Backing for freight project

source: business news

Backing for freight project

 


Infrastructure Australia has released its preliminary assessment of the Perth Freight Link, which concludes the project will deliver net economic benefits but also raises questions about its cost. 

The release of the five-page ‘assessment brief’ has followed mounting political controversy over the project, which is budgeted by the state government to cost $1.575 billion.

The IA report says the capital cost will be $1.742 billion.

A state government spokespeson said it is normal practice to prepare two estimates for Infrastructure Australia - is $1.575 billion considered the most probable cost, while $1.742 billion is a more conservative estimate.

IA said Main Roads WA, as the project proponent, had provided “good evidence that access to port gateways in Perth is a nationally significant problem”.

“In addition, IA has a high level of confidence that the proposed solution will deliver net economic benefits.”

The IA assessment, dated May 2015, was based on the Barnett government’s original plan - an extension of Roe Highway, followed by upgrades to Stock Road and Leach Highway.
The state government is currently evaluating whether the stage 2 development should include a tunnel under residential areas south-east of Fremantle.

Critics of the project believe the government will also need to build a larger bridge over the Swan River to avoid a major logjam at Stirling Bridge.


Federal Labor MP Alannah MacTiernan said the IA assessment raised more questions than it answered.

“The IA assessment already shows a $167 million cost blowout on the project – before a shovel has even hit the ground or a single contract has been let,” she said.

“The assessment did not include the $700 million-plus needed to tunnel through Hamilton Hill and build a new bridge over the Swan River, nor the cost of tolling infrastructure.”

The IA report said the multi-criteria assessment used for the project has significant weaknesses, including a bias against low-cost options.

The federal government agency noted that its assessment was based on preliminary risk assessments and construction timelines.

Despite this, IA was satisfied the proposed solution was preferable to one lower-cost option - a $100 million upgrade of Leach Highway.

It was also satisfied the freight link would continue to have economic merit if an ‘outer harbour’ was developed at Cockburn Sound.

This supports Transport Minister Dean Nalder’s argument the project makes sense, irrespective of future port developments.

Critics believe spending should be focused on freight transport links to Cockburn Sound, which is expected to become the site for Perth’s major commercial shipping terminal over the next 10-20 years.

IA said Main Roads could investigate broadening the planned freight levy so that it applied to more than heavy freight trucks.

It also commented on the state government’s plan to hold or sell the future revenue stream from the freight levy.

“Analysis shows that this maximises the expected value of the revenue stream, although this approach results in the state government taking on considerable greenfields traffic risk,” the IA report states.

“The proponent should provide further detail, or present a sensitivity analysis so this risk can be evaluated.”

the original story is available from Business News HERE