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Lane Cove Tunnel in receivership -

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

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

Bronwyn Herbert reports.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MICHELLE ZEIBOTS: The investors don't understand that it's not physically possible to get the sorts
of traffic volumes on these roads that are being cited in the prospectus.

TONY SHEPHERD: That investors have lost money is a great disappointment. But those investors you
know win and lose on various projects over many years and they'll come back into the field next
time they'll be more caution. But I'm sure they'll be there.

BRONWYN HERBERT: Tony Shepherd is the Chief Executive of Infrastructure Partnerships Australia. A
lobby group promoting Public Private Partnerships. He says the NSW Government has not lost a cent
from the financial collapse of the Lane Cove Tunnel.

TONY SHEPHERD: I think that private sector's big and ugly enough to look after itself. I think the
private sector has got the capacity to learn the lessons. One thing which will not happen in the
future will be there'll be no upfront payments from the project developers to the Government for
the right to toll.

BRONWYN HERBERT: For the past decade NSW Green's MP Lee Rhiannon has been calling for restraint on
Public Private Partnerships in toll roads.

LEE RHIANNON: The lesson that we have here is that major infrastructure projects have to be
publicly funded, managed and owned by the Government. Otherwise the public loses out.

BRONWYN HERBERT: A spokesman for the Federal Minister for Infrastructure Anthony Albanese says the
Government has asked Infrastructure Australia to investigate the high up front costs of Public
Private Partnerships and to ensure there's more realistic forecasts of traffic volumes. Proponents
of the model say it's far from dead and it's still the best way to deliver large projects at a
cheaper cost.

TONY SHEPHERD: Australia has pioneered PPPs of this nature. We are a world leader; they've made an
extremely valuable contribution to the development of Australia. Obviously there has been some
loses. But we learnt from that experience, and I'm sure these projects will continue to provide a
great service to the people of Australia.

TRACY BOWDEN: That report from Bronwyn Herbert.