other than you, if there is anyone else—Mr Deegan previously or anyone?
Mr Roe : Yes.
Senator CONROY: Is the allocation of the $1.5 billion subject to the state of Victoria meeting any requirements? In other words, as part of this business plan is there any requirement such as the delivery of an updated business case and a final project cost? Are they requirements of getting the $1.5 billion? That might be a Mr Mrdak question more than you, but if you have got anything that you can offer on that?
Mr Mrdak : Yes, we would anticipate Victoria has to issue what we call a project proposal report under the legislation which sets out the full details of the project to enable Commonwealth funding to be provided. Clearly the government has made commitments, as Ms O'Connell has indicated. But as with other projects, the Victorian government does have to provide all of the necessary project proposal reports to the department for funding to flow.
Senator CONROY: So it does not actually have to provide a completed business case to Infrastructure Australia at all?
Mr Mrdak : The Victorian government has undertaken to provide a business case.
Senator CONROY: No, that is not what I asked. Under what you have just described to me, it does not have to have completed that process with Infrastructure Australia before you give them the money.
Mr Mrdak : It does not have to but it will be done.
Senator CONROY: What is the difference, just for those of us who do not follow this quite as closely as you, between a project proposal report and a fully updated business case?
Mr Mrdak : The project proposal report is effectively the program which sets out what will be constructed and the milestones for spending for the construction. It is effectively the document against which the department will then manage the payments to the program.
Senator CONROY: Can you indicate the Commonwealth funding profile for this project?
Mr Mrdak : Yes. I will just see whether we have got officers who have that information for you.
Senator CONROY: So for 2013-14, 2014-15, 2015-16, 2016-17 and then beyond?
Mr Mrdak : This is East West stage 1?
Senator CONROY: Stage 1, yes.
Mr Jaggers : For East West Link stage 1, the profile is for, starting in 2013-14, $500 million, $100 million, $300 million—
Senator CONROY: Sorry, for 2014-15 it is $100 million?
Mr Jaggers : Correct, yes.
Senator CONROY: For 2015-16?
Mr Jaggers : It is $300 million.
Senator CONROY: For 2016-17?
Mr Jaggers : It is $600 million.
Senator CONROY: Anything beyond that?
Mr Jaggers : No.
Senator CONROY: Could you indicate the Victorian government's contribution to this project?
Mr Jaggers : I do not have a profile for—
Mr Mrdak : Essentially Victoria will meet all of the additional costs of the project either themselves or through private financing. That is the capped amount of the Commonwealth contribution.
Senator CONROY: Capped?
Mr Mrdak : Yes.
Senator CONROY: Put your house on that?
Mr Mrdak : That is the government's commitment, $1.5 billion to stage 1.
Senator CONROY: So your house is not on that?
Mr Mrdak : That is the government's commitment.
Senator CONROY: Senator Johnston, your house on it?
Senator Johnston: The government said it is going to do it. They are going to do it.
Senator CONROY: Your house is safe, Senator Johnston.
Senator Johnston: Like all of our election promises, we live up to them.
Senator LINES: Oh, please! Break them all!
Senator CONROY: Spoken well by you there. Well said.
Senator Johnston: It is going very well, actually.
Senator CONROY: What advice did the department give the Commonwealth minister and Treasury in relation to the readiness of this project and its relative merits against other road projects?
Mr Mrdak : In East West Stage 1? It was a government commitment that they made on coming to office. We provided advice in relation to how the project development is progressing.
Senator CONROY: So you gave no advice about the readiness or the relative merits?
Mr Mrdak : No. We have provided advice in relation to what stages it is at, as it proceeds and including working with Victorian officials in relation to the cash-flow provision.
Senator CONROY: You are aware that it was categorised as 'real potential'. It had not reached the 'threshold' level or the 'ready to proceed' level?
Mr Mrdak : I am aware of Infrastructure Australia's assessment so far, yes.
Senator CONROY: You did not say you disagreed with it when it was published.
Mr Mrdak : I am aware of where Infrastructure Australia has seen the project to this point.
Senator CONROY: If I can move on to East West Link stage 2, has Infrastructure Australia seen a full business case for East West stage 2 yet?
Mr Fitzgerald : No, we have not.
Senator CONROY: Have you seen any business case? Have they even sent you a letter?
Mr Fitzgerald : We have some very early very high-level information.
Senator CONROY: High level information, like you get when you are at Treasury and Finance?
Mr Fitzgerald : Sorry?
Senator CONROY: You described your involvement as high level—
Mr Fitzgerald : Yes, conceptual information.
Senator CONROY: So you have got conceptual information. I note that IA has recently announced it received the interim business case for stage 2 but you are saying it is a conceptual business case, not a detailed business case?
Mr Fitzgerald : There is significantly more information that we would require for it to be a full business case.
Senator CONROY: As opposed to where you are at with the stage 1 business case? So in other words, you have got a stage 1 business case which you are saying you are iterating but stage 2 needs significantly more information—
Mr Fitzgerald : Yes.
Senator CONROY: Meaning it is not at the readiness—
Mr Fitzgerald : It is not at the same level as stage 1.
Senator CONROY: It is not at the same level as stage 1. Thank you.
Mr Fitzgerald : Correct.
Senator CONROY: When did you receive it, the stage 2 business proposal, shall we call it, because I do not think 'case' really meets it? It may have been before you arrived so you may not know—
Mr Fitzgerald : No, since I arrived.
Senator CONROY: Oh, since you arrived, okay.
Mr Fitzgerald : Approximately two weeks ago.
Senator CONROY: Excellent. So that was what, days before the budget?
Mr Fitzgerald : I would have to take that on notice. I cannot remember exactly the date.
Senator CONROY: How many pages was it?
Mr Fitzgerald : Again, I would have to take it on notice.
Senator CONROY: Come on, you must remember whether it was a big, thick, weighty document?
Mr Fitzgerald : No.
Senator CONROY: You put those proposals together, Mr Fitzgerald, and you know what a weighty document looks like.
Mr Fitzgerald : No, it was not a weighty document.
Senator CONROY: A couple of pages?
Mr Fitzgerald : No, more than that.
Senator CONROY: I refer to your IA's estimates answer which was tabled last week. Hopefully you have seen that. It may have already gone through and be sitting on the minister's desk, which is why I say you may or may not have seen that, Mr Fitzgerald. In it, it was indicated that 'I had not received any material at all from the Victorian government with respect to stage 2'. That is answer 139, dated 21 May. How do you account for this discrepancy?
Mr Mrdak : This one might fall to me, Senator, if you do not mind.
Senator CONROY: Were you sitting on it?
Mr Mrdak : There has been a more lengthy process than we would have liked in relation to those answers. Those answers were correct as per March-April when they were developed. That answer was unmodified from April when it was provided to the committee last week.
Senator CONROY: When it was provided to the committee last week you knew it was inaccurate?
Mr Mrdak : It was provided on the basis that it was accurate as per the time it was prepared for the minister's consideration. It did not reflect the update as of the budget.
Senator CONROY: Mr Mrdak, Mr Fitzgerald obviously needs to check. Was the letter from Victoria received before or after the budget, on stage 2?
Mr Mrdak : The letter to Infrastructure Australia? I am not familiar with when it was received. I think Mr Fitzgerald has taken that on notice.
Senator CONROY: I was wondering if you knew.
Mr Mrdak : No, I do not.
Senator CONROY: What problems has IA identified that East West Link stage 2 will solve? Traffic?
Mr Fitzgerald : If I could explain the situation a little more, if we go back another—
Senator CONROY: I live in Melbourne, don't forget.
Mr Fitzgerald : Yes, that is right. There was a study done on the east-west corridor some years ago now by—
Senator CONROY: That was the one that had the core assessment at 0.5, according to Mr Roe. That is what he said.
Mr Fitzgerald : No, I was not actually referring to the business case itself.
Senator CONROY: No, that was a BCR core.
Mr Fitzgerald : I was talking about a study that the previous government in Victoria undertook which determined that—
Senator CONROY: You would have been working there then?
Mr Fitzgerald : Yes, I was. Clearly, in terms of the planning for Melbourne at that time and since then, it identified the east-west corridor as a significant corridor for Melbourne in terms of traffic congestion, freight routes and a second crossing to the West Gate Bridge. So there are a number of key transport issues that are solved through the development of this project.
Senator CONROY: I am stretching my memory here but I did not think the two projects were completely comparable—the study that you are talking about and what the government today are actually proposing. If they were fully following the previous Labor government's study you could probably make the claim that you just made. Correct me if I am wrong, but the new government's proposal is not the same as the proposal that was put forward in that study that you have just described. You might say that it is roughly in the same area, and I can see that, but it is not exactly on the same route, with the same design and the same plan.
Mr Fitzgerald : From a corridor perspective it is very much the same. In fact, we are talking about East West Link stage 2, so that actually completes that entire project. All of these projects, over time, as the—
Senator CONROY: Where is it coming up? I live in the west of Melbourne, so I am familiar with the argument about where it comes up. I am very familiar with an argument about where it should come up being a matter of some public controversy, and different governments have had different views on where it should come up. I am trying to understand—
CHAIR: Come and live in Junee.
Senator CONROY: I love living in Williamstown. Thanks for the invite. I am familiar with the fact that the argument, particularly around where it comes up, has moved. Sometimes it is going to come up in one place, sometimes it is going to come up in another place. I am not even sure where it is actually going to come up yet. I am intrigued by you saying it is basically the same project.
Mr Fitzgerald : No, when I say it is the same project, it is dealing with the same traffic issue.
Senator CONROY: It is in Melbourne.
Mr Fitzgerald : Yes, it is in Melbourne. It is dealing with the same traffic issues on the east-west corridor. Now, with the announcement that stage 2 is going ahead, it does work to solve those objectives.
Senator CONROY: Mr Roe, I want to ask you about 0.5 versus 0.8. You indicated that 0.5 was on the broader east-west corridor. I think those were your words. I am happy to get Hansard to read it back to us, if you like.
Mr Roe : I recall that there was a 0.5 number in an earlier submission when there was a discussion—so it was at a very high level.
Senator CONROY: You were indicating to me that was on the full project rather than either stage.
Mr Roe : That is my understanding. I can take it on notice to check those facts and get back to you.
Senator CONROY: I think you are right. I just wanted to be clear that the full project was 0.5, subject to your memory being correct.
Mr Roe : Yes. That was when—
Senator CONROY: Early stage.
Mr Roe : Yes, it was just being discussed at the concept level.
Senator CONROY: Has IA done any independent calculation or a BCR for any part of East West Link stage 2?
Mr Roe : No.
Mr Fitzgerald : No.
Senator CONROY: Are you calculating one, or planning to do so?
Mr Roe : We expect to receive the full business case and undertake the assessment of the cost-benefit analysis.
Senator CONROY: But you have only received a conceptual business case so far?
Mr Fitzgerald : Correct.
Mr Roe : Yes, that is correct. As you mentioned, an interim business case.
Senator CONROY: I think 'interim' is being generous, Mr Roe. Mr Fitzgerald did not pretend it was an interim one. Has IA calculated the net present value?
Senator LUDLAM: Can I jump in quickly? In practice you do not do the BCA; you wait for them to be handed off by the proponents?
Mr Roe : Yes, that is correct.
Senator CONROY: But they kick the tyres.
Senator LUDLAM: Yes, you assess it but you do not conduct it?
Mr Roe : That is correct, yes.
Senator CONROY: There has been significant disagreement, as you are aware, Senator Ludlam, about the validity of some of the figures. So a more robust kicking of the tyres, which could even include doing one themselves—
Senator LUDLAM: Kick the wheels completely off.
Senator CONROY: Has IA calculated the net present value of East West Link stage 2 or any part of it?
Mr Fitzgerald : No.
Senator CONROY: Has IA calculated the short-term or long-term productivity gains from the project?
Mr Fitzgerald : No.
Mr Roe : No.
Senator CONROY: Given that $1.5 billion of Commonwealth funds were recently committed to this stage of the project—can I clarify it is $1.5 billion for stage 1 and $1.5 billion for stage 2? Is that right?
Ms O'Connell : That is correct.
Senator CONROY: Given the $1.5 billion of Commonwealth funds, would it have been embarrassing if that letter from the Victorian government had not arrived before you gave them the money?
Mr Mrdak : Sorry, Senator?
Senator CONROY: If that letter with the business case had not even arrived at Infrastructure Australia before the budget, would that have been an embarrassment?
Mr Mrdak : I do not believe so.
Senator CONROY: I just wanted to check. I would be embarrassed—giving them money before they had even asked for it.
Mr Mrdak : There have been ongoing discussions between the Victorian and Australian governments.
Ms O'Connell : East West Link was first on IA's priority list in 2011. It has been a longstanding project for consideration and development.
Senator CONROY: Yes, but they do not have a business case. It can be at early stage for a long, long time but there is no business case at all. What is stage 2 classified as at the moment—'real potential' as well or is it still at the early stage? Or was East West just classified in toto? Was it broken into two bits?
Mr Roe : East West Link stage 1 is on the priority list at the moment.
Senator CONROY: So stage 2 is not on the list at all?
Mr Roe : No, that is correct.
Senator CONROY: It did not even make it to the early stage?
Mr Roe : We have not received it for assessment previously.
Senator CONROY: As I was saying, given the $1.5 billion of Commonwealth funds recently committed, can you reassure the public that alternatives were considered by IA and that East West Link stage 2 is the best option to address the problem it solves? As we have discussed, where it comes up has been a matter of ongoing movement over a number of years.
Mr Roe : We will undertake that as part of our assessment of the business case.
Senator CONROY: You will undertake that as part of your assessment; okay.
Mr Roe : Yes.
Senator CONROY: Again, Mr Fitzgerald, given your roles, you might want to consider before you jump in. What advice did Infrastructure Australia give the Commonwealth minister and Treasury in relation to the readiness of this project and its relative merits against other road projects? That will be part of your assessment?
Mr Fitzgerald : Correct.
Mr Roe : Correct.
Senator CONROY: How much time did you have to assess stage 2 before the $1.5 billion was allocated by the federal government? It was allocated on budget day, so let us take a wild guess and say it was submitted to you before the budget, but clearly not long before the budget. It may even be that you did not get the letter until after the budget. It still sounds like a fairly short period of time between when you received the project for assessment and when the money was allocated by the government.
Mr Fitzgerald : That is correct. It was a very short period.
Senator CONROY: Very short.
Mr Fitzgerald : And that was from IA's perspective, to the extent that there is—
Senator CONROY: Yes, I am only asking about IA's position in your role as an assessor of these things.
Mr Fitzgerald : That is correct.
Senator CONROY: Not the departments and governments having chats. My next question is: what assessment have you made of this? But you have not really had a chance to make an assessment yet.
Mr Fitzgerald : That is correct.
Senator CONROY: Mr Mrdak, you are aware that it is not even on the list in any of the four categories?
Mr Mrdak : As Ms O'Connell indicated, East West was considered, I thought in the early stage, but I will stand to be corrected on that.
Ms O'Connell : It was.
Senator CONROY: Stage 2 does not appear, from the sound of it, to have been, even in the early stage.
Mr Mrdak : My thinking was the whole corridor—
Senator CONROY: So if you wrote 'a road around Australia' in early stage you could then say that whatever road you picked had been on the early stage list from day one?
Mr Mrdak : I do not think that is how Infrastructure Australia would ever operate.
Senator CONROY: It sounds like how you are trying to make them operate, though.
Mr Mrdak : I am not sure how you would have formed that view.
Senator CONROY: I will move on. It is all right, Mr Mrdak. What advice did the government give the minister and Treasury in relation to the readiness of this project and its relative merits against other road projects?
Mr Mrdak : Victoria certainly provided advice to the Australian government in relation to the project in the lead-up to the budget. The department did provide advice to the government in relation to it as part of the budget consideration.
Senator CONROY: You just did not believe everything the Victorian government told you, though, did you, Mr Mrdak?
Mr Mrdak : We provide advice to the government on our assessment of the state of the—
Senator CONROY: You gave a rigorous assessment of it?
Mr Mrdak : We provided advice in the budget process.
Senator CONROY: As we did before, could I get the Commonwealth funding profile, 2013-14, 2014-15, for stage 2?
Mr Jaggers : In 2013-14—just one moment.
Senator CONROY: Take your time. They are very difficult pages to un-concertina and read out from.
Mr Jaggers : In 2013-14 it is $1 billion.
Senator CONROY: One billion in the next—what is today? When was the budget?
Mr Jaggers : And in—
Senator CONROY: So you are giving them $1 billion in a six-week period?
Mr Jaggers : And—
Senator CONROY: Is that right? You have allocated in the Commonwealth budget, announced two weeks ago, $1 billion to be given to them in this financial year?
Mr Jaggers : Yes.
Senator CONROY: One billion dollars for something that they have a conceptual business plan for?
Mr Mrdak : The Victorian government has done a substantial amount of work on this project.
Senator CONROY: They do not even know where it is coming up. Anyway, 2014-15?
Mr Jaggers : In 2018-19 there is $500 million allocated.
Senator CONROY: Sorry, I was distracted, Mr Jaggers. Was that for 2014-15?
Mr Jaggers : Senator, I said in 2018-19 there is $500 million allocated.
Senator CONROY: 2018-19. So in 2014-15 it is zero, in 2015-16 it is zero, in 2016-17 it is zero, in 2017-18 it is zero and then outside the forwards it is $500 million?
Mr Jaggers : This is reflecting the Australian government's profile but of course there is the Victorian profile. They will be spending money in those interim years as well. So there is some money—
Senator CONROY: Why was there a need to give them a billion dollars today for a project that seems not to have a lot of activity going on in those four years? It is the Victorian government, but I am confused about why you gave them a billion dollars up front.
Mr Mrdak : I think the Australian government are very keen to see the acceleration of this project. That is the basis on which they have provided this under a financial arrangement with Victoria.
Senator CONROY: So you decided to splash a billion dollars out on a project for which you do not even have anything other than a conceptual business plan in 2013-14?
Mr Mrdak : The government has made it clear in the budget documentation that the funding will be contingent on the business plan and the advice from Infrastructure Australia.
Senator CONROY: Yes, but you are giving them the money by 30 June.
Mr Mrdak : It has been the government's decision to accelerate the project that way, yes. That has been agreed with the Victorian government.
Senator CONROY: Accelerate the project? They have not yet given you a completed business plan for stage 1, you have given them $1 billion and you expect them to give you the full business plan in the next six weeks?
Mr Mrdak : We will await the documentation to Infrastructure Australia, but that is the government's position.
Senator CONROY: It just looks like a very shonky bringing forward of a billion dollars to claim that you spent an extra billion dollars towards the deficit. This is about as shonky as it gets—giving them a billion dollars. When is the first remote chance that they could put a shovel in the ground on stage 2, Mr Fitzgerald? You are a relative expert on this.
Mr Jaggers : Senator—
Senator CONROY: Sorry; I am asking Mr Fitzgerald a question. When is the roughest time that they could actually start digging?
Mr Fitzgerald : I have not seen the program for stage 2, so I cannot answer that.
Senator CONROY: Quite seriously: a billion dollars in the next six weeks for a project that is years away from shovel ready—years away. No-one is seriously disagreeing with this and Mr Fitzgerald is nodding. It is years away and you give them a billion dollars.
Mr Mrdak : The project is due to commence construction by the end of 2015.
Senator CONROY: So 2016.
Mr Mrdak : 2015.
Senator CONROY: But you said the end of 2015.
Mr Mrdak : The end of 2015. There is construction to commerce by that period.
Senator CONROY: What, you will pick up a shovel yourself just so you can say, 'We did it'?
Mr Mrdak : The advice from the Victorian government is that they will be in a position to start the project at that time.
Senator CONROY: But you are not giving them the billion dollars unless they get in a full business plan to Infrastructure Australia.
Mr Mrdak : The payment is due to be made this financial year.
Senator CONROY: You just said that it was subject to—
Mr Mrdak : The final funding arrangements are subject to the provision of the business plan, but it is not clear whether the business plan will be available before 30 June.
Senator CONROY: So you are going to give them a billion dollars before June before you have a business plan.
Mr Mrdak : The business plan may take longer than 30 June to be completed.
Senator CONROY: Your earlier evidence was that it was contingent on getting the business plan.
Mr Mrdak : The project—
Senator CONROY: So that—
Mr Mrdak : Can I just finish it—and, if the government subsequently decided not to proceed with the project, that would—
Senator CONROY: Will they ask for the money back? Are you going to go down to Victoria yourself—
Mr Mrdak : If the project did not proceed, I presume that the Commonwealth would—
Senator CONROY: with a suitcase to get the money back from them?
Mr Mrdak : That is correct.
Mr Fitzgerald : Excuse me, Senator; could I correct something that I said earlier. Apparently, IA did receive some early work, or the conceptual business case, on what was called the East West Link, but it was not split into two stages back in 2011 because it was on the 2011 list.
Senator CONROY: But it is not on the 2013 list.
Mr Fitzgerald : No, it is not on the current list; only stage 1.
Senator CONROY: That explains the confusion; thank you. I am just looking at a media release that you put out, Mr Fitzgerald—I think it is in your name. It is dated 29 April. It states:
Infrastructure Australia has consistently held the view that an East West Road Link is a meritorious project.
Can I just check: in your four categories, there is no category of 'meritorious'.
Mr Fitzgerald : No, there is not.
Senator CONROY: So is this a new categorisation, a new category?
Mr Fitzgerald : No.
Senator CONROY: You were part of the Victorian government when you looked at the first high-level concepts. You worked for KPMG on this project for most of the last three or four years. It does not make your current list. It is not 'early stage', 'real potential', 'threshold', 'ready to proceed', but you think that it is meritorious.
Mr Fitzgerald : Yes, I do.
Senator CONROY: You are aware of the definition of conflict of interest.
Mr Fitzgerald : Yes, I am.
Senator CONROY: You go on to say:
This major link has been on Infrastructure Australia's national priority list, as a project with real potential, for some time.
That is not even factually accurate. You continue:
It is especially significant as it will create an alternative to the Westgate Bridge.
Infrastructure Australia has recently been provided with an interim business case for Stage 2—
Publicly you called it an interim business case but earlier before the committee you called it a—what was the word?
Mr Fitzgerald : Conceptual.
Senator CONROY: A conceptual business case. You say:
Infrastructure Australia has recently been provided with an interim business case for Stage 2 of the project by the Victorian Government and welcomes the opportunity to review the project submission.
Infrastructure Australia appreciates the vision and planning behind nationally significant projects like the full East-West link.
Nationally significant projects: where are those in your categories?
Mr Roe : In order to get onto the priority list, they need to be deemed to be addressing a nationally significant problem. That is all projects on the priority list.
Senator CONROY: And traffic is the problem, as Mr Fitzgerald has identified. The road is to solve a traffic problem.
Mr Fitzgerald : To solve the broader congestion of traffic and freight routes to and from the port and the second crossing of Westgate Bridge, which is all related to traffic, of course.
Senator CONROY: I travel it daily. You go on:
Infrastructure Australia therefore looks forward to commenting further in due course.
Why did you release this press release? It has some factual errors. Why did you release a press release?
Mr Fitzgerald : Both governments had announced this project proceeding and—
Senator CONROY: Your job is to assess them, not to be a booster for them, Mr Fitzgerald.
Mr Fitzgerald : I am an advocate of all national projects—
Senator CONROY: No. In your current position, you are not an advocate. Your job is to do a clinical assessment and not to be a booster. When you worked a few weeks ago for KPMG, you could be a booster. You cannot be a booster when you are in charge of the organisation. How do you think Mr Roe feels sitting next to you, trying to do an independent assessment, when you have already told him that it is meritorious and nationally significant? Your job is not to be a booster.
Mr Fitzgerald : But I would—
Senator CONROY: Did anyone request that you put out this press release?
Mr Fitzgerald : No, they did not.
Senator STERLE: Wow! They have put you in a position, haven't they?
Senator CONROY: Can you confirm that IA gave the Melbourne metro, as proposed before the recent redesign by the Victorian government, the classification of a threshold project on its infrastructure priority list?
Mr Fitzgerald : I do not know the answer to that.
Senator CONROY: Mr Roe will be able to answer that.
Mr Roe : Yes, it is 'threshold' on the infrastructure priority list.
Senator CONROY: So that is a rail project, Mr Fitzgerald, and it was classified higher than this project has ever been classified by your organisation. Is that a fair characterisation: a project that is 'threshold' is of a higher category than—
Mr Fitzgerald : Correct.
Senator CONROY: 'real potential'?
Mr Fitzgerald : Yes.
Senator CONROY: I want to talk about the M80 Ring Road project. Are there any changes to the funding profile for the M80 project in Melbourne in the 2014 budget as against the 2013 budget? If so, can you outline the change? Mr Mrdak might want to take this, or probably Mr Jaggers is able to read me a list of zeros.
Mr Mrdak : The government has set a new profile, following discussions with the state of Victoria, in relation to the M80 project, yes.
Senator CONROY: So what is the new profile? 2013-14, please: what was it?
Mr Mrdak : We can give you the current profile. I am not sure that we can—
Senator CONROY: I can get you a whiteboard.
Mr Jaggers : The current profile for the M80 project, in 2015-16, is $129.08 million.
Senator CONROY: Just for clarification: that means that in 2013-14 it is zero?
Mr Jaggers : That is correct.
Senator CONROY: And in 2014-15 it is zero?
Mr Jaggers : Yes.
Senator CONROY: And, just for completeness, what was it in last year's budget?
Mr Jaggers : I do not have a breakdown of where it was last year, year by year. I do have an overall breakdown—
Mr Mrdak : We will take that on notice for you.
Senator CONROY: Oh, stop it. Come on; someone can find that number in the next five minutes.
Mr Mrdak : We will endeavour to do that, but I will take it on notice. Mr Jaggers does not have the information before him at the moment.
Senator CONROY: I am not keen to wait until October before I get my answer for something that was in last year's budget paper. So can someone undertake to get it for us before lunch?
Mr Mrdak : We will seek to do that.
Senator CONROY: Thank you. So in 2015-16, it is $129.08 million?
Mr Jaggers : Yes.
Senator CONROY: In 2016-17?
Mr Jaggers : It is $89 million.
Senator CONROY: In 2017-18?
Mr Jaggers : Zero in 2017-18 and then in 2018-19 it is $58.1 million.
Senator CONROY: 58.1.
Mr Jaggers : Yes.
Senator CONROY: Million, did you say?
Mr Jaggers : Yes; that is correct.
Senator CONROY: That adds up to—
Mr Jaggers : It adds up to $276.18 million.
Senator CONROY: Thank you. You did mention that you did have an aggregate from the old budget paper. What was the aggregate figure?
Mr Jaggers : In the pre-election economic fiscal outlook the figure was $525.1 million.
Senator CONROY: 525? That seems to be about half. Where is the rest of the money? Are there some more for years after that that you just have not given me some information on yet, Mr Jaggers?
Mr Jaggers : No.
Senator CONROY: So you are only building half the road—what, only in one direction?
Mr Jaggers : No. We will be working with Victoria on which sections will be built. We have—
Senator CONROY: Let me get this right. We were previously funding this for half a billion and now we are funding it only for about a quarter of a billion.
Mr Mrdak : The Victorian government have advised that the M80 is no longer one of their priorities ahead of some other projects in the state, particularly the East West Link and some of the other projects with which they are proceeding. On that basis, the Commonwealth has scaled back its funding.
Senator CONROY: So you have withdrawn a quarter of a billion dollars of funding?
Mr Mrdak : The funding has been reallocated to other projects which are of a higher priority to the Victorian and Australian governments.
Senator CONROY: Yes, but not to Infrastructure Australia. We will get to that in a minute.
Mr Mrdak : We have had that discussion in relation to Infrastructure Australia. In terms of the program itself, the Victorian government advised that the M80 was no longer their major priority, that they had shifted their priorities to projects such as the East West Link, the Tullamarine Freeway and other projects in Victoria.
Senator CONROY: Another freeway. So East West and Tullamarine. Are there any others, off the top of your head? I am happy for you to take this on notice.
Mr Mrdak : The Victorian budget included a range of projects which they have given higher priority to, including a number of grade separations and—
Senator CONROY: I am just looking to know where the other quarter of a billion dollars went to.
Mr Mrdak : The Commonwealth in the budget has supported projects such as the St Albans road-rail level crossing project.
Senator CONROY: It is all right. I will come to them separately later.
Mr Mrdak : The budget sets out the Commonwealth's commitment. The profile which Mr Jaggers has given you is what has been put to Victoria in response to their request for the profile over the next few years.
Senator CONROY: If Mr Jaggers is able to give us a breakdown of the profile previously?
Mr Mrdak : We will seek to do that.
Senator CONROY: Back to IA. Has IA provided any advice to the department or ministers about the merits of this project since September last year?
Mr Roe : We provided a priority list update in June-July last year. We updated that priority list and published that in December 2013.
Senator CONROY: As far as you know, has IA's view on the merits of the M80 project been sought by the federal or Victorian governments?
Mr Roe : The M80 project is included on the infrastructure priority list at 'threshold'.
Senator CONROY: But they have not got in touch? You are just hoping that they have read your latest update?
Mr Roe : Yes. The priority list is contained in the annual report to COAG, which is for COAG—
Senator CONROY: But they have not contacted—
Mr Roe : I am just—
Senator CONROY: As far as you are aware, the federal or Victorian government has not contacted you about the M80 at any stage?
Mr Roe : The Victorian government provided a submission originally in relation to the infrastructure priority list.
Senator CONROY: But nothing—
Mr Roe : We have not received an updated submission since—
Senator CONROY: No; I said 'contacted' rather than 'updated submission'. You have not had any contact with them at all on the M80—
Mr Roe : Not that I am aware of.
Senator CONROY: in the last 12 months?
Mr Roe : To make it simple, no, not since the list—
Senator CONROY: I note that the M80 Ring Road project stage 2 was assessed in July 2012 as a threshold project, the second highest level of priority, and that it had a BCR of 2.2. Is that correct?
Mr Roe : That is correct.
Senator CONROY: Did Infrastructure Australia recommend or support the transfer of funding from this project towards the East West Link stage 2 project, which is yet to be assessed?
Mr Roe : Infrastructure Australia does not advise on funding issues.
Senator CONROY: To the best of your knowledge, who made the decision—the government?
Mr Roe : Yes, the government makes decisions on funding.
Senator CONROY: Given that the M80 has a BCR of 2.2, can you assure the Australian taxpayers that the East West has a higher BCR?
Mr Roe : Infrastructure Australia does not make decisions on funding.
Senator CONROY: No; I asked you whether it had a higher BCR. The BCR for the M80 is 2.2. The BCR for East West stage 1 or 2—I do not think you can come up with a stage 2 one yet, but a combined one was about 0.5 originally—is lower than the BCR for the M80. Correct?
Mr Roe : Yes, as presented by the Victorian government, the 2.2—
Senator CONROY: The Victorian government gave you a 2.2 figure before you kicked the tyres on it and said, 'Yes' and, after a bit of massaging, 0.8 for stage 1 and nothing for stage 2 at this stage.
Mr Roe : That is correct.
Senator CONROY: Just to be clear, Mr Mrdak, a quarter of a billion dollars has been taken from the M80 project and farmed to other projects. We will get to some of what they are in a minute. I am happy to go through them and, as I have said, I will come to them, but that is factually the case.
Mr Mrdak : The numbers that Mr Jaggers has given you are now in the forward program for the Commonwealth, yes.
Senator CONROY: But as for the missing quarter of a billion dollars, you were going to give me a list before—and I will come back to that—but that is money taken from the M80 that was already allocated that goes to other road projects. Some are apparently new but others just have more money?
Mr Mrdak : That is correct. The government reallocated that funding to other higher priority Victorian projects.
Senator CONROY: Higher political priority by the Victorian government but clearly not a higher priority than Infrastructure Australia's assessments and, frankly, the Victorian government's own assessments on a BCR modelling case?
Mr Mrdak : They are of a higher priority from the Victorian government's—
Senator CONROY: A higher political priority, but they do not meet any objective tests that they themselves have provided or Infrastructure Australia has—
Mr Mrdak : I can only indicate to you the advice received from the Victorian government to the Australian government.
Senator CONROY: I note that the Melbourne Metro project was assessed also in July 2012 as a threshold project, the second highest level of priority. Previously stage 1 of this proposal had been assessed as ready to proceed. My goodness! Has Infrastructure Australia been provided with the comprehensive preliminary business case that the Victorian government says it has prepared for the alternative Melbourne rail link? I agree that you have a conceptual letter.
Mr Fitzgerald : No, we have not received anything on that.
Senator CONROY: Given that the Premier did not actually know where the train station was going to be—that does not shock me; you probably could have helped him out, Mr Fitzgerald—you have received nothing at all, no business case, no preliminary business case, no letter, no nothing?
Mr Fitzgerald : Or requests for funding. So the business cases that come to IA are business cases where there is a request for funding from the Commonwealth government.
Senator CONROY: Does Infrastructure Australia assess the Melbourne rail link as a preferable project or one more ready to proceed than the Melbourne Metro project; and, if so, on what basis have you done that?
Mr Fitzgerald : We have not done that.
Senator CONROY: Just to clarify, you have not seen a full business case for the new rail project. They may not be seeking federal funds?
Mr Fitzgerald : The new rail project?
Senator CONROY: Yes, the Melbourne rail link.
Mr Fitzgerald : No, we have not.
Senator CONROY: No part business case, no nothing, just absolute—
Mr Fitzgerald : That is correct.
Senator CONROY: Has Infrastructure Australia identified that the Melbourne rail link will solve a particular problem, in terms of the criteria that you use?
Mr Fitzgerald : No, we have not considered that at all.
Senator CONROY: Have you done any independent calculation of a BCR for the Melbourne rail link?
Mr Fitzgerald : No.
Senator CONROY: I am advised you have not. So you do not have a BCR that you have calculated on the Melbourne rail link?
Mr Fitzgerald : No, we do not.
Senator CONROY: Do you plan to do one at any stage?
Mr Fitzgerald : No. In fact, as discussed earlier, we do not actually prepare BCRs. They are proposed to us by the—
Senator CONROY: If you thought one was so shonky, you might consider it at some stage. But I am not suggesting that. I am just saying that you should not absolutely, definitively rule things out when you may one day need to. So you have not calculated the net present value of Melbourne rail link?
Mr Fitzgerald : No, we have not.
Senator CONROY: You have not calculated the short-term or long-term productivity gains from the project?
Mr Fitzgerald : No, we have not.
Senator CONROY: Given that the Commonwealth government will not fund this project, does this affect your priority for assessment of this project?
Mr Fitzgerald : As I said a minute ago, only projects that are seeking Commonwealth funding come to IA for consideration—that is the current position—so if the Victorian government is not seeking funding on this project, then it would not come to Infrastructure Australia.
Senator CONROY: Given, as you have said, that they are not seeking funding, does this mean that you are more likely to accept the Victorian government's assertions about its merit? You are not just going to agree with them because they tell you it is good. I am saying: seeing as they are not asking for any money, just because they publicly say, 'Hey, this has got merit,' you would not necessarily come out and say that; you would have to have some way of ensuring it?
Mr Fitzgerald : Correct.
Senator CONROY: How does IA standardise its process to assess project merit? Does it have a standard method for deriving and comparing BCRs?
Mr Roe : For a cost-benefit analysis, yes, we have a standard approach to analyse cost-benefit analysis. So we look to break down the costs and the benefits into their core components. I think there are roughly 22 or 23 components of a cost-benefit analysis that we disaggregate and look at the assumptions one by one.
Senator CONROY: Let us come back to a project that Mr Mrdak mentioned earlier, the level crossing on Main Road in St Albans. The Victorian government has announced that it will proceed with the Main Road at St Albans grade separation project at a cost of $200 million, with Victoria contributing $50 million from savings on the regional rail link and the balance of $151 million coming from the Commonwealth. Does that sound about right, Mr Mrdak?
Mr Mrdak : That is correct.
Senator CONROY: But this funding does not appear in the Commonwealth budget and may come from underspending on the Commonwealth contribution for the regional rail link. So am I right in thinking that it is not identified in the—
Mr Mrdak : That is correct. The state of Victoria and the Commonwealth have identified that there is likely to be a budget underspend in relation to the regional rail link. Those funds that are available from that will be released to both the Commonwealth and Victorian contributions to that rail level crossing project, which will become part of the scope of regional rail link.
Senator CONROY: Has Infrastructure Australia assessed the Main Road grade separation and recommended that it be given priority?
Mr Fitzgerald : No, we have not.
Senator CONROY: What is the process for deciding what happens to the underspending on Commonwealth funded projects and how is Commonwealth approval given?
Mr Mrdak : They are matters for probably me and the department more so than Infrastructure Australia. They are matters that are managed as part of the program administration. Therefore, they fall to the department rather than Infrastructure Australia. Where there are savings identified through our program monitoring and management with the jurisdictions, decisions are then taken by the respective governments in relation to reallocating those project funds usually to projects within that jurisdiction.
ACTING CHAIR: Senator, do you have anymore?
Senator CONROY: Yes. I just want to run through this press release that I mentioned earlier, the Western Highway, Ballarat to Stawell duplication. That was $263.4 million. That was previously funded by the previous government?
Mr Jaggers : Yes, that is correct.
Mr Mrdak : Yes, it was in the—
Senator CONROY: The Princess Highway, Waurn Ponds to Winchelsea to Colac duplication, was it previously funded?
Mr Mrdak : That was in the program as at PEFO, I believe.
Mr Jaggers : I am sorry, can you just repeat the name of that?
Senator CONROY: Princess Highway, Waurn Ponds toWinchelsea to Colac duplication.
Mr Jaggers : That was a project previously funded.
Senator CONROY: Funding will continue—in other words, what was previously funded—for road maintenance, with $2.5 billion for Roads to Recovery. That was previous funding?
Mr Mrdak : There is additional funding for Roads to Recovery in 2015-16, an additional payment of $350 million.
Senator CONROY: Is that on top of the $2.5 million or is that part of the $2.5 million?
Mr Mrdak : That forms part of the $2.5 million.
Senator CONROY: So $2.2 million was previously funded by definition then?
Mr Mrdak : That is correct.
Senator CONROY: Was the $565 million for black spots projects previously funded?
Mr Mrdak : There is an additional payment of $200 million for black spots over two years, which has been announced as part of the budget. That forms part of the $565 million but is additional to what was previously provided for—
Senator CONROY: So there was $565 million previously?
Mr Mrdak : No, the $565 million includes the additional $200 million provided—
Senator CONROY: Includes the additional $200 million?
Mr Mrdak : Since MYEFO.
Senator CONROY: And is that different from the $300 million for the bridges program, which was previously funded?
Ms O'Connell : Yes, it is; it is different to that. Spots and bridges are different.
Senator CONROY: So you would say that the previous black spots program had only $365 million in it?
Mr Jaggers : I think it was $300 million. We will just check the details on that for you.
Ms O'Connell : The additional figure in terms of the supplement to the black spots program is a national figure and I think what you are looking at is the Victorian proposition. That is why the figures are different.
Senator CONROY: Are they contingent on asset sales by the states?
Ms O'Connell : No, they are not. The additional black spots program is not.
Senator CONROY: Roads to Recovery?
Ms O'Connell : That is not contingent on asset sales. There is separate funding for the asset recycling initiative.
Senator CONROY: So to be clear, just so there is no confusion, $3 billion has been cut from Melbourne metro rail in 2013; that is gone?
Mr Mrdak : Not in 2013. Most of the funding for that project in PEFO was well beyond the forward estimates.
Senator CONROY: But it has been cut?
Mr Jaggers : There was $1 billion in the years 2013-14 to 2018-19 and $2 billion for 2019-20 onwards.
Senator CONROY: So $3 billion has gone from the forwards and the rest?
Mr Jaggers : And that was a decision that the government made a commitment to before it took office.
Senator CONROY: I just want to confirm that that was the case. So $3 billion has been cut from rail funding and has gone into road funding—that is accurate—and $500 million has been withdrawn from M80 road upgrades and that has been refarmed and reallocated? You were beginning to discuss it all before. That is included in the one I covered with the St Albans road and rail link?
Mr Mrdak : No, not the $500 million. We took you through the figures there. There is a remaining amount in conjunction with—
Senator CONROY: I am sorry, $250 million?
Ms O'Connell : Yes.
Senator CONROY: A quarter of a billion?
Mr Mrdak : That has been reallocated.
Senator CONROY: I will pause there. That seems to be all I have on Victoria for the moment.
ACTING CHAIR: We will now go to Senator Lines for WA. I know that Senator Ludlam will have questions on WA and I am sure that Senator Back will have questions on WA. Mr Roe.
Mr Roe : For the Melbourne rail crossing project that Senator Conroy mentioned, could I just take on notice whether we have received a submission on that?
Senator CONROY: Sure. If you are able to come back to us before you finish today, that would be great.
Mr Roe : I will.
ACTING CHAIR: Thank you, Mr Roe. Senator Lines.
Senator LINES: I also want to take you to the media release by Minister Truss in relation to the budget—I assume that you have that—for Western Australia.
Mr Mrdak : Yes.
Senator LINES: I am not quite sure who should answer this, but I will go to Mr Mrdak and I guess he can indicate who will know the answers. Are you familiar with the newly packaged project to Fremantle port?
Mr Mrdak : Yes, the Perth freight link project.
Senator LINES: So you are best placed to answer this?
Mr Mrdak : Yes.
Senator LINES: Can you confirm that this project includes previously allocated Commonwealth funding in the 2013 budget of $59 million for the Leach Highway?
Mr Jaggers : Which funding are you referring to? Are you referring to a number in the—
Senator LINES: The newly packaged Fremantle port funding.
Senator Johnston: The $106 million.
Senator LINES: I am asking you to confirm that it includes previously allocated Commonwealth funding in the 2013 budget of $59 million.
Mr Jaggers : Yes. The $925 million that has been contributed by the Australian government does include that $59 million that had previously been allocated to the Leach Highway (High Street) project.
Senator LINES: Did you say $59 million?
Mr Jaggers : Yes, $59 million.
Senator LINES: Can you indicate the Commonwealth funding profile for that project? Perhaps you could give me the figures for 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 and anything that has been committed beyond that.
Mr Jaggers : Yes.
Mr Mrdak : As Mr Jaggers searches for those numbers, I just want to reaffirm that these are indicative allocations that the Commonwealth has put forward and they are yet to be agreed by the state of Western Australia.
Senator LINES: So they are yet to be agreed?
Mr Mrdak : Yes.
Senator LINES: Did you hear that, Senator Sterle? Mr Mrdak has told us that the figures we are going to get are indicative and they have yet to be agreed by the state government.
Mr Mrdak : That is correct. The minister has provided these indicative profiles to the states; hence my reply to Senator Sterle last week indicating that the program is yet to be settled because we are waiting for responses from the jurisdictions.
ACTING CHAIR: Can you just clarify something?
Senator LINES: Yes, sure.
ACTING CHAIR: There was this hoo-hah in WA where the assistant minister and the minister and the Western Australians were looking like rabbits in the spotlight, not knowing what they were supposed to pay. So all 'indicative' means is 'we'll make an announcement to the media but we've got no idea how much money is going in'?
Mr Mrdak : No, far from it. What I am saying is that what is indicative is the profile across the years. The total funding contribution offered by the Commonwealth of $925 million is locked in. What Mr Jaggers has is the indicative profile across the out years.
ACTING CHAIR: What does that mean in English? I am sorry, tell us what it means in English. For those people who are sitting here watching the politicians from Canberra making wonderful announcements that Western Australians have no intention of putting any money in—they just did a state budget—what does that actually mean in English for the building of this road in the near future?
Mr Mrdak : It means that the road will proceed and that we have made indicative allocations across the years of the forward estimates of how much Commonwealth money that project will draw down.
ACTING CHAIR: With the greatest of respect, does 'indicative' mean definitely or maybe? What does it mean? Tell me what indicative means in road funding?
Mr Mrdak : It is our estimate at this stage of how much funds will be expended in each financial year on the project. As you know, we pay on milestones of work and this is our indicative estimate of how much work will be completed in each of the years that have been profiled.
ACTING CHAIR: There is no rock-solid guarantee that it will be shovel-ready and money will be coming. It is just, 'Let's make an announcement and hope, for crying out loud, that West Australians will fall for it.'
Mr Mrdak : I do not think so.
ACTING CHAIR: I tell you what, I will challenge you at every stage, at every year and at every budget, because this is all bull dust. If it were all fair dinkum, there would be figures against this.
Mr Mrdak : We have figures.
ACTING CHAIR: I am not blaming you guys. I am not blaming the department. I know how professional you are. You have your hands tied behind your back.
Senator LINES: Let us get the breakdown.
Mr Jaggers : We do have a breakdown. From 2014-15, there is $76.9 million.
Senator LINES: Nothing in 2013-14?
Mr Jaggers : That is correct. In 2015-16 we have $175.9 million. In 2016-17 there is $449.2 million. In 2017-18 we have $223 million. If I could add to that comment that the secretary is making on the estimates and the indicative nature of them, we have not been to market for this project yet either and, of course, the market will determine the final project cost.
Senator LINES: Yes. Following on from the comments made by Senator Sterle, I am just a bit confused now. There was a media release by the assistant minister on 19 May regarding the proposed extension of Roe Highway which indicated that the WA Minister for Transport and the assistant minister were to meet to begin planning and prioritising the project. But then the WA Treasurer, Dr Nahan, said in their estimates on 21 May, 'We have not agreed to go ahead with the project,' and the WA Premier, Colin Barnett, said on 22 May that there is no money in the state budget for the project this year. Can you advise of the status of your discussions with the state government?
Mr Mrdak : Certainly, ministers have met at senior levels and discussed the project.
Senator LINES: After 19 May, when they said they were going to meet?
Mr Mrdak : In the lead-up to the budget on 13 May—
Senator LINES: They met?
Mr Mrdak : this was the subject of discussions. Subsequent to the budget, Minister Briggs has met, as have other senior ministers, with Western Australian ministers. We are working on the basis that this project is agreed and it will be a matter for the Western Australia government as to when it takes decisions on its contribution. As far as the Australian government is concerned, this project is agreed to go forward.
Senator LINES: So, the assistant minister met with the WA people after the budget.
ACTING CHAIR: Who did they meet? Can you tell us who he met with in WA?
Mr Mrdak : My understanding is that the assistant minister has had discussions with both the Western Australian Treasurer and the Western Australian Minister for Transport.
Senator LINES: So despite Dr Nahan saying there is no money and they have not agreed?
Mr Mrdak : The discussions as far we are aware have been on the basis that this project will proceed.
Senator LUDLAM: Mr Jaggers, where are you reading those figures from? What was the source of those forward estimates?
Mr Jaggers : I am reading them from my notes.
Mr Mrdak : They are the budget figures in the budget papers.
Senator LINES: Can you give me the dates that this meeting with Dr Nahan and the assistant minister went ahead?
Mr Mrdak : I will take that on notice and get you those states.
Senator LINES: It is strange that on 21 and 22 May the Treasurer and the WA Premier seemed to indicate there was no money and the project would not go ahead.
Mr Mrdak : There are aspects of the project which remain to be settled in terms of the design and the like, but as I said the Australian government is proceeding on the basis that the project will proceed.
Senator LINES: What is the WA government's contribution to this project? They are saying zero, what are you saying?
Mr Mrdak : The intention is the project will go to a PPP and go to the market. Until such time as the design has taken place, it is unclear what the Western Australian contribution would be. It will very much depend on the degree to which the Western Australian government decides to enable private financing and what contribution it will make. At this stage the total cost of the project is estimated at $1.570 billion.
Senator LINES: Okay. What is the difference then between your total input? It is interesting that you have forward estimates that are not real figures, yet the WA government does not seem to have any or say that they cannot make any projections.
Mr Mrdak : These projections are based on our discussions thus far with the state of Western Australia. It would be a matter for Western Australia to reach some judgments as to how they decide to profile their funds and also, as I said earlier, the degree to which they decide to utilise a PPP framework and use private financing.
Senator LINES: So you do not have any idea of what the state government is going to commit?
Mr Mrdak : We understand there is a commitment by the Western Australian government to this project, but details of the WA financing we do not have as yet. The minister has put to them our indicative profile. For the whole program for Western Australia, we are waiting for a response from the Western Australian government formally.
Senator LINES: It is a worry when their Treasurer says it is not in their estimates. I mean you have given us figures, but the WA government said it was not in their estimates.
Mr Mrdak : Well as I say, we have been working on this project with WA officials and ministers have discussed it at length. We will await WA's formal confirmation of the program.
Senator LINES: So at this point according to a media release by the WA Treasurer, Mike Nahan, there is no agreement?
Mr Mrdak : I cannot comment on that.
Senator LINES: Have you done a cost-benefit ratio for the project, a BCA?
Mr Jaggers : Some elements of the project have had benefit-cost analysis completed previously.
Senator LINES: Which elements?
Mr Mrdak : The Roe Highway extension from the freeway through to Stock Road. I believe the Leach Highway project has also had a benefit-cost analysis completed.
Senator LINES: Roe Highway through to Stock?
Mr Jaggers : Yes, from the freeway. It is the link between the Kwinana Freeway and the Stock Road.
Senator LINES: And Leach Highway.
Mr Jaggers : And then there has been work done on the High Street project, as it was formally known.
Senator LINES: So what does that mean, 'work done'?
Mr Jaggers : I believe there was a benefit-cost analysis done on that section as well.
Senator LINES: And who calculated that BCA?
Mr Jaggers : Work has been done by the Western Australian government. They have also employed consultants to assist them with that process.
Senator LINES: Do you know who they have picked?
Mr Jaggers : I do not know all the consultants involved, no.
Senator LINES: Is that something you can give us?
Mr Jaggers : It is a matter for Western Australia, who they have engaged. I do not actually have all those details.
Senator LINES: Does Mr Fitzgerald know?
Mr Fitzgerald : No, I do not know, Senator.
Senator LINES: I wonder if it is KPMG. That would be an interesting twist. Has Infrastructure Australia provided advice to the government on this project?
Mr Jaggers : I believe that elements of the Perth freight link have had previous assessment.
Senator LINES: Which elements?
Mr Jaggers : The High Street, Leach Highway, component had an assessment and I think it was on Infrastructure Australia's 2013 list.
Senator LINES: Right, so the previous government.
Mr Jaggers : It is Infrastructure Australia's 2013 priority list, the High Street component.
Senator LINES: Anything else?
Mr Jaggers : Not directly, but some parts of this route have also been assessed by IA. If you look at the broader Perth freight link through to Swan Valley and the Swan Valley bypass, that had been assessed. Also, the grade separations on the Tonkin Highway have had some assessments done by IA. So elements of it have been, but as a complete Perth freight link there has not been an assessment overall.
Senator LINES: Has Infrastructure Australia advised the BCA?
Mr Jaggers : No.
Senator LINES: You have had some discussions. Mr Mrdak told us that there had been a meeting between the assistant minster and the WA ministers. Does that mean that formal discussions have commenced or are they yet to commence? What is the status of that?
Mr Jaggers : In our view, they are formal conversations that two governments have had. Announcing this project reflects the discussions and agreements reached by ministers.
Senator LINES: Does the WA government understand, if they have commenced formal negotiations?
Mr Mrdak : Certainly. On budget night they received the formal letter from the minister, which sets out the program of works and that program does include this project.
Senator LINES: Given that you have now commenced formal negotiations, is there a series of meetings set down? What happens from now?
Mr Mrdak : The next stage is the development of all the planning and development work for the project. Mr Jaggers will lead our work on that with the WA officials to bring that forward, to enable it to progress to a formal project proposal. At the same time, the WA government will need to respond to the Australian government's offer of the program.
Senator LINES: Will you do that program work yourself? That will be the department's work?
Mr Jaggers : My division will take the lead in the work and we will engage experts along the way in finalising the details of the project.
Senator LINES: How will you engage experts?
Mr Jaggers : We will be engaging experts to look at issues like patronage and issues around the final financing model as well.
Senator LINES: Will that be consultants? Who will it be?
Mr Jaggers : We have a panel of experts and we would use experts from the panel. They would be consultants.
Senator LINES: This is the panel which is similar to the one described by Ms O'Connell earlier in the day?
Ms O'Connell : That is correct. I think it was described by our CFO. We do have panel arrangements in place for when we need expert advice.
Senator LINES: Is the funding for those experts in the forward figures you gave me?
Mr Jaggers : No, that will be departmental funding.
Senator LINES: Can you give us an idea of departmental funding that will go into this project over and above the estimates that you have given me?
Mr Mrdak : The costs of our work will be absorbed within the department's budget.
Ms O'Connell : We do not receive departmental funding based on project by project; it is to manage the overall program and we place our emphasis where the priority requires it.
Senator LINES: It does not sound like very good forward planning, because you could have seven projects but you could only afford four.
Mr Mrdak : We develop our budget around all of the projects. We have a very large program of work that Mr Jaggers is managing and we do that within—
Senator LINES: The Perth project is in your projected—
Mr Mrdak : It is within the department's allocation and we manage it within our existing appropriations.
Senator LINES: Can you give me the funding profile for the NorthLink WA and Tonkin Highway grade separations?
Mr Jaggers : Yes, we can. The funding for the grade separations commences in 2016-17. There is $40 million allocated in 2016-17, $70.3 million allocated in 2017-18 and $30.3 million allocated in 2018-19.
Senator LINES: Has the WA government committed to its part of the project?
Mr Jaggers : We understand that Western Australia is contributing $140.6 million to those projects.
Senator LINES: Going back to the answer that you gave me before regarding High Street and the other bits you said there had been projections done around. What percentage are they of the total project?
Mr Jaggers : Of the High Street component?
Senator LINES: Yes, and the others. You said you have done some costings on—
Mr Jaggers : I am sorry if I have misled you in some way. That NorthLink project, the grade separations, while it is part of broader works, it is not actually costed in this Perth freight link project itself, which is the $925 million. Only the $59 million from the High Street project is a component of the $925 million commitment.
Senator LINES: Sorry if I confused you. What I am asking you now is: you told us you had done some design and costing work on Roe Highway to Stock Road and you had done High Street, and I think you mentioned Leach Highway. Of those sections which have been assessed, what percentage are they of the total project?
Mr Jaggers : The largest component of the project is what is called the Roe 8 project, which is the connection between Kwinana Freeway and Stock Road. There are also grade separations and widening on Stock Road, which are obviously a smaller component of it, and High Street. I do not actually have a percentage breakdown for you. I could maybe take that on notice.
Senator LINES: Could you get it today?
Mr Jaggers : I am sure I can.
Senator LINES: Great, thank you. In relation to the Perth Freight Link project, has Infrastructure Australia seen a business case?
Mr Fitzgerald : We have seen a business case for a component of that.
Senator LINES: I like these component parts. Which component part have you seen?
Mr Roe : The Leach Highway High Street upgrade, as a component of the broader project—
ACTING CHAIR: Is that the $59 million?
Mr Roe : That is a project that is threshold on the priority list —
ACTING CHAIR: Sorry, is that the $59 million that Senator Lines asked about earlier? Is that the same project that was already—
Mr Roe : On the priority list it is at $100 million.
Mr Jaggers : Just to clarify, the $59 million was the Australian government contribution to that project, but the actual project was around $114-$188 million.
ACTING CHAIR: So it was part of that?
Mr Jaggers : Yes.
ACTING CHAIR: It is very important that we hear this. We have got a $1.6 billion project being announced with all the bells and whistles and fanfare, we have got $925 million—and we have not even started digging down to where the heck that is going to come from—and we do not know where the other $645 million is going to come from or if it is going to come at all. Now you are telling us that you have done a business case analysis—or you have received one; you have not done one—for one tiny, weeny little bit of it to the value of an extra $50-odd million.
Mr Roe : I would not categorise $100 million as a tiny project.
ACTING CHAIR: But, of the $100 million, there was $59 million already allocated previously. This is—I will not use the word full of bull, but this is a shocker. I cannot believe what we are experiencing here, and we are only scratching the surface. These ministers are running around the country promising money that we do not even have and they do not even know where it is coming from, and you people have not even seen the business case review. This is just ridiculous.
Senator Johnston: Fancy getting a lecture from you.
ACTING CHAIR: You, minister, should be embarrassed.
Senator Johnston: I am not embarrassed at all.
ACTING CHAIR: As a Western Australian, you should be darn well embarrassed. It is about time we started sticking up for Western Australia instead of lying.
Senator Johnston: Your government was the greatest promiser and non-deliverer we have ever seen. Promises, promises, promises and delivered nothing but debt.
ACTING CHAIR: I will call order.
Senator BACK: I would like an opportunity at some point to put some truth and honesty into all this.
ACTING CHAIR: I tell you what, you will get the opportunity.
Senator BACK: I do know something about this project, and I would like the opportunity, out of courtesy—
ACTING CHAIR: This is an absolute disgrace. Senator Lines has the call and then I will come to you.
Senator LINES: Mr Roe, you have indicated that you have seen some of the business case for the Perth Freight Link project. You said Leach Highway, is that Leach Highway to Stock Road?
Mr Roe : That is right. I will read the descriptions here. The project that was presented to Infrastructure Australia was for a 1.5 kilometre dual carriageway between a four-lane divided road, and capacity extension to six lanes for High Street, and to undertake a major intersection reconfiguration along Leach Highway in east Freemantle between Carrington Street and the Stirling Highway.
Senator LINES: How many pages is that business case?
Mr Roe : I would have to take that on notice.
Senator LINES: Can you give us a guess? Is it weighty?
Mr Roe : It would have been Infrastructure Australia's templates, and they are quite detailed questions. In order to get the threshold on the priority list there needs to be a material amount of information presented.
Senator LINES: Does the material you have received to date—which is parts of—allow you to recommend this project for Commonwealth taxpayer funding?
Mr Fitzgerald : We do not make a recommendation on funding, as discussed earlier.
Senator LINES: What would you recommend, given that you have just got bits of this project?
Mr Fitzgerald : We would not make a recommendation. We do not make recommendations on funding.
Senator LINES: So you have the information, what will you say to the department or the government?
Mr Mrdak : The government has made clear that this project, along with other major projects announced in the budget, will be subject to a business case being put to Infrastructure Australia for assessment. This is a new project and it differs from the project that was previously looked at by Infrastructure Australia. That process has now commenced, in light of the commitments that have been made by governments. It is difficult for Mr Fitzgerald to give you an answer to your question at this time.
Senator LINES: Maybe you can tell me. What would you expect to receive back from Infrastructure Australia?
Mr Mrdak : At the time when the business case was provided, Infrastructure Australia council will need to make a judgement as to where the project sits on its priority list. The project will sit across the categories that it has established. The government will then review that advice from Infrastructure Australia and make its final decisions on the project.
Senator LINES: When do you think you will be in a position to put this project on a priority list, or move it up or down?
Mr Mrdak : I think at this stage we anticipate the business case being prepared. We would hope to have the business case in a position where—
Senator LINES: This is by the department, leading the work—
Mr Mrdak : With the Western Australian government in the first instance, who will be responsible for the project. We would hope to see the first indicative business case by the end of this year.
Senator LINES: You indicated to us that you believe you are in formal negotiations with the WA government, and you have said there will be ongoing meetings, but you hope that there is a costing by the end of the year? Do you not agree time frames? When does all of that get negotiated?
Mr Mrdak : We will. I am probably being a little bit vague. I was indicating that we expect to be in a position to have that proposal.
Senator LINES: You have gone from 'hope' to 'expect', why have you done that?
Mr Mrdak : As I was saying, this is an occasion where the Western Australian government will be looking to develop a private financing model for this project, which will involve a considerable amount of work. As Mr Jaggers has indicated, there is work to be done on patronage forecasting and looking at various models by which private financing might be applied. When I was using my more vague terms earlier, we would want to be in a position, if at all possible, by the end of this year to have that work brought together. That will be somewhat dependent on how quickly the Western Australian government and ourselves can deal with what are some very substantial issues around project planning and design as well as the various options for financing.
Senator LINES: But you have got formal negotiations going on, so do you develop a plan of work or a program by which you require dates to be agreed or costings to be done?
Mr Mrdak : We will. That work is now underway with Mr Jaggers, and the WA officials have got that work underway including developing a project plan.
Senator LINES: When would we expect that initial project plan to be finished?
Mr Mrdak : As I said, we would aim as best as we can to have it by the end of this year.
Senator LINES: So the project plan—
Mr Mrdak : Sorry, the project plan will be developed over the coming weeks with a view to having the business case ready by the end of this year.
Senator LINES: So in a couple of weeks we will have a project plan?
Mr Mrdak : That would be our intention.
Senator LINES: When does Infrastructure Australia get involved?
Mr Mrdak : Infrastructure Australia would then review the business case, once it is finalised. That would be provided to Infrastructure Australia—
Senator LINES: But you do not expect by the end of the year?
Mr Mrdak : That will be the timing we will be trying to work to, yes.
Senator LINES: Infrastructure Australia have done some costings for parts of the project, and you went through those: Leach Highway, High Road, et cetera?
Mr Fitzgerald : Yes. That is only a small component of the project that is now being proposed.
Senator LINES: Do you know what percentage of the project that you have done a business case cost ratio for is? You said 'tiny', does that mean 10 per cent?
Mr Fitzgerald : This is reported as a $100 million project, so it is $100 million as a percentage of the total project cost.
Senator LINES: So, to use your words, it is tiny.
Mr Jaggers : I think I will take that one on notice. The original proposal on High Street has had some modification since IA has been assessed. There have been some improvements by the WA officials in the current design work. I will give you a breakdown of the proportion of that.
Senator LINES: Did Infrastructure Australia calculate the BCR?
Mr Roe : No, we assessed the benefit-cost ratio.
Senator LINES: That someone else gave you? That the department gave you?
Mr Roe : The Western Australian government provided it, yes.
Senator LINES: Was that their own work? Did they use consultants?
Mr Roe : I am not sure. I can ask the Western Australian government.
Senator LINES: Do you do any analysis of the BCR or do you just accept what you are given?
Mr Roe : We undertake analysis of cost-benefit analysis and information presented.
Senator LINES: To make sure that there are no errors?
Mr Roe : Yes, to check its robustness. We do that at quite a detailed level.
Senator LINES: Is that work that IA does itself?
Mr Roe : That is work that we conduct with the use of consultants.
Senator LINES: Who do you use for those consultants?
Mr Roe : I need to take that on notice, for which consultant was used for this project.
Senator LINES: Could you get back to us today?
Mr Roe : I can ask, but otherwise I will take it on notice.
Senator LINES: Has Infrastructure Australia provided any advice on the merit or the priority of any of the Perth Freight Link projects?
Mr Fitzgerald : No.
Senator LINES: Not as yet. Why have you not done that?
Mr Mrdak : It was only announced by the government in the budget. It is a new initiative.
Senator LINES: I think I have been hearing about this for years, but anyway. Has Infrastructure Australia considered alternatives to the Perth Freight Link project? I do not know if you understand that there is a fair amount of heat around this in Perth.
Mr Roe : We have not received a submission for that broader corridor.
Senator LINES: But you would not deal with that yourself?
Mr Roe : No, we would review submission material that is presented to us.
Senator LINES: Have you published information with respect to that project?
Mr Roe : Not the broader project that you are discussing or that $1.6 billion.
Senator LINES: What have you published on, then?
Mr Roe : Just in relation to the Leach Highway High Street upgrade component.
Senator LINES: Where is that to be found?
Mr Roe : On the Infrastructure Australia website.
Senator LUDLAM: I am staying with Western Australia and staying with this project. I think Senator Lines has cleared up why there are different amounts of money quoted in different places. I am still trying to separate out for myself how much of the funding is for the Perth Freight Link. It was the first time that I had seen works all the way from Perth Airport, on the other side of Kenwick, all the way through to Fremantle conceived of as a single project. Works, as you are obviously aware, are well underway around the airport—around that so-called Gateway project. Do any of the funding appropriations that we have discussed so far relate to this existing works or have you netted that out of the $925 million indicative?
Mr Jaggers : The $925 million does not include works like Gateway or the works on the Tonkin Grade Separations.
Senator LUDLAM: Good. For the purposes of this conversation, then, we can set that aside. That is committed; that is already underway. That was an ALP initiative from a couple of years ago. It is making a horrendous mess of the urban bushland around the airport.
ACTING CHAIR: Let me tell you, it is a long time coming, I reckon.
Senator LUDLAM: We will set that aside. Let us talk about of the $925 million, is it possible to separate out how much of that is a Commonwealth commitment specifically to that stretch of freeway through the Beeliar Wetlands between Kwinana Freeway and Stock Road? We will leave aside the rest of the High Street stuff for a second.
Mr Jaggers : We will be able to provide the breakdown. I think I have taken that on notice.
Senator LUDLAM: You already did. But you took it on notice not for October but for later this afternoon, if that is possible.
Mr Jaggers : Yes, I said that we will try to get that back.
Senator LUDLAM: Great. That should be fairly black and white. You are aware that this is under appeal in the WA environmental protection agency at the moment and it has not yet been assessed for acknowledged Commonwealth environmental matters. You are aware of those two things?
Mr Jaggers : Yes, we are.
Senator LUDLAM: Should people bother to participate in environmental and heritage assessments, given that you have already made you minds up? Well, not you. This has been landed on your heads, actually. But the government has made its mind up, utterly pre-empting state and Commonwealth environmental impact assessment. Why should people bother to participate in those processes?
Mr Jaggers : With every project, whether it is funded by either the state or the Australian government, the environmental approval process is an integral part of the project.
Senator LUDLAM: Can I just pull you up there. It is an environmental assessment process, not an environmental approval process. Do you just assume that everything is going to go ahead, irrespective of what those regulators come up with?
Mr Jaggers : No. Thank you for clarifying. Environment assessment is a part of all projects. Certainly, there was an opportunity with the project to minimise any environmental impacts, and that will impact on the final design and outcome of the project.
Senator LUDLAM: You are aware that under both state and Commonwealth environmental law it is possible for the regulators to come back and say this project should not proceed. On what basis have you come to the view that those regulators will not do that in this instance?
Mr Jaggers : We have not formed any view about the outcome of those environmental assessment processes.
Senator LUDLAM: You have. There is money committed in the forward estimates to this project going ahead. You have absolutely formed a view.
Ms O'Connell : That is right, senator. But it is common practice to make commitments such as that, and it is obviously pending all of the necessary planning approvals taking place.
Senator LUDLAM: You do not have planning approvals. We do not really have a business case. Nobody has been able to see the cost-benefit ratio. But we are just assuming that this thing is going ahead no matter what.
Mr Mrdak : As Mr Jaggers has indicated, clearly there will need to be planning and environmental assessment processes undertaken.
Senator LUDLAM: What if they find that the project should not proceed?
Mr Mrdak : Then both governments will need to reconsider their approach to this project, as they do with any project.
Senator LUDLAM: Don't you think it is a little bit strange for funding to be committed before those processes have run their course?
Mr Mrdak : No. In many ways, processes often do not commence until such time as governments do make commitments to projects. Like with any project, unless there is a commitment to proceed and funding allocated, no-one would enter into an environmental assessment process if funding is simply not there.
Senator LUDLAM: That has not been the case in my experience. Projects can be green-lighted and move forward and be assessed before funding is committed. If we were running an honest process here where you genuinely believed that the environment or heritage regulators might say this is unacceptable, then we would have something to talk about. But quite clearly you see it as a fait accompli— again, not you, but the government itself. It is a political decision.
Mr Mrdak : I do not think the government would see it that way at all. The government will always meet the legislative requirements of both Western Australian and the Commonwealth environmental assessment processes.
Senator LUDLAM: Were you consulted before the announcement was made a couple of weeks ago that this project would be proceeding? Again, referring specifically to the western end, leaving the gateway stuff aside, were you consulted before this was picked up from obscurity and made a major government announcement?
Mr Mrdak : The government worked on the issue with the Western Australian officials and provided advice to the government in relation to the project.
Senator LUDLAM: When you said 'the government' earlier, who did you mean?
Mr Mrdak : Sorry, the department. The department did work through this project in the lead up to the budget.
Senator LUDLAM: But what is the cause and effect? Were you asked if this project was viable, or were you told that it is going to go ahead and were you then instructed to work with the Western Australian authorities?
Mr Mrdak : We had been working with the Western Australian government for some time on projects.
Senator LUDLAM: They had ruled it out. They had said it was not proceeding.
Mr Mrdak : This project was identified, and we undertook some preliminary work in the lead up to the budget and provided advice to the government.
Senator LUDLAM: Is it your understanding that the segment of freeway that runs through the Beeliar Wetlands is proposed to be elevated? Or will it run across the terrain?
Mr Mrdak : I will just check with my officers as to how much detail we have.
Mr Jaggers : We do not have an answer to that question at this point in time.
Senator LUDLAM: That is mad. If it is elevated it will be vastly more expensive. How do you come up with cost estimates if you do not know whether it is on the ground or up in the air? There is no way you can come up with any kind of project cost unless you know that basic detail.
ACTING CHAIR: You could put a toll on there for the truckies.
Senator LUDLAM: I am going to get to the toll. But let's just talk about the project itself. If you put it on pylons it costs you more than twice as much. So is it up in the air or is it on the ground?
Mr Mrdak : I think there are indicative proposals in terms of how the design would operate, and that has formed the basis of the advice from Western Australia about the costing.
Senator LUDLAM: Do those indicative proposals put this as an elevated freeway, or is it on the ground surface?
Mr Jaggers : We would have to come back to you with the details on the costing.
Senator LUDLAM: Can we do that before we rise at three?
Mr Mrdak : We will seek to do that.
Senator LUDLAM: It is a really basic project detail.
Mr Mrdak : I understand.
Senator LUDLAM: You are with me on that.
Mr Mrdak : We have worked off the basis of their cost estimates prepared by the state of Western Australia.
Senator LUDLAM: Are you aware that this project has been strongly contested for a period of more than 20 years by local residents and that it is a real flashpoint? It is going to be a very big issue.
Mr Mrdak : I am certainly aware that there have been significant concerns about various routes in this area in the past, yes.
Senator LUDLAM: There have. In fact, the project was taken off the books by the state Labor government. It was never removed from the Metropolitan Region Scheme, but it was formally cancelled. It was originally meant to link up with the Fremantle Eastern Bypass. Are you aware of that kind of project history? It goes back quite a way.
Mr Jaggers : Yes.
Ms O'Connell : Yes.
Senator LUDLAM: Yes, you are. And that the Fremantle Eastern Bypass has been deleted from the city's statutory planning? So the railway link, effectively, does not go to where it was intended to go. It goes nowhere.
Mr Jaggers : It goes to Stock Road.
Senator LUDLAM: We will talk about Stock Road in a second. This is the largest number of appeals to an EPA process in the history of environmental regulation in WA. Were you aware of that? There is huge community opposition to this proposal that you are bankrolling before you have seen the environmental impact assessment documents finalised. Again, I refer not to you—because I understand that you are not the decision maker. But that is what you are involved in.
Mr Mrdak : I am not familiar with the appeal process to date.
Senator LUDLAM: Do you think it might be useful to become familiar with it?
Mr Mrdak : We will work through those details as we prepare the project proposal.
Senator LUDLAM: Is the department in contact with the Western Australian EPA or the Department of Environment—the regulators on this? Or are we operating in silos for the time being?
Mr Mrdak : Our work is with the WA Department of Transport and Main Roads officials. It is for them to manage relationships with other WA state agencies.
Senator LUDLAM: I guess, then, that it would consequently be in your remit to liaise with your Commonwealth counterparts in the Department of the Environment. Have you been doing that?
Mr Mrdak : We have not been doing so to this point. We are certainly aware of the environmental assessment requirements. But I do not think we have had any formal discussions. I will just check with my officers.
Senator LUDLAM: How can you punt it to the WA department to contact the EPA and then say that you have not been in contact with the Commonwealth regulators on the same project? That is a bit odd.
Mr Jaggers : It is matter for the Western Australian government to liaise with all involved.
Senator LUDLAM: You are bankrolling this project to the tune of nearly a billion dollars. It is squarely a matter for you guys.
Mr Jaggers : The usual practice is that it is the state government that is the proponent of the project, and the deliverer of the project seeks and gains all necessary approvals for the project.
Senator LUDLAM: So there are no plans for you guys to liaise in future—recognising also that it is not being formally assessed by the Department of the Environment yet. So that would have been a good answer as well—that it has not started. But you are going to leave all of that to the proponents, to the Western Australian government, even though they had actually ruled it out before the Commonwealth came up with the funding.
Mr Mrdak : We will work with the Western Australia officials on this project.
Senator LUDLAM: But not with Commonwealth ones?
Mr Jaggers : As we need to, we will liaise with our Commonwealth colleagues.
Senator Lines interjecting—
Senator LUDLAM: As Senator Lines reminds us, there is no money for this in the Western Australian budget, in the forward estimates.
Mr Mrdak : As I have answered to the previous questions, that is a matter with Western Australia to deal with as they respond to the government's program.
ACTING CHAIR ( Senator Sterle ): They have lost their AAA credit rating. They have their priorities all wrong.
Senator LUDLAM: Yes, and this state is now subjected to more than $25 billion in net debt. Let us talk about the cost-benefit analysis that was conducted into the project. Has the department seen that? The public has not, but have you?
Mr Jaggers : We have seen some information from Western Australia about different components of the project.
Senator LUDLAM: I asked you a really specific question about cost-benefit analysis, or the CBA, that has been done. Has the department seen that yet?
Mr Jaggers : No. We have seen the analysis of the sections that have had benefit-cost analysis done. So we have seen some work on the Roe 8 component of the project—the Roe 8 extension.
Senator LUDLAM: I will get to High Street and Stock Road in a second, because there are some fairly serious issues for local residents there as well. The state government has not released the whole document to you? Have you asked them for the whole document? Or are they refusing to disclose it to you as they are to the public?
Mr Jaggers : No. We have seen documentation from Western Australia.
Senator LUDLAM: You said some of it. You made it sound like it was quite partial.
Mr Jaggers : The 'some' was in reference to some parts of the project. We do not have the cost-benefit—
Senator LUDLAM: Have you seen the cost-benefit analysis that was conducted?
Mr Jaggers : There has not been a cost-benefit analysis on the whole of the Perth Freight Link project as a single project. But on the—
Senator LUDLAM: Has there been one conducted into the section of railway through the Beeliar Wetlands? Have you seen that?
Mr Jaggers : Yes. There has been one conducted by the Western Australian government, and we have seen that.
Senator LUDLAM: You have?
Mr Jaggers : Yes.
Senator LUDLAM: Okay. Can you release it to the public, please?
Mr Jaggers : The release of that documentation is a matter for Western Australia in consultation with us.
Senator LUDLAM: Are you aware that they have refused to—that the public cannot see it?
Mr Jaggers : I was not aware that they had been asked and had refused.
Senator LUDLAM: That is something. We are both learning things today. The transport minister said in the press release—I think of about a week or so ago—that releasing that document may negatively impact discussions with the private sector. You have seen the document, so you are ahead of us. Apparently—and Minister Jamie Briggs must have also seen it—he says the railway project will generate more than $5 of economic benefit for every dollar spent. Is that consistent with what you have seen?
Mr Jaggers : That is consistent with what we have seen.
Senator LUDLAM: I think it was Senator Conroy who was talking before about benefit-cost ratios for some of the projects in Victoria, East West Link in particular being a 0.5. Clarify this for me. That is, for every dollar spent you get 50c in economic benefit. Is that what that would have meant for that Victorian project?
Mr Jaggers : I am not commenting on that figure. I have not seen that figure.
Senator LUDLAM: Maybe I am distracting us unnecessarily, but in terms of the benefit-cost ratio, that is saying effectively it is a one to five. We are generating five times the economic benefit for every dollar we spend on this freeway.
Mr Jaggers : That is what it would mean.
Senator LUDLAM: And we have to just trust you on that—or not trust you. You are not permitted by the West Australians to release it. We just have to trust that that modelling is sound. Have you taken a look at the underlying assumptions behind that one to five ratio that has been presented?
Mr Jaggers : We have not completed a detailed analysis of the benefit-cost ratio that was developed.
Senator LUDLAM: You have not? You have committed nearly $1 billion to the project and you have not read it yet?
Mr Jaggers : I think, as the secretary mentioned, there is still more work to happen on the project and there will be a fuller business case developed as well.
Senator LUDLAM: How much does that study rely on economic benefits of time savings as a factor?
Mr Jaggers : Usually it is a significant factor in a benefit-cost ratio for a transport project. I do not know exactly what proportion in this case, but usually quite a high proportion is down to travel-time savings.
Senator LUDLAM: That is effectively monetising that if I spend six minutes less on my journey, those six minutes are worth a certain amount of money. You tab that up over 30 years and it can be huge amounts of money.
Mr Jaggers : And then those benefits are then discounted at a particular rate, usually either four per cent or seven per cent.
Senator LUDLAM: Did the CBA that you saw measure the benefits—or the costs, I guess, to be fair—of the ecological services that are provided by a wetland, just through the five-kilometre corridor, again just sticking with Roe 8. Did it monetise the benefits to the native vegetation as a carbon sink or as a groundwater recharge area on surrounding land values, as a place of recreation that would be obliterated by this thing, or the lost heritage values to local Aboriginal mobs? Was that factored in?
Mr Jaggers : I am not aware, I do not know.
Senator LUDLAM: Any of those things?
Mr Jaggers : I do not know.
Senator LUDLAM: Can you take that on notice?
Mr Mrdak : We will check that and come back to you.
Senator LUDLAM: That would be great. Because otherwise all we are hearing about is the benefits and none of the costs. I would strongly dispute the way some of those benefits are calculated anyway. But it is all a top-secret national security matter, so we are all working in the dark. Since you have access to the document, anything at all that you can provide us would be great. Actually, it is $5.20, not $5 for every dollar invested. So let us get to the question of the toll. My understanding is that some traffic modelling has been done for the project, basic traffic modelling to justify its existence at all. Is that correct?
Mr Jaggers : Certainly, West Australia has done traffic modelling and we have done some traffic modelling ourselves.
Senator LUDLAM: Do you do that independently?
Mr Jaggers : Yes we do.
Senator LUDLAM: That is useful to know. Can you release what the Commonwealth has done or is that national security secret as well?
Mr Jaggers : It is still a work in progress.
Mr Mrdak : We will take that on notice. We have done some indicative analysis, as Mr Jagger has indicated. We will take on notice whether that can be made available to the committee.
Senator LUDLAM: This is proposed to be a public-private partnership for the tolling of commercial vehicles, at least a certain amount of freight fleet. Does that mean we should expect that a lot more of the underpinning modelling and assumptions behind this project will be considered commercial-in-confidence, because the West Australian government is going to be in negotiations with a commercial partner?
Mr Jaggers : I believe that is correct.
Senator LUDLAM: So there is the first problem right there. If it is a taxpayer funded project, we can ask you here, and you have no legitimate reasons to deny us that information. As soon as it becomes a public-private partnership, it all goes behind the firewall of commercial-in-confidence. That is our first problem.
Mr Jaggers : Certainly with a PPP, details need to be released to the market, in a consistent and considered manner so there is accuracy in that information. And the market can respond, because presumably the market will be spending money to bid for these particular projects. So there does need to be some careful consideration of the commercial impacts of a project.
Senator LUDLAM: And far as the state government is concerned, the commercial impacts will outweigh the public interest in knowing whether this controversial project goes ahead or not, and whether the assumptions behind it are utterly flaky or not. That is something of a problem for us. When you say you are modelling the traffic assumptions, does that mean you are critiquing the effort that the state government put in or do you do your own modelling and then see whether the two models stack up next to each other?
Mr Jaggers : It is a bit of both. The state have been doing their own work and we have been doing some work as well. We will share that information with them at the appropriate time and have a discussion about the details of that at work.
Senator LUDLAM: When is that expected to be concluded, or at least that portion of the process?
Mr Jaggers : I would expect, as they work toward the business case, that we will make our information available to them and we will be reviewing the information as it comes through. It may be a matter of months.
Senator LUDLAM: That is what it sounded like. Can you confirm—I think this is uncontroversial—the announcement that there are intended to be no traffic lights at all on the Perth freight link. So you could take it all the way from Kewdale to the Port of Fremantle without a single set of traffic lights.
Mr Jaggers : Certainly to the end of this project, which ends at High Street where High Street connects to Canning—to that point at the end of High Street.
Senator LUDLAM: Then you have got a whole bank of traffic lights. You have got five or six in a row before you actually get to the outer harbour or to the North Mole.
Mr Jaggers : There are a couple of lights after that that work.
Senator LUDLAM: That is where I live. So no traffic lights at all until you hit that big, sweeping bend at the High Street end.
Mr Jaggers : In fact, that High Street interchange will also not have a traffic light under the current proposal.
Senator LUDLAM: Where High Street hits the bottom end of the Stirling Highway.
Mr Jaggers : Yes.
Mr Pittar : I understand, too, that there will be no lights where the Stirling Highway crosses Marmion Street, either.
Senator LUDLAM: Are we going to put a flyover there—how are people going to get over Marmion Street?
Mr Jaggers : A grade separation.
Mr Pittar : Put a grade separation there too.
Senator LUDLAM: Quick and the dead. Does a grade separation mean, for the purpose of local residents, a flyover or a cloverleaf? What does it actually look like?
Mr Jaggers : There are different ways of separating it. You can separate it by a road being sunken or going over.
Senator LUDLAM: Will you still be able to get onto that freight link from Marmion Street or will that access be closed off?
Mr Pittar : There will be local access movements as well. The intention would be, in broad terms, to separate freight movements and separate local traffic.
Senator LUDLAM: It sounds like you are going to close off Marmion Street which the locals will not be delighted by. It is either that or a cloverleaf. How do you get people onto that road?
ACTING CHAIR: Is there a plan that we can see?
Mr Jaggers : A broad schema, or map, has been released. The details of each intersection are still to be settled.
ACTING CHAIR: So there is nowhere we can go to a website and say, this is the plan?
Mr Jaggers : Not at this stage, but you would expect that once the business case is settled. Obviously there is a strong period of public consultation still required on this project.
Senator LUDLAM: Give us a break! The decision has been made. If I am a member of the public, why would I turn up to your consultation—you have already made your minds up? You have committed a billion dollars in funding. Let us get on to the toll. The toll, which came completely out of the blue—like pokies, toll roads are one of those things from the east coast that we are quite happy not to have infect Western Australia. Nonetheless, this is a toll initially only for freight vehicles. I might flick this to you Senator Johnston, because I guess it is a question of policy rather than implementation. What kind of commitments have you made that the toll will never be applied to non-freight traffic.
Senator Johnston: I am not aware of that, but I think the issue of tolls is a matter for the Western Australia state government.
Senator LUDLAM: No, you guys made that one up. That came from you.
Senator Johnston: Sorry?
Senator LUDLAM: That was not a Western Australian initiative. This was not going to proceed at all.
Senator Johnston: It is a matter for WA as to how they domestically manage the traffic and who pays.
Senator LUDLAM: That is interesting. What are you going to do to prevent people from simply avoiding the toll? Will you be closing off other roads, as happened in New South Wales with the Cross City Tunnel, for example? How are you going to prevent people avoiding paying the toll?
Mr Jaggers : There are a number of mechanisms that the state was able to use to reduce leakage of heavy vehicles off the main thoroughfare, the Perth freight link.
Senator LUDLAM: Leaking—that is cute. And one of those techniques is blocking alternate routes, blocking other local roads to traffic?
Mr Jaggers : It can be done a number of ways, including by charging people who are leaving the road and then re-entering. There are a range of ways that it can be enforced. There are a number of projects in Australia where the same issue is an issue.
Senator LUDLAM: It certainly was an issue in Sydney.
Mr Jaggers : It needs to be part of the resolution to the project.
Senator LUDLAM: Why would I not just stay on High Street if I am bringing my truck out from the freight yards in Kewdale to the port—why would I pay you a toll at all?
Mr Mrdak : Other jurisdictions have utilised mechanisms such as defining heavy-vehicle corridors and requiring operations by regulatory requirements to stay on certain roads. That way it shifts heavy vehicles to dedicated freight corridors.
Senator LUDLAM: Are you aware that at the time this announcement was made, the Western Australian Freight and Logistics Council said they had never heard of it? Do you have any idea what consultation was done either by yourself or by the state government before this thing hit the headlines?
Mr Mrdak : This project was developed from advice from the Western Australian government in relation to how we could improve access to the port. This has been a process that has been developed for some time by the Western Australian government I think. The Australian government is very focused on trying to lift productivity of access to the port.
Senator LUDLAM: I am not sure how you will do that when you are still going to have a choke point—I forget exactly how many it is—of five or six sets of traffic lights between High Street and Tydeman Road before you actually get to the container port. Are we not just shunting a hideous bottleneck further up into North Fremantle? Will your traffic modelling identify that if that is the case?
Mr Mrdak : I do not necessarily agree with your assertion. I do not understand enough of the modelling at this stage, but if the modelling—
Senator LUDLAM: Can you make those roads wider or—
Mr Mrdak : That is work that will be underway to make sure we do not end up shifting a problem elsewhere.
Senator LUDLAM: But you will.
Mr Mrdak : The focus here is trying to get much more efficient access into the Fremantle port.
Senator LUDLAM: You will be getting much more efficient access until the point where you hit the first set of traffic lights on Tydeman Road, or maybe just before you get to the bridge, and then it is going to be an utter nightmare.
ACTING CHAIR: Senator Ludlam, I am on tune with you on this but can I ask how much longer you have got because there was an arrangement for 20 minutes?
Senator LUDLAM: I could go on this for hours and hours. I was at a public meeting the other night where they did not have enough room. It was not even standing room only. We could not fit enough people in the room, and people were demanding to know how this thing got into the Commonwealth budget without any traffic modelling being completed, without a business case and without an environmental and heritage assessment being done. You have not provided us with anything. You cannot even provide us with a map.
Mr Jaggers : I think a map has been provided and released of the route. I would say that the components of this project, like the Roe 8 extension, are not new ideas, neither are the Stock Road or the High Street projects.
Senator LUDLAM: I will agree with you on that; they are old ideas that should have been put to rest 20 years ago.
Senator Johnston: That is a matter of political opinion.
Senator LUDLAM: Yes, strong political opinion as it happens, Senator Johnston. See you on the barricades.
ACTING CHAIR: Struth, those are fighting words.
Senator BACK: If I can just put it into perspective, this freight link had its origins in 1955 with the Stephenson report of the metropolitan regional plan for Perth, which actually started its implementation in 1963. We are not talking about anything new or different or suddenly appearing, are we? Commissioner Leach, after whom the Leach Highway was named, was integrally associated with all of this planning that far back. He was the first person, in fact, to introduce traffic lights onto roads in WA and that was because of the construction of the BP refinery at Kwinana, which then required greater movement.
I do declare an interest, as Minister Johnston knows. My office is at Cockburn Central, which is very close to where Roe 7 currently terminates at Kwinana Freeway. Not that I am in my office all that often, but I can attest to the absolute snarl that exists where Roe Highway terminates. Senator Ludlam is quite correct when he speaks of there now being a discontinuation of the road into the Fremantle port. But that was the action, as I recall—I stand to be corrected—by former state minister McGinty, who actually had zoned land changed and had sold the land for residential development to make sure it could not happen. Let us be very clear on why we have the issue. You asked a question a moment ago, and the question was answered, about heavy vehicles on certain roads. At the moment those vehicles go from Roe onto Kwinana Freeway with enormous congestion, down to Leach Highway and then they go west on Leach Highway, which continues as High Street. It is the one road. At the moment we have enormous traffic congestion along Leach Highway. It is in the middle of a built-up, highly residential area, and that is where the current road traffic goes. What this Roe 8 will do—I agree that it does not remove the issue—is make it vastly safer for small traffic going along Kwinana Freeway and, particularly, along Leach Highway west from Kwinana Freeway through to now Stock Road. Let us be clear on what it is doing. Let us also be clear that this has been WA coalition, or Liberal, state policy—Minister Johnston will correct me if I am wrong—to my knowledge since 2008, Senator Johnston, when I was the candidate for Alfred Cove, the seat now occupied by the Minister for Transport, Dean Nalder. There is nothing new about this freight link.
I want to make a final point before asking questions. Again, I have a personal interest because I have a son living in Lafayette, Louisiana. There is a road that goes over the bayou between Lafayette and Baton Rouge, which to my recollection is some 40 kilometres long travelling in an east-west direction. Whilst it had some difficulties—I have inquired—during construction, the environmental impact of that long road has been practically nil on the wetland beneath it over that very long period. Let us just put all of this into perspective. My understanding, from the figures that I have been given, is that we are going to see an easing of congestion of about 65,000 vehicles off surrounding road networks every day. I experience that when I am in my office. Secretary, in the period 2007 to 2013, what funds were allocated, other than the $59 million that you mentioned earlier, for this Roe 8 extension?
Mr Mrdak : Other than the projects we have discussed, the work on High Street and the like, no other funds are allocated to this freight—
Senator BACK: The $59 million, then, was part of the $114 million that you speak of as the High Street widening and further development.
Mr Mrdak : That is right. I am not aware of any other funding for what is now Roe 8 in the last—
Senator BACK: Or indeed a connection between what will become Roe 8 and Stock Road heading north.
Mr Mrdak : That is correct.
Senator BACK: The Australian government's contribution between 2007 to 2013 was purely $59 million of $114 million for High Street.
Mr Mrdak : That is correct.
Senator BACK: We are clear on that. So we are looking at net new expenditure by the coalition government of $866 million, being $925 million less $59 million.
Mr Mrdak : That is correct.
Senator BACK: On top of that there is an estimate of $645 million, which would be the WA government's contribution, however that is contributed—whether it is PPP or whatever—and however they recover it. That is the case, is it?
Mr Mrdak : That is correct.
Senator BACK: Good, thank you. We speak of the joint media statement. I do not think it has been mentioned here before. We have certainly had plenty of mention of Assistant Minister for Infrastructure Briggs. Indeed, however, it was a joint media release, was it not?
Mr Mrdak : That is correct.
Senator BACK: Who was the other joint releaser? I have it here. It was Dean Nalder, WA Minister for Transport and Finance. Is that correct?
Mr Mrdak : Yes, that is correct.
Senator BACK: Can I now clarify—and it is quite correct—the question asked and the answer given? It was said that there is no allocation in the 2014-15 year by the WA government for this particular project—the year coming up?
Mr Mrdak : Not as yet.
Senator BACK: The amount committed by the federal government in 2014-15 is $76.9 million. It is probably reasonable to assume that $59 million of that $76.9 million may well, in fact, be funds that were previously committed. The new money from the federal government is in the order of about $16 million only in 2014-15. There is no hard work being done until 2016-17, is there? In 2015-16, it is $176 million; in 2016-17, $450 million; and in 2017-18, when it is due for completion, $223 million. Is that correct?
Mr Mrdak : That is correct.
Senator BACK: Can you clarify, because I am very interested, what—as Senator Ludlam has asked—is the normal process or protocol for the allocation of funds for a project which then must go through full environmental and community consultation approval processes?
Do you go through a full environmental process before you ever allocate funds or decide the project is on the books, or do you put the project on the books and then go through that process? What is the correct procedure around Australia?
Mr Jaggers : It varies, but for large projects, generally, the commitments are made and then the environmental assessment process takes place. Often state government are not willing to proceed with large projects to environmental assessment or planning approval until such time as they have financial commitment both within their jurisdiction and, if it is Australian government funded, from the Australian government. It is not unusual that you would have a situation where commitments are made and then environmental assessments are undertaken, including funding being utilised from the project commitments to undertake that planning and environmental assessment work.
Senator BACK: So we are not to fear, as has been suggested, that this has already been railroaded through and that there will not be the normal processes required for the approvals to take place?
Mr Mrdak : That is correct.
ACTING CHAIR: We will adjourn for an hour.
Proceedings suspended from 13:01 to 13:59
Senator BACK: I just want to ask you briefly about the Swan Valley Bypass project and then I want to go to some infrastructure investment. Can you tell me the progress of the Swan Valley Bypass, who is paying what, the completion dates and what the purpose of it is?
Mr Mrdak : Certainly. We will get you that detail.
Mr Jaggers : Yes. The Australian government commitment is $615 million for the Swan Valley Bypass. Construction is due to start in late 2016 and be completed in 2019.
Senator BACK: What is the total cost of the project?
Mr Jaggers : The total cost is estimated at $836.6 million. It is constructing 40 kilometres of new highway from the Reid Highway to Tonkin Highway intersections, dual carriageway for 15 kilometres and single carriageway for 25 kilometres.
Senator BACK: Aimed at what purpose principally?
Mr Pittar : The principal purpose of that bypass is to move heavy vehicles from the existing Great Northern Highway that runs through Swan Valley and to separate heavy vehicles from the lighter tourist traffic that currently runs through the Swan Valley.
Senator BACK: So, it is due to start late 2016?
Mr Pittar : That is correct.
Senator BACK: Local government will be very pleased. I have some questions on the infrastructure investment program. Can you tell me what the total funding is in that investment between this current year, 2013-14, and 2018-19?
Mr Mrdak : Yes. Between 2013-14 and 2018-19 the Australian government has committed $40.8 billion.
Senator BACK: So, $40.8 billion?
Mr Mrdak : To infrastructure investment. On top of that, there is the asset recycling initiative of $5 billion.
Senator BACK: So, that is included in the $40.8 billion?
Mr Mrdak : The $5 billion asset recycling initiative is additional to the $40.8 million.
Senator BACK: We will come to that. Beyond 2019-20 have we put anything into the out years?
Mr Mrdak : Yes. The government has provided for $4.5 billion from 2019-20 onwards, which provides a total infrastructure investment package of $50 billion.
Senator BACK: When is the asset recycling initiative scheduled for allocation of funding? Does it have a time limit on it?
Mr Mrdak : It will commence immediately with proposals from the jurisdictions, but it is profiled 2015-16 and 2016-17, and some will start in 2014-15. So, it is out over the next three years.
Senator BACK: This is the initiative in which the states and territories are being invited to participate. How will that allocation be made by the Commonwealth to the states and territories?
Mr Mrdak : The states and territories have signed with the Australian government a national partnership agreement that sets out the processes, but essentially it is open to the states and territories effectively to identify assets they may wish to sell or lease. Provided the money is effectively recycled into new infrastructure, to which the Commonwealth agrees, they then become eligible for the Commonwealth funding assistance to enable them to invest in the new infrastructure that will arise from the funds freed up from the asset recycling.
Senator BACK: Is that dollar for dollar?
Mr Mrdak : The Commonwealth has put $5 billion on the table. The expectation is that will fund a proportion, but the greater bulk of it will be funded from the asset sales.
Mr Jaggers : Yes, that is correct. The state will be funding the majority of the new investment in infrastructure, with up to 15 per cent contribution provided by the Commonwealth government.
Senator BACK: How does it work? Is it first in best dressed? Who, from the Commonwealth's point of view along this table, makes the recommendation to government as to which projects should or should not be supported given the fact the state comes along and says, 'We are willing to either lease or sell an asset'? Tell us how it works.
Mr Mrdak : Essentially there is an element of first in best dressed. The incentive is there for jurisdictions to bring forward asset recycling proposals. The Commonwealth assessment as to whether infrastructure investment which will result from those will be agreed by the Commonwealth will be taken by the Treasurer with the Minister for Infrastructure and Regional Development.
Senator BACK: I am still confused as to how much. If WA says, 'We're prepared to divest ourselves of $5 billion worth of assets', do they get the five? How does it work?
Mr Mrdak : Basically, the Commonwealth will need to make some judgments as to which projects will be supported. There will effectively be a competitive process between the jurisdictions as to which asset recycling and which investment program the Commonwealth will support with its $5 billion investment.
Senator BACK: Will there be a bidding round?
Mr Mrdak : Essentially that is right.
Ms O'Connell : The states have two years to identify what the asset sales are that they wish to undertake.
Senator BACK: So, none of the Commonwealth's money moves for the first two years? Is that how it would work?
Mr Mrdak : It will be open to some jurisdictions that are more advanced to bring forward projects earlier. As I said, the total Commonwealth available funding pool is $5 billion. It really will be an incentive for the jurisdictions to move more quickly to access that.
Senator BACK: Is the Infrastructure Growth Package separate from the program we have just been talking about?
Mr Mrdak : That is correct.
Senator BACK: Can you tell me what that involves and includes?
Mr Mrdak : Certainly. The Infrastructure Growth Package in this budget is a total of about $6.6 billion. I can give you the key projects.
Mr Jaggers : The Infrastructure Growth Package, as the secretary has said, is $6.6 billion. That will fund a range of new initiatives. I will just list them for you. The Black Spot Program will have an extra $200 million provided in the years 2015-16 and 2016-17, or $100 million in each of those years. The Roads to Recovery program will have an extra $350 million in 2015-16.
Senator BACK: So, $250 million in each of them?
Mr Jaggers : Sorry, there is $350 million in 2015-16.
Senator BACK: What will that take it up to for Roads to Recovery?
Mr Jaggers : I can provide that detail for you.
Senator BACK: On notice if you like. This is a very important project.
Mr Jaggers : That will take the total commitment to $2.47 billion or $2.5 billion.
Senator BACK: Over what time frame?
Mr Jaggers : That is over the period 2014-15 to 2018-19. Do you want me to provide the other projects?
Senator BACK: Yes.
Mr Jaggers : The other projects are the Western Sydney Infrastructure Package, where there is a $2.9 billion commitment over 2013-14 to 2018-19, with some of that funding happening in 2019-20.
Senator BACK: Is that an overall infrastructure plan for Western Sydney?
Mr Jaggers : That will fund a number of key road projects that will link to western Sydney airport, with connections to the M7, the M5 and the M4.
Senator BACK: Is that $2.9 billion New South Wales's share or are they also in the pot for the balance of that?
Mr Jaggers : That is an Australian government contribution and New South Wales will also be contributing to that project.
Senator BACK: I know there are plenty of others now in the room wanting to ask questions so I will just finalise with urban rail projects. Where will those urban rail funds be spent in this year and the out years?
Mr Jaggers : Yes. There were another five projects in that growth package that I did not get through. I might just list those for you.
Senator BACK: Yes. List those briefly and then we will go on.
Mr Jaggers : There is also the National Highway Upgrade program, $228.7 million. There is the upgrade of the North-South Road, including the Darlington Interchange in Adelaide. An additional $393.8 million has been applied to that project. There is the Perth Freight Link project, which we talked about earlier this morning. There is the Northern Territory Road Package, and also acceleration of the East-West Link, and additional funding for the Toowoomba Second Range Crossing. They make up that $6.6 billion in the growth package.
In relation to urban rail, there are a number of projects. I will ask Mr Wood to walk you through those.
Senator BACK: Time is of the essence, I am afraid, Mr Wood.
Mr Wood : With the four continuing urban rail projects, there is the Perth Light rail Planning Study, which completes this year; Moreton Bay rail link in Queensland; Gold Coast light rail also due to complete this year; and a regional light rail link in Victoria.
Senator BACK: That funding is out for how long?
Mr Wood : With the regional rail link the funding completes in early 2016. It is a total amount of $2.9 billion. The Gold Coast light rail completes this year. The funding was actually expended a couple of years ago; it was paid at the beginning of that program. For Moreton Bay the funding extends until December 2016, and the Perth light rail, as I mentioned, funding completes this year and that funding has already been fully expended.
Senator BACK: Do you have the total figure of all of those combined, without having to add it up; otherwise take it on notice, if you would?
Mr Jaggers : I am not sure that we have the urban rail. We certainly have a total rail number.
Senator STERLE: Is this what the government has cut?
Senator BACK: No. This is the new funding.
Senator STERLE: Mr Mrdak, in terms of the Perth Freight Link, I bet you two bob, or a $2 scratchie, that it will not get up and will not fly. Does anyone want to take me on? And if it does not, who wants to resign?
CHAIR: That is the end of your statement. Senator Dastyari, if you have a question—
Senator DASTYARI: I have questions regarding the intermodal. Is tomorrow at 7.30 during the surface transport the time to ask questions around that?
Mr Mrdak : Is that the Moorebank Intermodal?
Senator DASTYARI: Yes.
Mr Mrdak : That is now; this division deals with that.
CHAIR: We are really pressed for time. Senator Cameron, you have 15 minutes.
Senator CAMERON: Mr Mrdak, are you aware of the budget media statement by the Hon. Warren Truss and the Hon. Jamie Briggs in relation to Building New South Wales Transport Infrastructure for the 21st Century?
Mr Mrdak : Yes.
Senator CAMERON: Can I take you to that document.
Mr Mrdak : Certainly.
Senator CAMERON: It outlines a number of what it describes as New South Wales key projects. It also indicates that the Abbott government has made a record $14.9 billion investment to build the infrastructure of the 21st century. That is what is in the media release.
Mr Mrdak : Yes.
Senator CAMERON: Let me go firstly to the key projects. It states, 'The key projects listed below do not include road maintenance funding, black spot projects, heavy vehicle safety and productivity program, Roads to Recovery or untied local grants.'
Mr Mrdak : That is right.
Senator CAMERON: I have added them up to 30 projects, and that goes somewhere in the region of $8.484 billion. Is that roughly your understanding of what the projects go to?
Mr Mrdak : I think it would be of that order.
Senator CAMERON: So, does the $14.9 billion investment include these issues such as road maintenance funding?
Mr Mrdak : That is correct. That includes all of the programs and projects in the New South Wales program of works over the coming years.
Senator CAMERON: So, these are the recurring projects? You have to maintain the roads.
Mr Mrdak : They are a mix of capital works, new projects, as well as ongoing payments that we make to the state for maintenance, which is done under a funding formula. It also includes all of the Roads to Recovery and also notional allocations of new programs such as bridges and the like across the jurisdictions, which are all set out in the budget papers.
Senator CAMERON: Let me go to these projects. My estimate is that of the 30 projects that were announced 16 of those projects were projects that were announced and budgeted by the previous government.
Mr Mrdak : Certainly the government has essentially continued much of the former government's program as at PEFO.
Senator CAMERON: Much of them?
Mr Mrdak : Much of them, and has added some new projects.
Senator CAMERON: What is the value of the new projects?
Mr Mrdak : I will take you through the new projects that appear in that statement. The Western Sydney Infrastructure Plan, $2.9 billion.
Senator CAMERON: Maybe I can shortcut this, because I have only 15 minutes. My calculation off this document says that the existing projects under the previous government amount to $8.335 billion. The new projects, 14 of them, are important projects but in the context of the $8.3 billion it is rats and mice. I am just giving you an indication of the size of them. It is $159 million.
Mr Mrdak : I do not think that is accurate. If you look at it, the Western Sydney Infrastructure Plan, the WestConnex and some of the other projects are quite considerable. WestConnex is a $1.5 billion payment.
Senator CAMERON: Labor has announced that they would invest $1.8 billion in that project. So, it is not a new project. Labor announced that it would invest $1.8 billion, provided that WestConnex could connect into the city and to the Port of Botany; is that correct?
Mr Mrdak : That is correct.
Senator CAMERON: You cannot say that is a completely new project and that that is $1.5 billion.
Mr Mrdak : That is to stage 1 and then the government has committed to accelerate stage 2 of WestConnex with a concessional bridging loan, which is actually reported as impacting into the budget bottom line as well and, as I said, the Western Sydney Infrastructure Plan. I think it is a considerably larger investment than you have outlined. I am happy to give you the full detail of the New South Wales program.
Senator CAMERON: As I read it, you have Bucketts Way, the Gilmore Safety Package, Jane Street Expansion, Jensen Road at Wadalba, Kennedy Drive at Tweed Heads, Langford Drive and Woy Woy Road intersection, the Moree Bypass, Narellan Road, the Ridgeway, Gosford, Riverside Drive, Shoalhaven River Bridge planning, Tenterfield Heavy Vehicle bypass, and Werrington Arterial. Those are the ones that I can see as new projects and I add them up to about $159 million.
Ms O'Connell : There are a few significant omissions there, such as the Western Sydney Infrastructure Plan.
Senator CAMERON: Where?
Ms O'Connell : On the front page of the media statement, Western Sydney Infrastructure Plan, $2.9 billion.
Senator CAMERON: But that is part of the announcement for Badgerys Creek Airport, is it not?
Ms O'Connell : That is right. The road is necessary for that.
Senator CAMERON: There is still a lot of controversy over whether putting that road infrastructure in is more important than getting rail links to that airport. Are you aware of that discussion as well?
Mr Mrdak : Certainly. I think it is not just supporting the western Sydney airport proposal. It is also quite a significant upgrade to support the southwest growth centre in that part of Sydney. Those road projects have also been selected as a way to ensure that that southwest growth centre, which is the next major land release in that part of Sydney, will also be supported by infrastructure before it takes place. I will get Mr Jagger to give you the final figure, but our calculation is that by state New South Wales has increased funding of about $5.9 billion over the—
Senator CAMERON: In new projects?
Mr Mrdak : In new projects.
Senator CAMERON: Does that include the $2 billion loan and the $1.5 billion to WestConnex?
Mr Mrdak : It includes the budget treatment of the loan.
Senator CAMERON: The budget treatment?
Mr Mrdak : Of the loan.
Senator CAMERON: What do you mean the 'budget treatment'?
Mr Mrdak : The way in which the loan is treated you basically have to account for the cost of that borrowing to the government, recognising that at some point in the future the intention is that loan will be repaid. Based on that treatment, the accounting treatment of that loan, we anticipate—and I will just check the figure—around $5.9 billion is the additional Commonwealth spend in New South Wales.
Senator CAMERON: You can come back to me on that; I do not have a lot of time. So, you do concede that WestConnex was a proposal that the Labor government indicated it would fund subject to getting it into the CBD and Port Botany?
Mr Mrdak : Certainly the former government did support the stage 1 of the WestConnex on that basis. That is correct. The government has moved further to accelerate stage 2.
Senator CAMERON: Do you agree with the statement that Sydney, for instance, should fill the gaps between the CBD and the M4 at Strathfield? Should we do that?
Mr Mrdak : One of the areas for the design of the WestConnex stage 1 is to actually improve access to the CBD from the M4. The design of the M4 extension will actually improve that traffic flow.
Senator CAMERON: Where does that come in from, Haberfield?
Mr Mrdak : I would have to get the map in front of me. Mr Foulds may wish to comment. There are a number of entry points into the CBD coming off the WestConnex stage 1.
Mr Jaggers : City West Link.
Senator CAMERON: That is through Dobroyd Parade, City West Link, Dobroyd Parade, City West Link, onto the Western Distributor?
Mr Foulds : It is off City West Link and through that to the CBD precinct.
Senator CAMERON: Have you ever travelled that road recently?
Mr Foulds : Yes, I have.
Senator CAMERON: It is absolutely chock-a-block during peak times. It is at capacity, is it not?
Mr Foulds : The advice from RMS and the modelling associated with this project is that the overall scheme when applied will actually reduce that congestion.
Senator CAMERON: Chair, I do not know how many meetings are going on here, but it is a bit tough.
CHAIR: All right.
Mr Foulds : That is what the project team is aiming to deliver in New South Wales.
Senator CAMERON: So, what are they proposing to deliver down Dobroyd Parade, City West Link and onto the Western Distributor? A miracle? It is not going to work, is it?
Mr Foulds : The advice is that it will significantly reduce the congestion in that area whilst still allowing access to the CBD precinct. Once the whole scheme is in place it will be a 33-kilometre journey, reducing traffic lights, saving—
Senator CAMERON: But stage 1 takes you to Haberfield.
Mr Foulds : The whole of stage 1 takes you through to City West Link.
Senator CAMERON: Through to City West Link?
Mr Foulds : Yes.
Senator CAMERON: Is that state government advice?
Mr Foulds : This is the WestConnex delivery.
Senator CAMERON: Is this the cost-benefit analysis that has been done?
Mr Foulds : I have the cost-benefit analysis for the WestConnex project
Mr Mrdak : I do not think it has been done for that project yet.
Senator CAMERON: But traffic modelling is not cost-benefit analysis. Mr Mrdak, you would know that full well, better than anybody.
Mr Mrdak : I do—
Mr Jaggers : The WestConnex business case outlines the benefits, including the reduced travel times.
Senator CAMERON: A business case is not a cost-benefit analysis.
Mr Jaggers : No; it includes a cost-benefit analysis.
Senator CAMERON: Does it include it?
Mr Foulds : The benefit-cost ratio is 2.55, and a seven per cent discount rate, including wider economic benefits of the entire scheme.
Senator CAMERON: Is that cost-benefit analysis available?
Ms O'Connell : Of all three stages—
Senator CAMERON: Is that cost-benefit analysis available?
Mr Foulds : Most of the business case was provided in the New South Wales Legislative Council, and many parts can only be seen by members of that Legislative Council as an order of that council, but a number of them are able to be seen by the public.
Senator CAMERON: But this parliament is substantially funding it. Are you saying that we cannot see the analysis that has been done if we are funding it? Is that what you are saying; that we cannot see that full business case, including the cost-benefit analysis? Is that what you are telling us?
Mr Jaggers : I think what we are saying is that the business case is owned by the New South Wales government and they have made provision for the release of many parts of that, and other parts to be viewed by the Legislative Council.
Senator CAMERON: So, what does that business case say about stage 3, that is M4 South, from Haberfield to St Peters? That is not in the document that I have seen, Appendix A on the infrastructure construction schedule. The planning period is not even finished in 2017 and beyond. What does that mean? When will the planning stage for Haberfield to St Peters be finished?
Mr Foulds : The nature of the project is that the M4 widening section is able to proceed more quickly than stage 1B, which will take you through to City West Link.
Senator CAMERON: That is not what I am asking you. If you would just answer my question. When will the Haberfield to St Peters planning period stop and construction commence according to the business plan?
Mr Foulds : Stage 3 is expected to commence around 2018 and be delivered by 2023.
Senator CAMERON: Can you table that business plan and cost-benefit analysis?
Mr Foulds : That is in the business case executive summary, which was publicly released by the Australian and New South Wales governments in September last year.
Senator CAMERON: I am talking about the business plan in making the decisions to build this thing.
Mr Mrdak : We will take on notice what we can provide to the committee.
Senator CAMERON: The quote that I gave you earlier came from the current Prime Minister’s book Battlelines. He also said there should be a link through to Port Botany. Why is there not a proper link in WestConnex through to the CBD and a proper link to Port Botany? Why are we spending billions of dollars when we are not finishing it? Mr Albanese says we are building a road basically to a traffic jam.
Mr Mrdak : The New South Wales government's position is that the WestConnex stage 2 will alleviate a lot of the traffic pressure from the current M5 tunnel, which will obviate some of those current pressures of access to the port. Their traffic modelling would indicate that that link up into the inner west will provide essentially the capacity reliever for growth in that tunnel traffic.
Senator CAMERON: Given my practical experience—and I live in the Blue Mountains and I travel down Dobroyd Parade, City Link, the Western Distributor on a regular basis—those roads are congested. They are at full capacity during peak periods. Is there anyone here saying that that is not the case other than the state government? Given your analysis of what the state government is saying, are you saying we can afford to put more traffic onto that distributor?
Mr Mrdak : I do not think anyone is disputing your analysis of the current level of congestion and how that congestion will grow. The argument that Mr Foulds was putting was in the absence of the WestConnex that congestion will worsen. WestConnex is designed to provide ultimate entry and exit points, which will relieve some of that pressure on that road you have described.
Senator CAMERON: But if you are going to get the full-blown 33 kilometres some time in the future and then you end up feeding into that St Peters area—which again from my knowledge is an absolute parking station in peak periods—why would you not be getting feedback onto that WestConnex through the blockages and at St Peters? Why are we stopping at St Peters?
Mr Mrdak : Stage 2 will go into that area, but stage 3 which is programmed, as Mr Foulds has indicated, is designed to enable that traffic flow.
Senator CAMERON: But it does not go to Port Botany.
Mr Mrdak : No, it does not.
Senator CAMERON: We talking about the productive performance of New South Wales and the nation here. If we are going to spend billions of dollars on a road, and we are going to go within about four kilometres of Port Botany why are we not completing the four kilometres to allow traffic to flow to Port Botany?
Mr Mrdak : Certainly at this stage—and in the future there may well be an expansion of the M5 tunnel.
Senator CAMERON: And pigs might fly!
Mr Mrdak : It may but the reality is that at some point in the future that blockage also has to be addressed. The New South Wales government has prioritised WestConnex as the most immediate priority, but it does recognise that at some point in the future there will need to be a replication of the M5 tunnel.
Senator CAMERON: We are talking about a 10-year plan here. It is a 10-year-plus plan where billions of dollars are being spent and you cannot access the CBD without going through a road that is absolutely at capacity and you cannot access the port. What is the point of this? Where does this stand in terms of your priority list? Is this early stage, real potential, threshold or ready to proceed?
Mr Mrdak : I will just check Infrastructure Australia's list for you.
CHAIR: This answer will be the end. You are two minutes over.
Senator CAMERON: I have many more questions on notice.
CHAIR: I realise that. We have 10 people that want half an hour each.
Senator CAMERON: I am not surprised, because it is such a bloody mess.
Mr Mrdak : I am advised that it sits at early stage on Infrastructure Australia's list.
Senator CAMERON: So this is early stage.
CHAIR: Thank you very much. I will move to Senator O'Sullivan.
Senator CAMERON: When are we—
Mr Mrdak : We made that program from this year.
Senator CAMERON: Chair, can I just finish this off? This is my last point.
Senator CONROY: We are stopping New South Wales and moving to Queensland.
Senator CAMERON: I just need to get this last question in. Why are we spending money now if it is at the early stage and it has not gone through the ready to proceed process? Purely politics?
Mr Mrdak : The Australian government has made a commitment and early work, such as the M4 widening, will be under way very quickly to alleviate those capacity—
CHAIR: Thank you for that. Now I need some guidance from the committee. We have about three hours of questions. We have three-quarters of an hour to go. I need some guidance from the committee. Do you want to roll this section into Western Sydney or do you want to roll it into the Australian Rail Track Corporation, Transport Bureau or ATSB? What do you want to do? If I give you five minutes each, that is all you will get.
Senator CONROY: We have two days. I will defer to Glen and yourself.
Senator STERLE: As past experiences went, Chair, when there was a new budget out I used to allow it just to keep rolling and rolling.
CHAIR: So by agreement of the committee will we take an hour off the ATSB?
Senator CONROY: We will make up time.
CHAIR: No. That is by agreement. Will we take an hour off Civil Aviation, Airservices and the ATSB and add it on to this?
Senator CONROY: One hour only or an hour off each?
Senator STERLE: Chair, I will consult my colleagues and we will come back to you. Just keeping rolling along.
Senator CONROY: Everyone will be relaxed if everyone's questions are all going to get asked. It is only if you say that there is an artificial timeline that we have got to stay within.
CHAIR: There is, but we can adjust it.
Senator CONROY: Yes, we will manage it.
Senator STERLE: We will work together.
CHAIR: Thank you.
Senator O'SULLIVAN: It is my understanding that the registration of interest process for the Toowoomba Second Range Crossing closed on Friday, 7 March of this year. Can you advise how many submissions were received?
Mr Mrdak : I will just check whether we have that information with us.
Senator O'SULLIVAN: While that is happening, I might just proceed on because the questions are interlinked. I believe that after the registration of interest process was closed—and we are assuming that you will confirm that it is closed—the registration process would move to a formal expression of interest stage. Can you provide an update on when the expressions of interest will be released, and if there has been a delay in that process can you give any particular reason for the delay?
Mr Mrdak : I will answer the first question in terms of the registration of interest.
Mr Jaggers : The registration of interest process was run by the Queensland government and not the Australian government. They received about 60. I would have to check the exact detail.
Mr Mrdak : In relation to your second question, the expression of interest process has been held up by the need to settle the funding arrangements between the Australian and Queensland governments. That has now largely been settled by the additional allocation by the Australian government in the budget. We anticipate the expression of interest documents will go out in the next week or so to interested parties, subject to the two governments settling the financial terms.
Senator O'SULLIVAN: What is the typical period for the expression of interest?
Mr Mrdak : I think it is of the order of—
Mr Jaggers : We would expect a contract to be awarded by early 2015.
Senator O'SULLIVAN: 2015?
Mr Jaggers : Yes.
Senator O'SULLIVAN: There have been dates presented that the construction is due to begin by mid-2015. Do you think that is within the range of possibilities still?
Mr Mrdak : It still remains our target date.
Senator O'SULLIVAN: You referred to the negotiations between the Commonwealth and the Queensland state government with respect to the funding. Are you in a position to say that has now been resolved completely or are there still some outstanding issues?
Mr Mrdak : There is a small number of outstanding issues to be settled, but essentially the Commonwealth government has made provision in this budget for funding up to $1.2 billion, up to 80 per cent of the identified project cost. That has removed one of the issues that was under discussion with Queensland.
Senator O'SULLIVAN: So, without necessarily interrogating the remaining issues, are they small by nature? You would expect that they will resolve themselves?
Mr Mrdak : We anticipate their being resolved this week. I think we are very close to a resolution. They revolve around some of the issues of how the private financing will operate.
Senator O'SULLIVAN: Thank you for that. Can the committee be provided with an update on the funding and construction commitments on the Bruce Highway?
Mr Mrdak : Certainly.
Senator McLUCAS: Has Infrastructure Australia seen the business case for the Toowoomba Second Range Crossing? Not the final?
Mr Fitzgerald : I do not believe it is the final.
Mr Roe : That is correct. We have seen an early submission of the business case, but we have not received the most recent version.
Senator McLUCAS: When do you expect to receive that?
Mr Fitzgerald : We are in discussions with the Queensland government at the moment. In the near future I think we should be—
Senator McLUCAS: So, we are allocating money but we have not received a business case yet?
CHAIR: Can I just bring a bit of discipline to the meeting. I am trying to organise time. Allegedly, according to Mr Conroy, we are going to be here at 3 o'clock tomorrow, but I am going to propose to give everyone 10 minutes just to give everyone a shot and then we will keep going after that with your further shots to make sure we have a reasonable time to deal with ATSB, Civil Aviation and Airservices, within reason.
Senator O'SULLIVAN: Thank you. Back to the question. Can the committee be provided with an update on the funding and construction commitments on the Bruce Highway?
Mr Mrdak : Certainly. The Australian government has, in this budget, provided to meet its commitment of $6.7 billion over the next 10 years on the Bruce Highway. I will just get my officers to give you an update on which projects are now under way and which will come into effect very shortly.
Mr Jaggers : There are 45 projects plus funding to complete 16 ongoing projects in the next period on the Bruce Highway. Those projects include Cooroy to Curra (Section C); the Mackay Ring Road Stage 1 construction; Sandy Gully Bridge; the Managed Motorways Gateway Motorway to Caboolture project; Yellow Gin Creek upgrade; the Cairns Southern Access Corridor; Caloundra Road to Sunshine Motorway Stage 1 construction; Caloundra Road to Sunshine Motorway Stage 2 project. Also, in this period, we have the Cattle and Frances Creek upgrade projects; the Pine Rivers to Caloundra Interchange Planning projects; the Mackay Northern Access upgrade; the Haughton River and Pink Lily Lagoon upgrade project.
Senator O'SULLIVAN: Are the particulars available publically in relation to those projects?
Mr Jaggers : I think these projects are listed in the Fixing the Bruce Plan that was released in 2013. So, there are some details in the Fixing the Bruce Plan.
Senator O'SULLIVAN: In the interests of moving forward with time, I will chase them independently.
Mr Jaggers : Thank you.
Senator O'SULLIVAN: Can the secretary update the committee on what measures have been undertaken on the former government's Regional Australia Development Fund and what communications have been provided to the proponents of those projects which are not proceeding?
Mr Mrdak : The Australian government decided last year to proceed with the projects that were being funded under the former government's RDAF rounds 2, 3 and 4, which were committed to but not yet contracted. The Australian government advised proponents that it would not be proceeding with rounds 5 and 5B of RDAF. All of those proponents were advised last year of the government's intention not to proceed with those. We are currently completing work with those proponents on rounds 2, 3 and 4 that were not contracted. I will ask Mr McCormick to give you an update on where we are at on those rounds.
Mr McCormick : As the secretary commented, the uncontracted projects from RDAF rounds 2, 3 and 4 and the identified community infrastructure grants projects are now being funded under the community development grants program, and as their value for money assessments are undertaken they are being contracted.
Senator O'SULLIVAN: So, where those arrangements have to do with the community development grants have the proponents of the new program been notified of the grant program details?
Mr McCormick : Yes.
Senator O'SULLIVAN: Can the committee be updated on what new funding has been committed to infrastructure investment as part of the 2014-15 federal budget?
Mr Mrdak : Certainly. This budget provides an increase of $11.6 billion over and above what was set out in MYEFO last year for infrastructure investment. That comprises two elements, a $6.6 billion growth package which forms part of the government's economic package, and some $5 billion as an asset recycling incentive program to encourage state governments to invest the proceeds of asset sales or leases into new infrastructure.
Senator O'SULLIVAN: In particular, with the new funding contained in that budget what programs will benefit regional and rural communities?
Mr Mrdak : There are a number of programs and projects. Some of the projects are being funded under growth. Firstly, there is a $200 million addition to the Black Spot Program. There is a $350 million addition in the year 2015-16 to Roads to Recovery, and then there is a $228 million commitment to the National Highway upgrade program, and then there are packages such as a package for the Northern Territory of $77 million, as well as a commitment of $585 million to the Toowoomba Second Range Crossing. Those, in particular, are in regional Australia.
Senator O'SULLIVAN: Thank you.
Senator URQUHART: Are there any new national building projects announced for Tasmania in the 2014-15 budget?
Mr Mrdak : Certainly.
Ms O'Connell : Some of the Tasmanian projects announced in the budget: continuing on the Midland Highway upgrade; the freight rail revitalisation, and the Brooker Highway commitment. There is also a list of other significant key projects that are part of it: the Huon Highway; main north-south rail line capacity improvements; rail capacity improvements in Rhyndaston; the Tasman Highway; northeast freight roads; upgrade of Port Sorell Road; Westbury Road traffic management in Launceston. That is a selection.
Senator URQUHART: Which of those projects was not funded in the 2013-14 budget?
Mr Jaggers : The additional funding in Tasmania includes $500,000 for the Westbury Road traffic management in Launceston. Additional funding will be provided through the Bridges Renewal Program for Tasmania. We estimate that that would be in the order of around $6 million. The arrangements for that program are yet to be finalised.
Tasmania will also receive extra black spot funding of about $5.5 million and will receive additional Roads to Recovery funding in the state of Tasmania of $11.4 million.
Senator URQUHART: Can you indicate the Commonwealth's funding profile for Midland Highway by project and how many projects are funded from the $400 million?
Mr Jaggers : We might be able to give you an indicative profile across the whole of the project, but we do not have a breakdown project by project yet, as Tasmania is still finalising its proposal to provide for the Commonwealth. I will just see if I can give you a breakdown. I think in 2013-14 it was $5 million; $25 million in 2014-15; $50 million in 2015-16; $50 million in 2016-17; $30 million in 2017-18; $40 million in 2018-19; and there will be additional funding to meet the $400 million commitment over the 10-year program.
Senator URQUHART: Sorry, how much was in 2014-15?
Mr Jaggers : In 2014-15 it was $25 million.
Senator URQUHART: So, the previous government announced a figure of $500 million for the Midland Highway. Can you confirm where the extra $100 million was in the budget and across the forward estimates?
Mr Jaggers : That is correct. There was a different amount in the budget at PEFO. I cannot tell you where that money is.
Senator URQUHART: Can you take that on notice?
Mr Jaggers : Certainly.
Senator URQUHART: Can you advise whether the nature of the Midland Highway project has changed from earlier plans because of that $100 million funding reduction?
Mr Mrdak : No, it has not changed. We were still awaiting a detailed program proposal from the Tasmanian government which set out how that expenditure on the upgrade of the Midland would be actually applied, so we had not progressed to a level of detail under the former government which would enable us to answer that question. Essentially the projects are yet to come forward from Tasmania.
Senator URQUHART: Is it fair to say then that the Tasmania state government is allocating the projects that get funded?
Mr Mrdak : They will identify their proposals for what are the priority projects for the expenditure of the funds over the forward estimates now that they have some details of what money is in the budget. We will await that to see where they prioritise that. We will then work with them as to whether we agree with that prioritisation of the projects and also the cost estimates involved.
Senator URQUHART: When will you have that?
Mr Mrdak : We are working with them at the moment. I do not know if—
Mr Jaggers : There is a process that Tasmania will be going through with Infrastructure Tasmania, and then providing details of those projects through to the department. I would expect that might be a month or two away.
Senator URQUHART: A month or two?
Mr Jaggers : I would expect a few months.
Mr Foulds : It will be a month or two for the first projects, and then there will be others over the course of that 10 years. Some of them will have several years lead time and others will be closer to being able to start.
Senator URQUHART: Has the Tasmanian government requested that the original commitment of $500 million be met?
Mr Mrdak : Not to my knowledge. I think the Tasmanian government recognises the commitment that the Australian government has made of $400 million over the program.
Senator URQUHART: What is the commitment from the Tasmanian government regarding the Midland Highway project?
Mr Jaggers : I have not got a firm number from Tasmania.
Senator URQUHART: Can you take that on notice?
Mr Jaggers : Yes, I will.
Senator URQUHART: Obviously, I guess, you have not got the final agreement with the Tasmanian government yet?
Mr Mrdak : No. The minister provided them with the Commonwealth's budget and program on budget night. We are awaiting a response to that from the Tasmanian government.
Senator URQUHART: Obviously you would not have any information on how many jobs would be created during the construction?
Mr Mrdak : Not in relation to the Midland Highway. Where we have had projects in the past we had that information, but we do not have a program proposal from them as yet.
Senator URQUHART: I just want to talk about the Tasmanian freight equalisation scheme. What plans does the government have for the Bass Strait subsidised schemes?
Mr Mrdak : The government has provided funding at its current level over the forward estimates for the Tasmanian freight equalisation scheme. At this stage, the government is not contemplating changes to the scheme, although it is reviewing the final report of the productivity commission into freight and Tasmania's transport needs. The government will, in light of its response to that, make some decisions on the future of the programs.
Senator URQUHART: When will that response come, given that it has had the report since 7 March?
Mr Mrdak : I think the government is looking to make a response shortly, I cannot give you a timeframe at this stage, but the government is very conscious of the statutory timeframes involved in responding to Productivity Commission reviews.
Senator URQUHART: Can you tell me why the government ceased the Tasmanian wheat freight scheme?
Mr Mrdak : This is a scheme that has not had any take-up for many years. My advice is that the last time that program was accessed was around 2009. Most wheat travels in containerised form these days, utilising the TFES rather than the wheat freight scheme. Hence there was no call on the funds. The government has taken the decision to terminate the program.
Senator URQUHART: What has the government done with that $4.1 million?
Mr Mrdak : That has been returned to budget.
Senator URQUHART: Why was it not added to the freight equalisation scheme or the Bass Strait Passenger Vehicle Equalisation scheme?
Mr Mrdak : Both of those other schemes are also operating well below their budget allocation. There is no pressure on those schemes at the moment to increase the amount of funding required for them.
Senator URQUHART: Can you confirm a start date for the Hobart Airport extension?
Mr Mrdak : I cannot confirm a start date at this stage. The Hobart Airport is undertaking extensive design reviews. It is also preparing its new master plan. I think it will probably be likely that we will not have a confirmed start date on that project until early next year. I cannot give you a start date on construction at this stage.
Senator URQUHART: That corporation is owned by a consortium of investors, the majority shareholder being Macquarie Bank. Was there a process in the department to support this funding and is the due diligence process complete?
Mr Mrdak : The commitment is one that the government made as an election commitment. We will assess the proposal once it comes forward, both in the airport master plan and also through a major development proposal. But we have not started that assessment. We have had initial discussions with the airport operators, but we have not received a detailed proposal as yet.
Senator URQUHART: So, when that proposal comes through, will that determine whether or not the funding continues?
Mr Mrdak : The government has made the funding conditional on a number of things occurring, one of which is the airport effectively securing an airline customer or at least some commitment such as the extended runway supporting Antarctic base operations. They will be the conditions we will be looking at. They need to come back with those so the government can finalise its investment in the project.
CHAIR: Last question.
Senator URQUHART: I have a lot more, but I will put them on notice. The funding from government is usually fifty-fifty, so why has the private investor only been asked to put in five per cent of that cost?
Mr Mrdak : Again, it is a commitment that the government made in the last year, in the lead-up to the election, and they took the decision to set that out in that way.
CHAIR: I will now move to Senator Whish-Wilson, and then I will move to this side of the table and you can argue it out amongst yourselves.
Senator WHISH-WILSON: Last year I asked a couple of times whether the Tasmanian government had put forward any formal proposals for a Hobart light rail project, and I think the words were that it was in the mix. This is going back mid last year. Could you give us a status update at all on that, if any, if ever it was considered as an infrastructure project?
Mr Mrdak : My understanding is that we have been involved in a scoping study for that work, but I do not think it has come forward as an investment proposal. I will just ask Mr Wood, who heads up our rail area, to answer that for you.
Mr Wood : There was correspondence between the previous minister with the Tasmanian government, but there was never a formal proposal. It was in the nature of a letter. A detailed proposal was not provided to the Australian government. I understand there has been work done in Tasmania on that project, but it has not been provided formally to us.
Senator WHISH-WILSON: So the process is that they work it up to a certain stage then put it to you? Is that what a scoping study would be? Would that be done at a state level or would you take on—
Mr Wood : That is really open to the Tasmanian government. If they wish to bring that proposal to the Australian government or to Infrastructure Australia they would bring it forward in that way.
Senator WHISH-WILSON: So, it did not go beyond that stage then?
Mr Wood : No. The Tasmanian government sought a small amount of funding for a scoping study, but that was not—
Senator WHISH-WILSON: Can you refresh my memory on how much that was?
Mr Wood : I think it was in the order of $200,000.
Senator WHISH-WILSON: Roughly when?
Mr Wood : It was $190,000, sorry.
Senator WHISH-WILSON: Close enough. When was that? When did they actually request that?
Mr Wood : I do not have the dates with me. I will just check that. There was a request shortly before the federal election.
Senator WHISH-WILSON: Would they have received that money for that study?
Mr Wood : No, they did not.
Senator WHISH-WILSON: Okay.
Mr Wood : No. It was a specific decision in the midyear economic uptake last year. It was one of a number of projects where funding did not proceed.
Senator WHISH-WILSON: I have a question in relation to the Bass Strait equalisation schemes, the two together, freight and passenger. In the forward estimates there is a reduction of $28.9 million. That breaks down to $15.6 million for the passenger vehicle equalisation scheme and $13.3 million for the freight. The response we got from the government was that you have been cautious with your assumptions and you have lowered your forecast for freight. I just wanted to ask who gave you that advice and what that was based on.
Mr Mrdak : It reflects the take-up of the program. They are both demand driven programs. So, what is set out in the forward estimates is essentially a removal of indexation that would otherwise have been applied to the growth, as has happened with a number of government programs. At this stage, as I answered in my earlier question, the take-up under both programs is below the notional budget allocation.
Senator WHISH-WILSON: Yes, I heard you say that.
Mr Mrdak : At this stage we do not believe we will approach the level of activity that will require an additional budget allocation. But as a budget measure the government has decided to not allocate the indexation that would otherwise apply to those notional amounts.
Senator WHISH-WILSON: Is that why they have tapered off?
Mr Mrdak : That is right. They have been set at the current nominal level. I think for Tasmania freight equalisation it is 114.
Mr Mrdak : Whereas the actual expenditure last full year was 111.
Senator WHISH-WILSON: Okay. So, there was not a change of your assumptions on expected volumes then?
Mr Mrdak : No, the volumes have been flat and declining in some areas. Bass Strait ferry, for instance, passenger numbers have tended to grow very slowly or have been flat, so our assumptions have continued to remain the same, but the government has sought to cap those programs at this point. But recognising they are both demand driven. So, as demand rises the government could come back and make further budget allocations.
Senator WHISH-WILSON: Was I correct when I heard you earlier saying you are reviewing the Productivity Commission recommendations prior to any changes or any—
Mr Mrdak : That is right. The government currently is considering the Productivity Commission final report on Tasmanian transport—
Senator WHISH-WILSON: That report recommending scrapping the scheme; is that correct?
Mr Mrdak : The draft report certainly recommended making some changes to the way in which the scheme support is basically funded and allocated. Those recommendations have changed a little but are essentially the same. Not scrapping the scheme, but certainly looking to change the way in which the payments are made. The government is currently considering that report.
Ms O'Connell : Some significant simplification of the scheme.
Senator WHISH-WILSON: But no structural changes in terms of looking at other schemes or alternatives?
Mr Mrdak : The government, as I said, is looking at the report, but at this stage is maintaining its current commitment to the programs as they are as set out in the budget.
Senator WHISH-WILSON: Could I just ask a couple of quick questions around the Tasmanian jobs and growth packages. Could you give us an update on how many projects have been approved and how many are currently under value for money assessments?
Mr Mrdak : Certainly. Mr McCormick, again, will give you that. A number have now been contracted and most have now provided the information we require for our assessments. A couple of projects we are still awaiting information on. I will just get Mr McCormick to give you those details.
Mr McCormick : Of the 33 projects, we have nine contracted, five contracts being negotiated, that is, the assessments have passed a value for money assessment. We have 11 projects under assessment and we are waiting for project information from eight projects.
Senator WHISH-WILSON: From one project?
Mr McCormick : From eight projects.
Senator WHISH-WILSON: Okay. Have any projects not got through the value for money assessment or been rejected by the government?
Mr McCormick : Not to date.
Senator WHISH-WILSON: If they were, would that information be released to the public or would it be confidential?
Mr McCormick : As the projects are contracted, we are required to put those up on the grants website as projects that are funded. So, one, they would not make it. There is a list of all projects under the Tasmanian jobs and growth plan on the department's website now.
Senator WHISH-WILSON: I have a list of them here, but I was just wondering if someone failed, for example, to get the funding, would it be transparent around why that may have occurred? I also understand you work with proponents to try and sort these things out.
Mr McCormick : We do work with proponents as closely as possible to collect the information or to enable them to provide information to demonstrate that they are value for money.
Senator WHISH-WILSON: Okay.
Mr McCormick : In the rare circumstances where it was not the case, we would be required to advise the minister for finance that the project had not been recommended and if the government proceeded to fund it, it would have to be notified.
Senator WHISH-WILSON: Is the Australian Government Innovation and Investment Fund just a name change from the Tasmanian Innovation and Investment Fund or is it something different?
Ms O'Connell : I do not think that—
Mr Mrdak : I am sorry, I think that is with the Industry portfolio. We do not think any of the officers here have much knowledge of that program.
Senator WHISH-WILSON: Can I ask then, in relation to the Tasmanian jobs and growth package again, whether any new projects have been added at all or whether it is just the original projects from the previous Labor government?
Mr Mrdak : It is just the original projects that were committed before the last federal election.
Senator WHISH-WILSON: Okay. That is it for me.
CHAIR: Thank you. I am now going to move to Senator Edwards, and then you have the floor.
Senator EDWARDS: If we can move into South Australian mode. We will have to speed up a little bit, I suspect. It was not meant at Tasmania; it was meant at everybody else.
What is the total Australian government commitment to infrastructure projects in South Australia, and specifically, if I can firstly take you to 2013-14 and 2018-19.
Mr Jaggers : Are you asking for a total of Australian government investment for South Australian infrastructure?
Senator EDWARDS: Yes, so that period.
Mr Jaggers : Oh, sorry, for the period.
Senator EDWARDS: Between 2013-14 and 2018-19.
Mr Jaggers : So, $1,990,000,000.
Senator EDWARDS: So, nearly $2 billion?
Mr Jaggers : Yes.
Senator EDWARDS: And 2019-20 and beyond?
Mr Jaggers : I do not think there is any commitment outside of the six-year program period.
Senator EDWARDS: There is none outside?
Mr Jaggers : No.
Senator EDWARDS: How does that earlier figure compare with the 2013-14 budget?
Mr Jaggers : I can give you a comparison between the pre-election economic fiscal outlook numbers and the current program. So, for that period between 2013-14 and 2018-19 there was $435.3 million additional in this budget.
Senator EDWARDS: So effectively there was—
Mr Jaggers : 1.55—
Senator EDWARDS: And there is an additional $435.3 million allocated in this budget?
Mr Jaggers : Yes.
Senator EDWARDS: How much of that is allocated to the Darlington project?
Mr Jaggers : One moment.
Senator EDWARDS: While you are there, I will also be asking you how much is allocated to the Torrens to Torrens project?
Mr Jaggers : The Australian government has allocated $496 million to the Darlington project and $448 million to the Torrens to Torrens project.
Senator EDWARDS: You have given me the Australian government's commitment. Do you have the state government commitment for both of those projects?
Mr Jaggers : Yes, I understand the South Australian government commitment to Darlington is $124 million and to the Torrens to Torrens project is $448 million.
Senator EDWARDS: No, $448 million was the Commonwealth one.
Mr Jaggers : It is also the—
Senator EDWARDS: Oh, it is matched. Fifty-fifty.
Ms O'Connell : Matched funding for Torrens to Torrens.
Senator EDWARDS: I am just trying to tell you how neglected it was, I suspect. So, when do you expect the Darlington project to being construction?
Mr Jaggers : We are expecting construction for both to start in 2015.
Senator EDWARDS: So late or early 2015?
Mr Jaggers : It is still to be determined, but I would say mid-2015.
Senator EDWARDS: If you were to start in mid-2015 when would you finish?
Mr Jaggers : Complete by 2018.
Senator EDWARDS: Three years?
Mr Jaggers : Yes.
Senator EDWARDS: Is the Torrens project the same time frame?
Mr Jaggers : The projects will be running to very similar time frames. We will be expecting Torrens to Torrens to start a little bit earlier in 2015 but to complete also in 2018.
Senator EDWARDS: How much funding is being provided to the South Australian state government for planning works for the Darlington project and the Torrens project respectively?
Mr Pittar : The Australian government provided $8.5 million to the South Australian government in December 2013 for the Darlington project and associated works between Anzac Highway and the Southern Expressway to progress those planning works. There is an additional $8 million that has been provided for associated and additional planning works along that corridor as well.
Senator EDWARDS: Is that for both projects or for just Darlington?
Mr Pittar : That additional funding is primarily for that south road corridor. It could be for Torrens to Torrens or Darlington. It is there.
Senator EDWARDS: So, $17 million has been provided to the state government in total or $8.5 million has and there is scheduled to be another $8.5 million?
Mr Pittar : Another eight, correct.
Senator EDWARDS: When?
Mr Pittar : That additional $8 million is—bear with me.
Senator EDWARDS: While you are looking, will there be strict parameters for how that money is to be spent?
Mr Jaggers : The first $8.5 million that Mr Pittar talked about was for the Darlington project itself, for the planning to get that ready. The additional $8 million is to fulfil the Prime Minister's commitment to have the full north-south corridor constructed by the end of the decade, to do planning work on the other remaining elements of it. That money is over three years starting in 2014-15.
Mr Pittar : That is profiled so that there is $2.3 million in 2014-15, $3.6 million in 2015-16, and $2.1 million in 2016-17.
Senator EDWARDS: Can you give me a very quick precis of what planning works actually is?
Mr Pittar : That would be broad concept planning, broad concept design around things like alignment, the type of interchange work that might be undertaken and that sort of thing.
Senator EDWARDS: So, it generally does not relate to property acquisition?
Mr Pittar : No, generally not. Once you get into more detailed design and planning, that is when you would move into potentially property acquisition. We would envisage the 10-year corridor upgrade strategy—talking about how you would actually move to implement a 10-year upgrade strategy for the north-south corridor.
Senator EDWARDS: What other things might it generally include as well as property acquisition, rather than just the engineering of the whole plan?
Mr Pittar : The concept planning would be, for example, how you might sequence projects along the north-south corridor. It might be how big or how small you make particular projects. You would know better than I that the challenge in Adelaide with that north-south corridor is that there are not too many other alternatives. You would not want to make it one big construction zone, because you would run into problems with how you keep traffic moving along a corridor such as that whilst it is under construction. They are the sorts of issues that the high-level planning work would need to address.
Mr Jaggers : It might also include geotechnical work as well to ensure that the alignments and design options being developed are realistic.
Mr Pittar : Service relocation and things like that as well.
Senator EDWARDS: What do you commonly get confused that is not included in planning, this budget? Do people come to you with requests for money for this, but it actually does not fit the descriptor of funds for planning?
Mr Jaggers : We assess every idea and option as they come. We look behind what the word ‘planning’ means in particular cases before a recommendation might be made to government about whether to proceed or not. Planning, as we have just described, can mean many things. Once you move to the very detailed planning with design work and engineering work, obviously that becomes more expensive. You usually would not count the preconstruction work or the construction activities under that heading.
Senator EDWARDS: Can you provide on notice a list of all the planning works that the Australian government has contributed funding towards since 2007 for those major projects in South Australia?
Mr Jaggers : Certainly.
Senator EDWARDS: In that context. Thank you.
Senator CAMERON: I just wanted to move on to the Pacific Highway in New South Wales. What new projects on the Pacific Highway are funded under this budget that were not funded under the 2013 budget?
Mr Mrdak : Essentially the Pacific Highway program is continuing as per longstanding arrangements. The significant issue is the degree of Commonwealth funding vis-Ã -vis state funding as per the government's commitments.
Senator CAMERON: The answer surely then is that there are no new projects; is that correct?
Mr Mrdak : The program of works was set some time ago.
Senator CAMERON: So, there are no new projects; is that correct?
Mr Mrdak : The program is continuing as it has been.
Senator CAMERON: Are there any new projects?
Mr Mrdak : How do you mean ‘new projects’?
Senator CAMERON: Any new projects for the Pacific Highway?
Ms O'Connell : There is no agreement with New South Wales on the funding of projects.
Senator CAMERON: I am simply asking: are there new projects? Are there any new projects? Either there are or there are not. What is the answer?
Mr Mrdak : It is not as simple as that. The program was determined some years ago. It is now progressing and being implemented. The issue has been the degree of funding and agreement from New South Wales to proceed.
Senator CAMERON: Are there any additions to the program from the 2013 budget to this budget?
Mr Jaggers : In the six-year program between 2013-14 and 2018-19, if you were to compare the figures at PEFO with the current budget—
Senator CAMERON: I am simply asking: are there any additions to the program? Is there new work being done? Is it too hard to ask such a simple question?
Mr Mrdak : There is new work being done in the sense that New South Wales and the Australian governments have now reached a deal which has enabled the final what we call the priority 3 section to proceed, which is the work essentially south of Woolgoolga to Ballina.
Senator CAMERON: Did the Commonwealth have that funded in the 2013 budget?
Mr Mrdak : The Commonwealth had made a provisional allocation which had not been agreed by the state government at that stage.
Senator CAMERON: But the Commonwealth had made an allocation; is that correct?
Mr Mrdak : Had made an allocation, which New South Wales accepted.
Senator CAMERON: So, the simple answer to my question is that there are no new projects?
Mr Mrdak : The less than simple answer is that Woolgoolga to Ballina is—
Senator CAMERON: I do not want a less than simple answer. I want a simple answer.
Ms O'Connell : There was previously not an agreed project to do Woolgoolga to Ballina. The federal government had a view, not an agreed project.
Senator CAMERON: I am not asking about an agreement. I am asking whether there are projects that are in the 2014 budget that were not in the 2013 budget. Is that such a hard question?
Mr Mrdak : Yes, there is. Woolgoolga to Ballina is now underway. It previously was not.
Senator CAMERON: Underway, but was that catered for in the 2013 budget of the Commonwealth?
Mr Mrdak : The money that the Commonwealth had offered in the 2013 budget was not accepted by the state government so the project was—
Senator CAMERON: You are actually playing silly buggers here. This is a simple question. The overall project has not changed dramatically since the 2013 budget, has it?
Mr Mrdak : What I would say is that Woolgoolga to Ballina was not agreed pre PEFO. It is now agreed and proceeding.
Senator CAMERON: That is six kilometres. How much is that worth?
Mr Foulds : Woolgoolga to Ballina is 155 kilometres, and that 155 kilometres is broken up into 11 stages. That preconstruction work was—
Senator CAMERON: I do not want the details. You can laugh all you like.
Senator Johnston: He is just answering your question.
Senator CAMERON: He is not simply answering my question. I have been at this side of the table long enough to know exactly what he is doing.
Senator Johnston: Wouldn’t know.
Senator CAMERON: I would know. So, basically it is the same; 2013 all funded?
Mr Mrdak : No, that is not what he said.
Senator CAMERON: There is a little booklet that goes out titled Building Australia's Infrastructure and there are no new projects in the timeline at page 38, are there?
Mr Mrdak : As we have discussed, the priority 3 Woolgoolga to Ballina is proceeding.
Senator CAMERON: That is 155 kilometres?
Mr Mrdak : That is right.
Senator CAMERON: What is the total length?
Mr Foulds : Six hundred and sixty-seven for the entire project.
Senator CAMERON: There was money allocated but the state government would not agree?
Mr Mrdak : That is correct.
Senator CAMERON: So, there was money allocated by the 2013 budget; is that correct?
Mr Mrdak : That is right.
Senator CAMERON: Why are these projects not in the booklet Building Australia's Infrastructure? Is that a policy decision?
Mr Mrdak : Which projects?
Senator CAMERON: This is the 2014-15 booklet called Building Australia's Infrastructure.
Ms O'Connell : We have that.
Senator CAMERON: No new projects are listed in the timeline at page 38.
Ms O'Connell : That is not correct. There is the Toowoomba Second Range Crossing.
Mr Mrdak : There is a number of new initiatives listed on page 38.
Senator CAMERON: I am talking about the Pacific Highway.
Mr Mrdak : They are projects which fall within priority 3. Woolgoolga to Ballina is one of those.
Senator CAMERON: So there is nothing new in this that was not there in the 2013-14 booklet?
Mr Mrdak : These were always projects that were going to need to be done.
Senator CAMERON: Have there been any savings on the projects against project estimates?
Mr Mrdak : There have been some savings on particular sections, yes.
Mr Foulds : There is considerable work going on now, especially in the Woolgoolga to Ballina section, to actually reduce the estimated cost. That is using techniques such as where possible using existing laneway so that you do not have to duplicate both sides. You can use some existing pavement where you can. Potentially taking on a delivery partner who can better manage the construction of those 11 sections. If you do not do them sequentially, you might manage two or three together and you get a better procurement outcome. That work is still underway. It is an iterative process.
Senator CAMERON: Has there been an allocation of those savings elsewhere?
Mr Foulds : No.
Senator CAMERON: There has not been allocation of savings?
Mr Foulds : Not that I know of, for the Pacific Highway.
Senator CAMERON: So, you are saving money on the Pacific Highway?
Mr Foulds : For the Pacific Highway.
Senator CAMERON: You are making savings there. Have the savings been allocated anywhere? Where have the savings gone?
Mr Jaggers : The work that Mr Foulds indicated was happening was to look at how we get the best value for money for the project. We have not gone to market on all of those sections. The final price will not be known until the market has responded to New South Wales entirely on all elements of those projects. The savings are not able to be reallocated until that—
Senator CAMERON: Mr Foulds indicated there were savings. You have not got a tender so you are not sure if those savings will come in, are you?
Mr Jaggers : We are initiating a strategy for New South Wales to decrease the cost to get better value for money.
Senator CAMERON: Strategies are a bit different from actually delivering savings.
Mr Jaggers : Of course, we will know the outcome of those strategies once they are implemented.
Senator CAMERON: When will that be?
Mr Foulds : I think you would have a clearer picture towards the end of this year.
Senator CAMERON: So, then you will be able to tell us how much has been saved by the new strategy and where the savings will be?
Mr Foulds : One would hope. Maybe not all of it, but we would certainly have a clearer picture.
Mr Mrdak : The intention is that the government has a commitment to complete the duplication of the highway by midnight at the end of the decade. Any savings on projects would then be utilised to meet the commitment of their $5.7 billion to complete the duplication.
Ms O'Connell : As a first call.
Senator CAMERON: Can you indicate the annual profiling across the forward estimates for Sapphire to Woolgoolga?
Mr Jaggers : That project, as Mr Foulds has just indicated, is completing. The final allocation this financial year it is $124.51 million. That is the last instalment of a $683 million commitment.
Senator CAMERON: Can you provide me, across the forward estimates, the annual profiling for Tintenbar to Ewingsdale, Ballina to Woolgoolga, Sapphire to Woolgoolga, Frederickton to Eungai, Oxley Highway to Kempsey, Nambucca to Urunga, Warrell Creek to Nambucca Heads and Kundabung and Kempsey? Can that be provided?
Mr Jaggers : Would you like us to take that on notice?
Senator CAMERON: Yes.
Mr Mrdak : It is probably easier if we give it to you now.
Mr Jaggers : Tintenbar to Ewingsdale is, from 2014-15, 129 million; 2015-16, $87.55 million. That is it for that project.
Senator CAMERON: Ballina to Woolgoolga?
Mr Jaggers : It is $103.14 million in 2014-15; $173.43 million in 2015-16; $1,107.24 million in 2016-17; $851.36 million in 2017-18.
Senator Johnston: We can take this slowly.
Mr Jaggers : I will go back to Woolgoolga to Ballina. For 2016-17, I had $1.107 billion. In 2017-18 I have $851.36 million. In 2018-19 I have $1.073 billion for that project. I think you asked about Frederickton to Eungai.
Senator CAMERON: Yes.
Mr Jaggers : In 2014-15 it is $41 million; in 2015-16, $125 million; in 2016-17, $51.09 million. That is it for that project.
Senator CAMERON: Oxley Highway to Kempsey?
Mr Foulds : Oxley Highway is in two sections. Oxley Highway to Kundabung and then Kundabung to Kempsey.
Mr Jaggers : Oxley Highway to Kundabung—in 2013-14 it is $238.13 million. There is nothing in 2014-15. In 2015-16, $198.52 million, and in 2016-17, $201.67 million. The other part of that is Kundabung to Kempsey. There is $115 million in 2013-14. That is the only instalment on that project. What else did you ask for?
Senator CAMERON: Nambucca to Urunga?
Mr Jaggers : Nambucca to Urunga, in 2013-14 there is $353.25 million, and that is the last instalment of money for that project.
Senator CAMERON: Warrell Creek to Nambucca Heads?
Mr Foulds : Warrell Creek to Nambucca Heads in 2014-15, $39.36 million; 2015-16, $87 million; 2016-17, $200 million; and in 2017-18, $148.64 million.
Senator CAMERON: Kundabung and Kempsey?
Mr Foulds : Kundabung to Kempsey is $115 million in 2013-14. It is 50 per cent of a $230 million project.
Senator CAMERON: The government say they will have the Pacific Highway fully duplicated by the end of the decade. That is what has been put. Is that correct?
Mr Foulds : Yes.
Senator CAMERON: I will just come back to WestConnex. I had a quick look at your answer to question on notice number 114. This was last week that you gave this answer. It says that Infrastructure Australia has not received a detailed cost-benefit analysis on the WestConnex project. Has that changed from last week?
Mr Mrdak : I think there has been some advice from the New South Wales government that they will be submitting a full business case and report to Infrastructure Australia within the coming days. There has been, as you may be aware, a great deal of tension between the New South Wales government and the former Infrastructure Australia coordinator. They have now, in light of some governance changes that have been made at Infrastructure Australia, indicated that they will be providing all of the business case material to Infrastructure Australia. I understand there are discussions being scheduled—I may be corrected—in the next week or so on the business case and details of the analysis.
Senator CAMERON: It said that the New South Wales government states that WestConnex is a preliminary strategic BCR of greater than 1.5. Didn’t someone tell me 2.5 when I previously questioned? How come it has jumped from 1.5 to 2.5 without you doing a strategic analysis of the business case or the cost-benefit analysis?
Mr Mrdak : I will just check if we are comparing like with like. I think we were talking there about the whole WestConnex project, the whole corridor, with wider economic benefits vis-Ã -vis WestConnex stage 1. I will just check with my officers whether that is the case. We might be talking about two different projects.
Mr Jaggers : That may be right. We did quote a benefit-cost ratio of 2.55, which is discount of about seven per cent but includes wider economic benefits. That is a piece of work completed by New South Wales.
Senator CAMERON: Let us go back to the Dobroyd Parade, City West Link and the Western Distributor. For the life of me I cannot understand how putting more traffic into that link will improve productivity and improve times to the city. How does it work? Tell me how it works by putting more traffic on it. Where is the traffic coming from?
Mr Jaggers : Some of the benefits of the project that have been identified by New South Wales include that it will bypass up to 52 sets of traffic lights. It will remove 3,000 trucks a day from the Parramatta Road.
Senator CAMERON: Where are those trucks going? Onto Dobroyd Parade and City West Link?
Mr Jaggers : It will be putting them underground. Their destinations are not likely to be the CBD through the city link.
Senator CAMERON: So the trucks will then have to come down to the City Airport Link. That would be down into St Peters. Is that where the trucks would go?
Mr Foulds : I think that is the modelling that New South Wales is doing for the whole reference scheme, to provide access to the precincts around the port, precincts around the airport and CBD. So where you have the portal and the exit and entry points—not every truck is going to go from the M4 and into the city. Some are currently coming onto Georges Road and they will go—
Senator CAMERON: M7?
Mr Foulds : Potentially M7 or they will come down Georges Road and turn on to the M5, either to Liverpool or to the left.
Senator CAMERON: Given that it is about three kilometres from St Peters to Sydney and roughly four kilometres from St Peters to Port Botany, why would you not take the Prime Minister's previous advice that we should have a link there? Have you had a look at what the benefits of a link to the city and a link to Port Botany would be? Have you looked at that?
Mr Mrdak : In our discussions with New South Wales officials in the planning for WestConnex we have certainly been looking at that. I know they have as well. One of the design areas they are looking at in terms of stage 1B is actually the question that you have asked, how do they manage that traffic once the M4 expansion takes place? It is fair to say that there is work taking place.
Senator CAMERON: Would this be a fairly fundamental question? If this is a fundamental issue, which I believe it is—why are we funding this project, which is a good project if we can get it to Port Botany and into the city, without a proper analysis?
Mr Mrdak : I think the proper analysis has been and continues to be undertaken by New South Wales. That analysis, as I say, is—
Senator CAMERON: Either it has been or is continuing to be. It cannot be both. It either has been done or it is continuing to be done. Which one is it?
Mr Mrdak : The analysis has been done to a point and now the detailed design work that is taking place on M4—
Senator CAMERON: What does ‘to a point’ mean?
Mr Mrdak : The business case has been completed. As I said, that is what will be available.
Senator CAMERON: It includes a cost-benefit analysis?
Mr Mrdak : That is correct.
Senator CAMERON: Why would this still be considered an early stage?
Mr Mrdak : As I said, New South Wales is about to provide an updated business case and material to Infrastructure Australia for them to consider the project in light of updated information.
Senator CAMERON: The early stage said these initiatives address a nationally significant issue, a problem, but the identification of development of the right solution is at an early stage. That clicks with me. Surely the right solution is not putting more traffic through Wattle Street, Dobroyd Parade, the City West Link and the Western Distributor. How do you get from an early stage that is really a problem in some areas to start to fund this? Why would we be funding this without the proper analysis?
Mr Mrdak : As I said, things have progressed considerably since that early analysis by Infrastructure Australia. We will wait for Infrastructure Australia to complete its further analysis of the revised material and then we will be in a better position to have this conversation.
Senator CAMERON: But the money is being committed?
Mr Mrdak : It has.
Senator CAMERON: The money has been committed without a cost-benefit analysis being viewed by Infrastructure Australia. That is correct, is it not?
Mr Mrdak : Infrastructure Australia certainly saw some early analysis and they will get an update.
Senator CAMERON: I am not interested in early analysis. I am talking about a proper cost-benefit analysis and business case. You have not seen that, but the money is being spent.
Mr Mrdak : The government has committed to the project; you are absolutely right.
Senator CAMERON: So, the government has committed to the project. Did the government commit to the project on your advice?
Mr Mrdak : This was a commitment they made in opposition and it is one of their commitments that—
Senator CAMERON: So, it is a political commitment?
Mr Mrdak : It is a commitment that government has made in coming into office.
Senator CAMERON: So it is not a commitment that could have been made on proper analysis of cost- benefit?
Mr Mrdak : As you said earlier, there was a commitment by the former government to the project which had certain conditions on it. The government has come into office with a commitment which does not contain some of those conditions but still requires assessment by Infrastructure Australia.
Senator CAMERON: Is there a chance that this may not go ahead if Infrastructure Australia says this is a crock?
Mr Mrdak : That will be a matter for the government to consider in light of further advice.
Senator CAMERON: So, you have not given your advice yet? So the government is proceeding and made these announcements, yet the department and Infrastructure Australia has not provided the government with advice yet?
Mr Mrdak : Infrastructure Australia is yet to consider the finalised business case. As I said, there was a reluctance by the New South Wales government to provide material previously. That has been overcome and we anticipate that material will be available very shortly for Infrastructure Australia.
Senator CAMERON: Has there been any indication from the government that it will keep its pre-election commitment and that is that any major project would have a fully costed cost-benefit analysis?
Mr Mrdak : The government has been very clear that all projects over $100 million will be assessed and advice will be sought from Infrastructure Australia.
Senator STERLE: What happened in Perth?
Senator CAMERON: This project has not met the standard, has it?
Mr Mrdak : The assessment will be undertaken by Infrastructure Australia.
Senator CAMERON: The government has committed the money and you are saying that you are yet to do the assessment?
Mr Mrdak : No. What I am saying is that the assessment has been undertaken and that advice will be provided to Infrastructure Australia very shortly.
Senator CAMERON: So, you have done an assessment. I thought you just told me that the cost-benefit analysis was still being undertaken and would be provided?
Mr Mrdak : That is right. New South Wales will provide the full business case.
Senator CAMERON: How can you have done an analysis on that?
Mr Mrdak : I was talking about New South Wales. Their analysis has now been completed and that will be forwarded to Infrastructure Australia.
Senator CAMERON: So, there is still a potential that this project may not go ahead if it does not meet the cost-benefit analysis criteria?
Mr Mrdak : That will depend on the advice from Infrastructure Australia, but the government has a very strong commitment to the project.
Senator CAMERON: The government has a strong commitment to the project, whether it meets a cost-benefit analysis or not; is that what you are saying?
Mr Mrdak : It is a commitment of the government to proceed with this project.
Senator CAMERON: So, the government will proceed with this project even if it does not meet the criteria outlined on productivity, shorter run times and proper cost-benefit analysis?
Mr Mrdak : I do not think we have said anything at this stage which suggests that it will not deliver those productivity—
Senator CAMERON: I would suggest to you that putting more traffic onto Dobroyd Parade, more traffic onto the City West Link and more traffic into the Western Distributor does not make any sense. Are any of you from Sydney?
Mr Foulds : I have lived there.
Senator CAMERON: You are from Sydney?
Mr Foulds : I have lived there.
Senator CAMERON: You have lived there and recently travelled down Dobroyd Parade?
Mr Foulds : Yes, I have.
Senator CAMERON: At peak time?
Mr Foulds : No. I have in the past, but not recently.
Senator CAMERON: I can tell you that it is a parking lot. Has anyone advised you that this area that you are talking about putting more traffic on is a parking lot at peak times? Has anyone advised you of this?
Mr Mrdak : We are very well aware of the existing congestion but, as I say, the design of the project does include entry and exit points off the M4, which are designed to better disperse the traffic than is happening at the moment. That is one of the design features of this project, as I understand it.
Senator CAMERON: So, that is a design feature?
Mr Mrdak : Yes.
Senator CAMERON: Where are the details of this design feature?
Mr Mrdak : New South Wales will release that information.
Senator CAMERON: Have you looked at it?
Mr Mrdak : We have certainly had discussions and I have been briefed on the proposal.
Senator CAMERON: You have been briefed. So you have not had a project plan put before you so you can do a cost-benefit analysis and an engineering analysis? You have not done that?
Mr Mrdak : We are involved and do attend project board meetings, and so we are across the project. As my officers will outline, we are comfortable with the way New South Wales is progressing with this project.
Senator CAMERON: You are comfortable. That does not fill me full of comfort, I may say, that you are comfortable. That is not a very strong adjective to use. Now I will move back to St Peters to Port Botany. Why are we not fixing that problem? If you end up pouring traffic into St Peters at peak time what is going to happen to that traffic?
Mr Foulds : The final design for stage 2, which that forms part of, has yet to be finished, so the exact nature of where that portal will be, how it will connect to the port precinct or the airport precinct, traffic flows and modelling are still being undertaken and finalised in order to make sure that the best entry and exit points—
Senator CAMERON: This is a $3.5 billion project?
Mr Foulds : Indeed.
Senator CAMERON: It is a $3.5 billion project. You cannot get the project from St Peters to Port Botany, roughly four Ks. You cannot get this project from St Peters to the CBD, roughly three Ks. You are going to spend $3.5 billion on it and it really is a road to nowhere. What happens at St Peters? What is your analysis of what happens once all of this 35 kilometres of traffic hits St Peters? What happens then? Can you tell me?
Mr Jaggers : We have been working with New South Wales. We have viewed the business case. We have looked at their modelling in terms of traffic flows. What New South Wales has presented with this proposal is a model where not every freeway goes directly to its destination, but there are on and off points at the port and on and off points at the city. That model and that design has been developed on the basis of detailed traffic projections and modelling about traffic and vehicle usage.
Senator CAMERON: Have you had a chance to analyse those projections and models?
Mr Jaggers : We have been through those projections and those models.
Senator CAMERON: What does ‘been through’ them mean?
Mr Jaggers : We have been provided with them and we have worked through them.
Senator CAMERON: What does ‘worked through them’ mean? What have you done?
Mr Jaggers : We have provided some high-level analysis, and as the project is developing we will continue to provide that analysis.
Senator CAMERON: You have done some high-level analysis as the project has developed. You have not analysed the full project, have you?
Mr Jaggers : We have done analysis of elements of the project.
Senator CAMERON: What elements of the project have you analysed?
Mr Jaggers : We have done some work on the financial modelling for the project.
Senator CAMERON: You have done some work.
Mr Jaggers : We have also engaged some expertise to help us with the patronage and the traffic flow modelling for the project as well.
Senator CAMERON: When you say you have done some work, that is not a very technical analysis for me to understand what you have done. This is 30-odd kilometres and $3.5 billion. You have looked at parts of it. You have not looked at the full aspects of it. You do not know whether it will meet a cost-benefit analysis or not, but you are going to spend $3.5 billion. That is just breathtaking.
You are not going to get from Port Botany to St Peters, or from St Peters to Port Botany or from St Peters to the CBD for $3.5 billion. What is going on? What is happening here? You said you have analysed some parts of it. You have not looked at the whole thing. It stops at St Peters. We do not know what happens after St Peters. We do not know what happens when the congestion at St Peters starts building up back at that 35 kilometres.
Mr Jaggers : We have said nothing of the sort.
Senator CAMERON: What have you said? You said you have analysed some parts of it. You have not analysed the whole project, have you? Have you analysed the full project, Mr Jaggers?
Mr Jaggers : We have viewed and analysed the full business case.
Senator CAMERON: The business case?
Mr Jaggers : Yes.
Senator CAMERON: What about a cost-benefit analysis?
Mr Jaggers : That contains a benefit-cost analysis.
Senator CAMERON: So you are satisfied? You are telling me that you have looked at this and even though the state government itself has not finalised its submission to you, you are ticking off on it?
Mr Jaggers : I did not say that.
Senator CAMERON: What are you saying?
Mr Mrdak : Firstly, what Mr Jagger is indicating is that the department, which has been closely involved with the project for some time, has worked its way through the business case and the materials that have been provided—including the ongoing design work for the project which deals with a number of the issues that you are raising. The submission that we are awaiting is the submission to Infrastructure Australia by the New South Wales government, which provides this information. That is information which is yet to be provided comprehensively to Infrastructure Australia, but my understanding is that it will be within the next week or so.
Senator CAMERON: As you indicated in your reply to question 114, is what you are looking at the significant changes to the scheme that the state government seem to have made?
Mr Mrdak : Where they have made design changes, yes, that will be part of it.
Senator CAMERON: Where they have made them. Have you got a plan of all the significant changes to the scheme? Have you seen that plan?
Mr Mrdak : Certainly my officers have, as Mr Jaggers has indicated. In being involved with the project development and also through the analysis of the business case we have seen the sorts of variations that have been made to the initial concept.
Senator CAMERON: You gave a response to the Senate last week that said that you have not received a detailed cost-benefit analysis on the WestConnex project. You are now telling me that you are across it all and that it is all okay. What is the position? Is the response to question number 114 a bit of crap or is what you are telling me now a bit of crap?
Mr Mrdak : No.
Senator CAMERON: What is going on here?
Mr Mrdak : I think the answer to 114 may be an answer from Infrastructure Australia which refers to the advice that has been provided to Infrastructure Australia. I have to differentiate between the advice the department is engaged with and what has been provided to Infrastructure Australia.
Senator CAMERON: Who makes the call, the department, Infrastructure Australia or the government?
Mr Mrdak : The department provides advice to the government in relation to this matter. Infrastructure Australia will provide its advice on the business case. That information is about to be provided to Infrastructure Australia by the state government.
Senator CAMERON: Have you seen Infrastructure Australia's advice on the business case?
Mr Mrdak : Infrastructure Australia's advice?
Senator CAMERON: Yes.
Mr Mrdak : Infrastructure Australia essentially looks at the project and then categorises it in terms of where it sits on its registered procedure. Infrastructure Australia at this stage has ranked the project where it is because of what it has been provided with.
Senator CAMERON: At the early stage.
CHAIR: Could I just bring the committee to order. Senator Cameron, you have had half an hour and you were allocated 10 minutes. I think you are over time.
Senator CAMERON: I think you have given me a fair go, Chair, and I am as equally confused as when I started.
Senator DASTYARI: I want to talk about the Moorebank intermodal. I have a few questions around it. Some of my questions are going to come from an article that was in the Australian Financial Review about four days ago. I am not sure if you saw it or not. It was called 'Corrigan set to remake Sydney's freight network'. I am not sure who deals with this. Are you right person, Mr Mrdak?
Mr Mrdak : No. It is with us.
Senator DASTYARI: There was meant to be a process that was set up in 2013—and tell me if any of this is wrong—that was meant to be some kind of an open process which was due to end at the end of this year and then a shortlist was to be selected; is that correct?
Mr Mrdak : That is right.
Senator DASTYARI: In 2013?
Mr Mrdak : Moorebank Intermodal Company started an expression of interest process for the development of the site. They invited expressions of interest and project proposals from companies interested in developing the Moorebank site as both an interstate and intrastate intermodal facility for Sydney.
Senator DASTYARI: It is a big deal in Sydney. It is a big project.
Mr Mrdak : Absolutely.
Senator DASTYARI: Here is what I do not get. So, according to this article, is it correct to say that Qube Logistics has been selected to build and construct the intermodal terminal?
Mr Mrdak : No. The Moorebank Intermodal Company, following consideration of the expressions of interest, where a number of shortlisted parties put in submissions, has selected that they will proceed to negotiate with Qube and Aurizon, their partners, as their proposal was the most advanced and best placed to meet the government's objectives.
Senator DASTYARI: Let us just get it straight. Something changed here in terms of timing—is that correct—
because the proposal is meant to be a much longer proposal?
Mr Mrdak : No, the timing has not changed. Essentially what the company has decided to do, based on their examination of the expressions of interest, is to proceed with a preferred bidder, but recognising that if they are unable to reach a satisfactory commercial negotiation which meets the government's objectives in that period then they will effectively go back to alternative bidders and reopen that process.
Essentially, as they have said publicly in their statement, the view of the company was that a bidder, the Qube consortium, had a much better prepared and developed proposal at this stage than other bidders. The company will now test that through a preferred bidder negotiation with them.
Senator DASTYARI: So, effectively what you are saying—I just want to be straight about this—is that there has not been any variation to the selection process to the one initiated by the former government?
Mr Mrdak : No, what—
Senator DASTYARI: This whole picking someone out and saying they are preferred, that is new.
Mr Mrdak : That has certainly been a decision that the company has made; that they believe that the best interests of the development rest in negotiating with a preferred bidder, the Qube consortium, at this stage, but has left open the opportunity—
Senator DASTYARI: So, how is that decision made?
Mr Mrdak : That was based on the company's evaluation of the expressions of interest and proposals that were received. The board of the company, the Moorebank Intermodal Company, then took that decision to proceed and advised its shareholder ministers that that was its position.
Senator DASTYARI: Do you have a list of who is on the board?
Mr Mrdak : Yes, we do.
Senator DASTYARI: That is publicly available?
Ms O'Connell : That is publicly available.
Mr Mrdak : We can provide that for you.
Senator DASTYARI: So the change in the process is that they are going to test the preferred bidder?
Mr Mrdak : That is correct.
Senator DASTYARI: And that is a new thing?
Mr Mrdak : They followed their evaluation of all of the interest. They believed that there was a bidder who had provided a proposal that was more advanced than others and, at the same time, a proposal that met the objectives the government was seeking. They will now test that in negotiation with that bidder.
Senator DASTYARI: So they effectively judged that they had the best proposal out of the ones that were lodged? Was that their judgment?
Mr Mrdak : That is the judgment of the company.
Senator DASTYARI: Mr Wood looked like he was about to say something. Is that correct?
Mr Wood : I was looking at something else.
Senator DASTYARI: These are questions that you may have answers to or you may not. You obviously know the complicated situation out there with where Mr Corrigan owns his land?
Mr Mrdak : Yes.
Senator DASTYARI: Have you spoken to Mr Corrigan about this?
Mr Mrdak : No, I have not. Over the last few years, particularly prior to the formation of the Moorebank Intermodal Company, where the department and the Department of Finance were much more heavily involved, we certainly undertook consultations and discussions with Qube Logistics and Aurizon.
Senator DASTYARI: This is not a new thing. For those who may not understand, all the land around it or to the side of it is actually owned Mr Corrigan—is that correct—or owned by Qube?
Mr Mrdak : No. They own a portion of land across the road from the current Moorebank School of Military Engineering. They sublease that back to the Department of Defence. They own an area there which they have been seeking to develop as a logistics facility, but the whole precinct is predominantly Commonwealth owned.
Senator DASTYARI: You are aware that what Mr Corrigan has been proposing over a long period of time has been effectively that they actually do the building and they give themselves the advantage of having it on their land as well.
Mr Mrdak : In the past they have had a proposal whereby a smaller intermodal facility would be developed on their site and not on the School of Military Engineering. As you said, this is quite a critical project. The School of Military Engineering site, which defence is vacating over the next two years, is probably the last opportunity to have an integrated intermodal facility in Sydney which is easily connected to the road and rail network. We are bringing some 220 hectares—
Senator CONROY: Who made the decision?
Mr Mrdak : The board.
Senator CONROY: Who is on the board?
Mr Mrdak : The board is chaired by Kerry Schacht from New South Wales. I can get you a list of board members. Mr Wood can tell you who is on the board.
Mr Wood : Yes. As Mr Mrdak indicated, there is Dr Schacht, Ms Claire Filson, Ray Wilson, Stephen Williams, Paul Binsted, Christopher Brown, Zorana Bull and Louise Thurgood.
Senator DASTYARI: You said it was the best prepared, most advanced proponent. Does that also mean that it was the best project or was it the most developed project? You used the words 'most developed'.
Mr Mrdak : I think that the words that the company used in its public statements were that it was the most advanced proposal.
Senator CONROY: Advanced?
Senator DASTYARI: Mr Corrigan’s land is next door.
Senator CONROY: Do the words ‘value for money’ enter that conversation?
Mr Mrdak : The project, as I understood it, provided for both the intrastate, the port shuttle, but also the interstate capacity for long rail services, which the Commonwealth was seeking. I am not privy to the expression of interest. That is obviously being managed in commercial confidence by the board.
Senator CONROY: You do not get a look-in at all?
Mr Mrdak : We have not been privy to the expression of interest.
Senator CONROY: Is Finance involved?
Mr Mrdak : We have been provided with briefings. My officers have been provided with briefings and access to some material, but we have not seen the full proposals. They are being dealt with by the board in accordance with their probity requirements.
Senator DASTYARI: You are saying that you yourself have not met with Qube Logistics for several years?
Mr Mrdak : I have not met with Qube Logistics—
Senator DASTYARI: Has anyone in the department been meeting with Qube Logistics?
Mr Wood : I have met with representatives from Qube Logistics in other contexts, but we have had no discussion about this project.
Senator DASTYARI: You were aware of this project? They have been talking to anyone who will listen. They have lobbyists all over the place.
Mr Mrdak : Yes. We have been very clear. Once the Moorebank Intermodal Company started, especially the tender process, we have been very careful, for probity reasons, to make sure that that is not in any way cut across by our engagement.
Senator CONROY: I am intrigued by the description you gave a moment ago about why they were picked.
Mr Mrdak : Intrigued?
Senator CONROY: You said the press statement said that they were the most advanced. I am just intrigued that that was the criteria, a definitive criteria.
Mr Mrdak : The wording used—and perhaps I am paraphrasing—essentially the board reached the view that the proposal being put forward by SIMTA, the Qube/Aurizon proposal, did meet the government's objectives as set out in the evaluation.
Senator DASTYARI: You are using the term ‘most advanced’. So was the economic benefit of the Qube bid evaluated against all other bids and business models?
Mr Mrdak : My understanding is that their proposal was evaluated against all the other expressions of interest proposals on a similar basis.
Ms O'Connell : The Moorebank company evaluated that proposal and the other proposals. Their advice to us was that this one certainly exceeded the other proposals.
Senator CONROY: Did any of them actually pass the minimum thresholds or the test? Not 'did they exceed at the others', which is what seems to me to be a very confused process.
Mr Mrdak : My understanding, again from advice from the company, is that there were a number of expressions of interest which met the objectives. The proposal from the SIMTA group was seen as one which best met the objectives in comparison to the others. Having said that, in starting this direct period of negotiations, the Moorebank Intermodal Company has not closed the process to other bidders.
Senator CONROY: I read it as being exclusive.
Mr Mrdak : For a period of time.
Senator DASTYARI: That is what ‘exclusive’ is. You are saying there were other proposals that met the government's objectives; nonetheless, a decision was made to go into ‘exclusive negotiations’ with a company that happens to own the land beside the site?
Mr Mrdak : That is correct. The board decided that the objectives would be best met by proceeding to direct negotiations for a period with that—
Senator DASTYARI: But other companies’ bids did meet the objectives?
Mr Mrdak : That is my understanding. But as I say, I have not been inside the evaluation process. I am just relaying to you the advice that has been provided to us.
Senator DASTYARI: Is the ‘exclusive negotiations’ announcement for the build aspects of the project or to build and operate?
Mr Wood : Could you repeat the question?
Senator DASTYARI: The story is unclear. We have no information from the government about this. With the idea that they have been given these exclusive negotiations, are the exclusive negotiations just for building the project or are they for building and operating?
Mr Wood : Those discussions with the company will finalise that process. It may well be a build and operate.
Senator CONROY: What was the tender for?
Mr Wood : The tender was for a—
Senator DASTYARI: For a lot of money.
Senator CONROY: To build and operate or just to build?
Mr Wood : It was an expression of interest process with a view to meet a number of objectives, part of which was around minimising financial exposure or financial support required from the Commonwealth.
Senator CONROY: Picking the competitor next door is not a good way to do that, but I am interested in what it was that the tender was for. Was it for a build and operate?
Mr Wood : Not specifically a build and operate. However, it was quite a likely outcome that a tenderer would be a builder/operator. It was really a matter for the expression of interest process to come to the best model provided. The detailed business case that the government undertook a couple of years ago explored a range of models. It came up with a model where the Moorebank Intermodal Company would be a landlord and there would be a tender process to go through for the builder and operator, but there are other models. There are PPT-type models and other sorts of things that could be considered. The expression of interest process was ultimately to go to market to see the best model that could be brought forward to provide value for money.
Senator DASTYARI: So, with Qube Logistics if this proceeds—and I accept that there is a process to go through—if they build this project, it will then also own the site of land beside it, which they will then be able to build up and nothing would stop them doing that?
Senator CONROY: It would integrate them, from the sound of it.
Mr Mrdak : In fact, that has been one of the objectives.
Senator DASTYARI: So one of the objectives is that Qube Logistics—
Mr Mrdak : No. One of the objectives, right from the start under successive governments, is that the whole precinct is developed as an intermodal facility. It has always been sought, under successive governments, to find ways in which that whole precinct, as Defence's needs rationalise in that area, becomes an integrated intermodal facility which has a combination of operators and a multitude of operators either operating the transport infrastructure or warehousing and other facilities on that combination of sites.
Senator DASTYARI: I am sure you are aware of this, but I will get it on the record. Were you aware of the concerns that were expressed about this proposal through the Department of Finance and others when these proposals were first being floated several years ago by Mr Corrigan?
Mr Mrdak : I am sorry?
Senator DASTYARI: You are aware of concerns that were being raised by the Department of Finance and others—
CHAIR: Just to clarify for the chair, what were the concerns?
Senator DASTYARI: The concerns were that the type of integrated model would create an unfair commercial advantage for the land owners.
Senator CONROY: Absolutely. You were handing a monopoly over.
Senator DASTYARI: You are handing a monopoly over to Corrigan.
CHAIR: My understanding is that this will save a lot of trucks going to Botany. Do we have an estimate of the savings?
Senator DASTYARI: No-one has an issue with the intermodal. We have an issue with who it is being awarded to.
Senator CONROY: If we can just get back to the tender process.
CHAIR: Can I just have an answer?
Mr Mrdak : Certainly. That is actually right. One of the key developments on this site that we are seeking is a port shuttle, which will try to increase the amount of rail movements to and from Port Botany rather than putting trucks on the road.
Senator DASTYARI: The proposal is bipartisan. No-one is opposed to the proposal.
Senator CONROY: It is actually not bipartisan for Chris Corrigan to be given a monopoly, and expand his wealth. That is absolutely not bipartisan.
CHAIR: With your indulgence, Senator Conroy., pausing there for a second. So, what you are proposing is that this is a corrupt deal?
Senator CONROY: We are investigating what is going on.
Senator DASTYARI: I want to get to the bottom of the arrangement that came to this.
Senator STERLE: It is a bit sus, Chair.
Senator DASTYARI: I think it is a bit more than a bit sus, Chair.
CHAIR: Qube is not involved, to the best of your knowledge?
Senator DASTYARI: To the best of my knowledge. I do not understand this. So, the decision to award exclusive negotiation status to Qube Logistics—would it not have been beneficial to the Commonwealth to maintain as much competitive tension as possible throughout the process, specifically to have a different builder and a different operator? This is what I do not understand.
Senator CONROY: We are creating a monopoly.
Senator DASTYARI: I cannot understand how we are going into exclusive negotiations where we are going to let someone build it, someone operate it and perhaps someone on the land decide it. Would it not be better for the Commonwealth to maintain it? If there were other bids that met the objectives, would it not be better for them to maintain that competitive tension right to the end? Was that the intention of the Labor policy on this?
Mr Mrdak : The intention was to test the market, as Mr Woods indicated. What was received was a variety of expressions of interest from persons who wanted to build and operate a facility right through to a number of parties who simply sought to build facilities on that site where there were other parties providing common use infrastructure.
The intention is absolutely right. Part of the underlying objective of the government, as it has been for successive governments, is to create an open access regime to this facility. The proposal being examined by the Moorebank Intermodal Company, to my understanding, is on the basis that whoever is successful—and as I said, entering into these arrangements with this consortium does not bring this to a conclusion—
Senator DASTYARI: No, but they are exclusive negotiations.
Mr Mrdak : For a period.
Senator DASTYARI: How long is the period?
Mr Mrdak : My understanding is—
Senator CONROY: I’d settle to create a monopoly pretty quickly.
Mr Mrdak : It is for up to six months.
Senator DASTYARI: Six months?
Mr Mrdak : That is the period of negotiation.
Senator DASTYARI: And the person is still meant to end at the end of this year? So, effectively, if we do not go with him we have one month to get another person in?
Mr Mrdak : The company would have to revise its timetable, if this did not proceed in this way. It has always been factored on the basis of an open access regime; that whoever is the builder and operator of the facility has to provide open access to other parties. That is something that sits at the core of the government's objectives.
Senator CONROY: Especially if Mr Corrigan gets his hands on it!
Senator GALLACHER: Mr Mrdak, I sat on the public works committee when this project was established, and basically one of the critical features was the interstate connectedness of the rail line. If DP World, Asciano and Qube are all bidding for the terminal and operation, has the Commonwealth lost a competitive tension there by Aurizon joining up with Qube? It is an interstate rail line.
Mr Mrdak : Aurizon and Qube have been for some time in partnership in relation to the previous proposal. That has been a long-established relationship. My understanding, as set out in the company's statement, is that the proposal put forward by this company, SIMTA, involves the development of both the port shuttle, essentially an intra-Sydney shuttle, for freight but also the development of the interstate rail facility, which is at the core of the Commonwealth's interests in this in many ways—to provide a facility that has long-term capacity for both port and also interstate rail freight.
Senator GALLACHER: And no restrictions on competition or access to it? That was the whole principle that went before the public works committee.
Mr Mrdak : Absolutely.
Senator GALLACHER: There would be no restriction on any operator using and competitively tendering through that process.
Mr Mrdak : And that remains.
Senator GALLACHER: Are you telling me that the rail operator and Qube—
Senator CONROY: You are building a monopoly. There is no other way around it.
Mr Mrdak : That objective remains. The advice from the company to the government remains an overriding objective, to provide an open access regime which enables many companies to develop and operate on that site. That remains an overriding objective.
Senator DASTYARI: I will just follow on from that. It looks as if Qube has said that they are going to raise their own capital for the project to remove the need for government funding, according to the Australian Financial Review article. Is that correct?
Mr Mrdak : I am not familiar with the Qube proposal in terms of what has been put to the company.
Senator DASTYARI: Can you take on notice whether the capital contribution was taken into account when the bid was considered and whether other proponents were able to offer their own capital fundraising?
Mr Mrdak : Certainly. I will take that on notice.
Senator DASTYARI: So, you are saying that while obviously people from your department have met with Qube—and I understand they are a big company and there would be reasons to meet with them—are you aware of any other meetings with Qube and Mr Corrigan and the minister?
Mr Mrdak : I am not aware of any such meetings or discussions.
Senator DASTYARI: Is anyone aware of any meetings?
CHAIR: Minister, can you take that on notice?
Senator Colbeck: Yes.
Senator DASTYARI: Is anyone in the department aware of meetings that have happened with Mr Corrigan and the minister?
Mr Jaggers : I am not aware.
Senator DASTYARI: Are you aware of any meetings with Mr Corrigan and the Prime Minister?
Ms O'Connell : I am not aware.
Mr Mrdak : I am not aware.
CHAIR: Cube still lives in Switzerland.
Senator DASTYARI: Are you aware that according to the donor to political party disclosure returns, the last one that was publically available, that Mr Corrigan's company, Qube, was one of the largest donors to Liberal Party?
Mr Mrdak : I am not aware of that.
Senator CONROY: Do you know how much?
Senator DASTYARI: You are not aware of the $51,000 that they donated to the Liberal Party?
Senator CONROY: Not by New South Wales Liberal standards.
CHAIR: Not by union standards. That is a small donation.
Senator DASTYARI: But you are not aware of then any of their further donations that are now not yet in the public record because of the 2015 time line period before they become publically available.
Mr Mrdak : I am sorry, I am not aware of any such donations.
Senator DASTYARI: This is a process and this is a proposal that you have been aware of for a long period of time. This is a matter that the Department of Finance had previously raised concerns about, which is why the tender process was established in the way it was processed. You are saying that, regardless of all of that, a decision has been made to give—and these are my words, not your words—a very significant donor to Liberal Party an exclusive period of negotiations for the next six months for a period that will end by the end of this year to build what is a several billion dollars net worth project and that they may get not only the building rights, they may get the managing rights and they own the lot of land beside it that allows them to integrate the whole thing into what is nothing other than an incredibly profitable venture.
Mr Mrdak : I can only outline the facts that I put to you and simply to say that the shareholder ministers were provided with advice from Moorebank Intermodal Company, that is both the Minister for Infrastructure and Regional Development and the Minister for Finance, and the government has agreed with the company's proposal to proceed in this way.
Senator DASTYARI: Okay, so let's go back. So, they went to—
Senator CONROY: That would be the definition of the words 'red hot'.
Senator DASTYARI: So, when you said the government agreed, the advice came from Moorebank Intermodal Company and then that obviously got ticked off by the shareholding ministers—
Mr Mrdak : It has gone to the shareholding ministers.
Senator DASTYARI: The shareholding ministers and Minister Cormann and Minister Truss—
Mr Mrdak : That is correct.
Senator DASTYARI: So, has it been ticked off by the shareholding ministers yet?
Mr Mrdak : The shareholding ministers have agreed to the strategy put forward by the company. The shareholder ministers raised a number of issues with the company's proposal, and there was a number of discussions and exchange of correspondence that took place with the company before the ministers were comfortable to sign off on the proposal.
Senator DASTYARI: Do you know when the minister signed off on this proposal?
Mr Mrdak : I would have to take that on notice.
Senator DASTYARI: But in the past week or two weeks?
Mr Mrdak : It would have been in the last three or four weeks in the lead-up to the company's announcement.
Senator DASTYARI: Okay, so in the past three or four weeks you are saying the company—when we say the company, we are talking about Intermodal Company, not Qube—
Senator CONROY: How much did the shares jump by? How much does it say?
Senator DASTYARI: The shares jumped by 6.4 per cent on the decision to a record high of $2.33.
Senator CONROY: Really? What a shock, being gifted a monopoly of public land and public money!
Senator DASTYARI: To donate to the Liberal Party.
Mr Mrdak : As I have explained, there is no gifting. There is a process underway. I can only, again, reiterate that there has been a very strong probity process around this. The Moorebank Intermodal Company has provided advice of the best way to proceed. There is no final decision being reached—
Senator DASTYARI: Was your advice to the government to proceed?
Mr Mrdak : We provided advice to the government in relation to a range of issues and—
Senator DASTYARI: But was your advice to proceed?
Mr Mrdak : I do not think I should put our advice in the public domain. That is advice that we provided to the minister.
Senator DASTYARI: So, you will not confirm whether or not you gave advice to proceed?
Mr Mrdak : We certainly provided advice on the issues arising and the benefits of proceeding with this proposal.
Senator DASTYARI: But you will not say whether your advice was to proceed?
Mr Mrdak : I do not think it is prudent that I discuss my advice to the government or our department's advice.
Senator CONROY: But you are fully conscious of a monopoly when it stares you in the face?
Mr Mrdak : We are certainly aware of the issues arising and, as I said, all I can do is confirm that we did provide advice to the government on these issues.
Senator DASTYARI: These are not new issues, you knew these issues are obviously there. These issues have obviously been raised as part of this process.
Mr Mrdak : The way you have presented the issues raised today are extreme, but let us generally say the issues of competition and open access have been at the forefront of our thinking. There is no doubt of that.
Senator DASTYARI: And yet you still proceeded even though it has been at the forefront of your thinking to proceed in what can only be seen as to allow a complete monopoly?
Mr Mrdak : I do not think the way you have characterised it is the way we would agree. It is proceeding on the basis—
Senator DASTYARI: It is a monopoly.
Senator CONROY: Define a monopoly for us.
CHAIR: We will wind it up there. By the way, Senator Dastyari—
Senator CONROY: I am sorry, you do not get to wind it up there.
CHAIR: Senator McLucas is patiently waiting.
Senator CONROY: And Senator McLucas will happily defer to Labor's questioners.
CHAIR: I am sorry, I am the Chairman.
Senator CONROY: You do not get to decide Labor's questioners.
CHAIR: When you were a secretary of the Labor Party a lot of cheques were processed through the carpet man from—
Senator CONROY: Senator Heffernan can you not abuse your position as Chair?
CHAIR: No, I am just saying.
Senator CONROY: I think Senator Gallacher wants to follow up a question.
Senator GALLACHER: At inception, the government business enterprise is designed to maximise the Commonwealth's position of integrity in terms of access and the best freight model for the area and also the best return for the government. Now, I note in a press release here that there is a statement that SIMTA's willingness to take risks on the freight volumes has had some impact on this decision. Given that we are talking about 1.2 million TEUs a year, plus half a million interstate, what is this risk that the Aurizon and Qube are taking that is so attractive to the government? I though the problem here was doubling of the freight into Port Botany and into Sydney over the next 20 years. Why have we got in a press release, ‘A willingness to take risks on the downside,' as a reason for them being a preferred tenderer?
Mr Mrdak : I think it reflects the fact that one of the key aspects is who will fund the development of the infrastructure on the site, not just at the initial start-up point, but over a period of time. That has always been an issue that has been raised by participants, all of the people who have looked at this issue, is does the traffic volumes, at least in the initial years, warrant the level of capex that the government is seeking to develop the site. The government essentially has funded the removal of Defence from the site and also preparing the site, effectively, to clean the site available for development. However, the common used infrastructure on the site—
Senator GALLACHER: So, we are unwinding the government business enterprise model on the basis that we might have had to invest some money.
Mr Mrdak : That is not clear at this stage. What I think the Moorebank Intermodal Company is testing is, is there a capacity by bidders, not just SIMTA but others potentially to fund the capital works required to develop the site beyond that allocated by the government thus far.
Senator CONROY: You give me a monopoly and I am sure people will lend me money to build.
Mr Mrdak : I am just trying to explain to Senator Gallacher some of the factors in consideration of taking risks, because clearly there is patronage risk in terms of the capex required to build the facility.
Senator GALLACHER: So, the clear model was a government business enterprise which would declare a dividend in some way to the government versus now someone taking a bit of risk in the infrastructure and investment. So are we are walking away from the business enterprise model?
Mr Mrdak : No, as Mr Wood indicated, the model had always had a number of options, one of which was essentially a government business enterprise and effectively the landlord or a government business enterprise which is the investor in the common use infrastructure as a landlord. That is an option. As I said, I am not familiar enough with SIMTA proposal at this stage as to what level of risk and capital investment they are proposing to make—
CHAIR: Are you asking—
Senator CONROY: Can you help me here?
CHAIR: Are you asking for an opinion of this government?
Senator CONROY: I did not ask them a question.
CHAIR: Can I just suggest we move on because Senator McLucas is waiting.
Senator CONROY: That is very kind of you.
CHAIR: We can come back.
Senator DASTYARI: I just want to go back to this statement, because this is the bit that kind of shocks me a bit and you have kind of made reference to my shocked statement yourself. So, the statement does not say that the Qube project is the best project, it says that it meets the governments objectives and that, ‘The response and the proposal was better developed.' What I do not understand is, and you have not quite been able to explain this to me yet, there were other proposals that also met the objectives, there were just none that were as well developed. The only point of difference you are saying between the project that has been given a six-month exclusive tender for a seven-month process and the others that failed was not that they met the objectives, it was solely that it was better developed.
Mr Mrdak : I think it would be the case reading this statement clearly it was a case in my understanding that they were well developed, but also some of the proposals may not have—while they may have met the objectives, perhaps not as well. I know, for instance, one of the key issues for a number of parties who had spoken to us informally before entering this process was the risk around the viability of the interstate rail facility in the early years. If you look at the business case, which the Commonwealth produced, that was a critical issue as to when the interstate facility would actually have the levels of boxes to be viable, essentially.
Senator DASTYARI: Are you aware of when Mr Corrigan and others purchased the land—sorry, not Mr Corrigan, Qube—adjacent to the intermodal site?
Mr Mrdak : I would have to check. I think it was in—
Ms O'Connell : Around the 2000s.
Mr Mrdak : Around middle of the last decade. I think around that time; it was part of a Defence asset disposal process.
Senator DASTYARI: Yes, and at that time had the idea of building a port terminal intermodal been publically floated?
Mr Mrdak : I would have to check. The first announcement of consideration of the Moorebank site was around 2003-04 as the potential for that site to be developed as an intermodal facility. I would have to check whether the Qube purchase of the Defence site took place after—
Senator DASTYARI: So, it was a Defence base. It was sold off as excess Defence base that is unneeded, which is obviously a sensible thing for Defence to do when they do not need space. At that point in time it was proposed to be an intermodal and Qube Logistics and others purchased the block of land that we are talking about.
Mr Mrdak : They purchased essentially what remained—and still remains today—Defence warehousing space. Defence has a lease. It continues to lease that space from SIMTA. Defence essentially sold the land but leased back the facility for a period. Defence is now going through a consolidation of its logistics facilities in that part of Sydney and over time Defence will restrict the amount of warehouse space it needs in that location. That will, over time, free up the land that SIMTA owns for alternative uses.
Senator DASTYARI: If you do not mind me asking, this is something I should probably know and I apologise, this is not a committee I normally deal with; how long have you been secretary of the department for?
Mr Mrdak : Since 2009.
Senator DASTYARI: When were you first made aware that there was a Corrigan proposal to develop their site and the land beside their site as part of an intermodal project?
Mr Mrdak : Look, I would have to—
Senator DASTYARI: Does it predate you?
Mr Mrdak : Yes, it has. I think it does. My recollection is the proposal has been around certainly before I took over as secretary, but given my history with the portfolio was around 2006-07, around that time.
Senator DASTYARI: I have gone through the criteria—the word better developed or how developed it was not one of the criteria, was it?
Mr Mrdak : I would have to have a look at the criteria. I think the essence is that the company has assessed all of the bids against the criteria—
Senator DASTYARI: But if I had several more years to own the land, would I not have a better developed proposal too?
Mr Mrdak : Again, it depends on what was being proposed. We are not looking so much at what is the proposal for the land they own, we are talking about the proposal for the School of Military Engineering site and what is proposed on that site. That is what has been assessed by the Moorebank Intermodal Company.
Senator DASTYARI: I do not want to put you in a difficult position, but I will ask you this: two or three years ago, in the life of the last government, was the department's position at that point in time that they had serious concerns about this proposal?
Mr Mrdak : There was not a proposal at that stage from a—
Senator DASTYARI: There were unsolicited proposals constantly coming from Corrigan and coming from Qube. That is a fact; we have established that already.
Mr Mrdak : There were proposals to develop their site for a limited port shuttle development.
Senator DASTYARI: And did you have concerns about that?
Mr Mrdak : We have always taken the view that an opportunity exists on the School of Military Engineering to do a much larger development which will actually meet the long-term needs of Sydney. That has not changed. The department's perspective has been two things, one creating an intermodal facility that has room to grow, both for port traffic but also to create an interstate facility. When we look at the network on the east coast, the great impediment to the growth of rail freight on the east coast remains terminal capacity in the long term. So, getting the School of Military Engineering with capacity for 1800 metre trains, which has always been our objective, remains the case and my understanding is that has not changed in the way the Moorebank Intermodal Company has approached this.
Senator DASTYARI: I think the answer to that was yes, but you are saying that the government—so once the Moorebank Intermodal made the request to government for permission—they are my words, I am sure there is more technical DP and C language—asked the government or the shareholding ministers for permission to go into exclusive negotiations, there was a series of questions and concerns that the government had and there was a process of to and fro of letters. Is that correct?
Mr Mrdak : That is correct.
Senator DASTYARI: I assume you are going to tell me that those letters and that correspondence is commercial in confidence?
Mr Mrdak : I will take that on notice as to the status of those letters. Given they are letters from the ministers to the company I will take on notice whether the minister wishes to release those.
Senator DASTYARI: Are you prepared to say whether or not at that point there was a discussion with the company or with concerns being raised about the monopoly status that Corrigan has now been provided?
Mr Mrdak : There were concerns in the discussions that both my officers had and also ministers had with the company. This issue of how open access would be treated was certainly an issue. I would not have used the words you have used around monopoly treatment, but certainly the way in which—
Senator DASTYARI: It is more than just open access. It is beyond open access. The issue is not simply that they are not going to allow their competitors access, the issue is they own the land beside it.
CHAIR: This is your last question.
Mr Mrdak : What we are dealing with is the intermodal facility on the School of Military Engineering.
Senator DASTYARI: But you cannot divorce that from the fact that they own the site beside it. Or can you? Is that what you have done?
Mr Mrdak : That is one of the things which would have been put forward by the company in terms of their proposal.
Senator DASTYARI: Did their proposal also include the activity on their site?
Mr Mrdak : As I have said, I have not been in detail through their proposal but I would envisage that they would look to integrate what they would do with their own site if they were successful in developing the School of Military Engineering site. One of the objectives of both the Commonwealth and New South Wales successive governments has been to get an integrated precinct in that area which allows a multitude of companies to develop warehousing around the logistics hub of the rail freight facility.
CHAIR: Senator Rhiannon.
Senator RHIANNON: Back to WestConnex. On what date did you receive the business case from the New South Wales government?
Mr Mrdak : I will see if my officers have that information with us, otherwise I will take it on notice.
Mr Jaggers : We will have to take it on notice.
Senator RHIANNON: So, seriously, you have come here knowing that this would be a big one. You have now got the western Sydney unit and you do not have that date. Can you guess approximately: a month ago, six months ago?
Mr Mrdak : It was some time ago; I think it was last year.
Mr Jaggers : With the WestConnex business case we first viewed it in Sydney and were provided a copy at a later stage. I would need to get both dates for you. I do not have those dates with me, I am sorry.
Senator RHIANNON: Does it include the cost-benefit analysis?
Mr Jaggers : Yes.
Senator RHIANNON: Did you agree that the cost-benefit analysis at 2.55 is accurate?
Mr Jaggers : We have not done a detailed analysis of the benefit-cost work that was done by New South Wales. We have taken it at face value.
Senator RHIANNON: Will you do an analysis of that?
Mr Jaggers : We are currently looking at the costs for the project. We are also looking at the patronage issues on the project and the financing model on the project. Once the business case is provided to Infrastructure Australia I would presume that analysis of the BCR would be done by that organisation.
Senator RHIANNON: Did I understand correctly, I was not sure of your last words, did you say you were going to do a cost-benefit analysis?
Mr Jaggers : I said that once the business case is provided to Infrastructure Australia I would expect that they would look at the benefit-cost analysis within that business case.
Senator RHIANNON: So, you expect or they will? Can we get an answer?
Mr Fitzgerald : They will.
Ms O'Connell : They will.
Senator RHIANNON: You will do it?
Mr Fitzgerald : Yes.
Senator CONROY: You will conduct a BCR?
Mr Roe : We will undertake an analysis of—
Senator CONROY: So, two plus two will equal four, Senator Rhiannon.
Senator RHIANNON: I note the interjection; it is very useful.
Mr Roe : Just to clarify. We will undertake a thorough analysis as with all project proposals that are presented to us of the cost-benefit analysis. So, we undertake a detailed analysis of each of the components of the costs and benefits and look for their consistency with standard methodologies and approaches for measuring those benefits and costs.
Senator RHIANNON: Just on the dates, I was just looking at my questions on notice and in a question on notice to you, number 114—we received it last week and it was from February—then you confirmed that you had not received a detailed cost-benefit analysis. So, does that mean as of February you still had not received the full business case? Because, Mr Mrdak, I thought you said last year and I am just checking my questions on notice are suggesting that you did not have the full business case because in answer to question 114 you have said that you had not received a detailed cost-benefit analysis for the WestConnex project. If that is the case, I am assuming that you also had not received the full business case. Is that correct?
Mr Roe : The response to question 114 was a question to Infrastructure Australia, so Infrastructure Australia had not received the full business case at that point in time.
Senator RHIANNON: So, am I incorrect in assuming that when Infrastructure Australia has the full business case the department has, and if you do not have it then you both do not have it or is that a wrong assumption?
Mr Mrdak : The department has more details at this stage than has been the case to this point for Infrastructure Australia, but my understanding is the New South Wales government is about to provide full details to Infrastructure Australia in the coming days.
Senator RHIANNON: What does 'coming days' mean? Less than a week?
Mr Mrdak : I think discussions are being scheduled, as I understand it—I will check with Mr Fitzgerald—for next—
Mr Fitzgerald : Yes, it is likely to be next week.
Senator RHIANNON: In response to an earlier question, Mr Mrdak, you stated that the department is involved in the project development and that you are working it through. As you have been working it through, Mr Jaggers and Mr Mrdak, have you found any problems? Any aspects that you believe the government needs to rework? Any aspects that you have disputed? Could you share that with us please?
Mr Mrdak : I think as per our discussion with Senator Cameron we have certainly focused on a number of the areas that he canvassed with us and that you have canvassed in previous hearings, particularly in relation to access to the CBD, what happens to the actual traffic flows on alternate routes and also the ability to influence some of the key congestion drivers as we see it, particularly heavy vehicle access from the M5 to key market areas.
Senator RHIANNON: My question was: are there areas in the business case that you have disputed. So, are you saying that you have identified that the New South Wales government's business case still has those problems and you are still working on the government to change their business case? Is that what you have just said?
Mr Mrdak : No, what I have said is that we have certainly raised those issues, and we believe a considerable amount of work has been done to address those issues, and particularly the ones Senator Cameron indicated earlier.
Senator RHIANNON: So, going back to the question; can you identify what areas in the business case that you have asked the New South Wales government to change?
Mr Mrdak : Quite early on, and I will be guided by my officers who sit closer than myself, clearly access to the CBD and also where the exit and entry points to the WestConnex network are and what that does to local traffic flows have been the two primary areas that we have been looking at with them.
Ms O'Connell : I think it is more about seeking clarification about New South Wales' underpinning modelling for those aspects, rather than asking them to change it. Through the ongoing discussions and iterations of the business case, you know, we are getting a better quality product.
Senator RHIANNON: So, when you say a clarification of the underpinning model, what do you mean please?
Ms O'Connell : We asked a number of questions to seek clarification around the traffic projections and traffic modelling that underpin the WestConnex business case.
Senator RHIANNON: So, your answer sounds as though it is different from Mr Mrdak's because I understood that he was actually identifying problems with the business case as in access to the CBD and on and off ramps.
Ms O'Connell : It is the same thing, looking at the traffic modelling and projections and where the traffic flows are.
Senator RHIANNON: Thank you for clarifying; I apologise that I misinterpreted. So, let us deal with the on and off ramps. So you are suggesting that they change the location of those, Mr Mrdak?
Mr Mrdak : Right from early on we have been looking with them at whether those entry and exit points are adequate for the traffic flows and I think there has been a considerable amount of work. I think Mr Foulds might want to indicate, but a considerable amount of work at looking at traffic flows and entry and exit points has taken place, and I think largely to our satisfaction, is that a fair summary, Mr Foulds?
Mr Foulds : That would be a fair summary. The idea is to look at the reference scheme and the business case. So, the business case covers a reference scheme which takes all three stages into account. It looks at how that reference scheme will be built, as in the scope, it then looks at how it will be funded and financed and that reference scheme is an iterative process and is under continual development so that at a point in time as you progress towards EIS and then to tender, you are refining through work on the traffic modelling, patronage, financial modelling, all of those things are being further refined to the point where you go to tender confidently.
Senator RHIANNON: It is certainly hard to get the details out of it and I know I am going to get cut off soon. Even if you have got to take it on notice, Mr Mrdak, have you recommended that there should be actual changes to the physical location of the on/off ramps? Can you release the traffic modelling? Can you take that on notice?
Mr Mrdak : I am happy to take that on notice, particularly in relation to traffic modelling. I do not know if I would call our questioning the recommendations but we have certainly asked the questions of the people developing the concepts over a period of time.
Mr Jaggers : I might just also add that the WestConnex business case executive summary was released last year in September and recently the New South Wales government have provided quite a number of the documents underpinning the WestConnex business case. They have provided those in compliance with an order of their Legislative Council and a list of those documents has been tabled. It is on the New South Wales website.
Senator RHIANNON: I was after it in the context because if I understood correctly these were where you, the department, is making suggestions to the New South Wales government on those issues. So, if you are at variance with the New South Wales government, can you inform us?
Mr Mrdak : Yes, I do not think we are at variance. I think we have got concerns and issues that are being worked through and largely resolved.
Senator RHIANNON: Okay, so coming to the issue you spoke about access to the CBD, that sounds like a very big one considering basically what the WestConnex is—I mean we know the name is a con job—it is not about western Sydney suburbs, it is about the inner west, it is about connecting the M4 and the M5. If you are talking about the access to the CBD that is actually a considerable change to the project, so when you say access to the CBD, what do you mean?
Mr Mrdak : We are wanting to ensure that the exit points from the WestConnex to the CBD do not create traffic problems or exacerbate traffic problems and what we are looking to do is to find a more seamless way to ensure the connections from the west to the CBD.
Senator RHIANNON: So, what suggestions have you made to the New South Wales government about that very point?
Mr Mrdak : Well, we have been looking at issues quite early on about where they have got their exit points, where the tunnel will effectively emerge, how it will then move traffic off that WestConnex M4 extension into the connecting roads in and out of the CBD.
Senator RHIANNON: Can you provide the committee with the details of the changes that you have suggested?
Mr Mrdak : They have been done through discussions, I do not think there is any I can provide, as such. I will certainly take on notice what else we can provide you.
Senator RHIANNON: Okay, so to actually get the detail. Last question, I promise. Commercial in confidence has come up as the reason that the New South Wales government is not releasing the business plan. Is that the reason that it is not being released? That it is commercially in confidence.
Mr Mrdak : I have no reason to doubt that. They are looking to take the proposal to the market. Obviously therefore there will be a commercial discussion around patronage figures and tolling and the like. I can understand their desire to ensure that they do so in a way that does minimise the market structure of the proposals that they are not starting to cut across the benefit they need to get out of any private concession they provide.
Senator RHIANNON: Are you saying in that answer that the business case should not be released at all or it should only be released after the project has been tendered and awarded?
Mr Mrdak : I think there are aspects of the business case which they regard as more confidential than others. Clearly, some of the areas such as traffic modelling—which will go to the core of the commercial viability of the project—are areas that they are very sensitive about.