Auditor-General’s report criticises government analysis of Transurban’s West Gate Tunnel bid
In a damning report, Victoria’s Auditor-General has raised major concerns about the process that saw Transurban handed another decade of CityLink toll revenue in exchange for bankrolling the West Gate Tunnel.
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Victoria’s Auditor-General has slammed the secretive government process which allowed Transurban to reap another decade of tolls on CityLink in return for bankrolling the West Gate Tunnel.
The damning report suggests the bureaucrats who assessed the toll road giant’s unsolicited bid to build Melbourne’s second western river crossing were not convinced their calculations on some design and construction costs represented value for money for Victoria.
But they did not raise that issue in advice provided to the government when it was closing the deal with Transurban for the $6.7 billion project.
The report also concludes:
THE inclusion of Monash Freeway upgrades in the project “lacked a reasonable justification” and inflated benefit-cost ratio for the West Gate Tunnel.
A GOVERNMENT business case for the project did not investigate whether it would be better to find other sources of funding — such as borrowing money — to pay for the road instead of allowing Transurban an extra 10 years of toll revenue on CityLink.
BUREAUCRATS did not properly analyse whether it would have been better to allow another operator to reap extended tolls on CityLink to fund the project, or whether the state would have been better off collecting the extra CityLink revenue itself.
MAJOR issues were raised internally about the traffic modelling used to justify the project, but a peer reviewer was “not retained long enough to assess the adequacy of responses to these issues”. No documents could be found showing a formal peer review was completed of the final value-for-money assessment.
The Auditor-General declared that the Department of Treasury and Finance’s “narrow assessment approach” had “deprived the government of critical information to support its decisions on whether, and how, to progress the proposal”.
It found the value-for-money assessment failed to adequately test and disclose the assumptions and calculations used to come up with the final figures backing the project’s approval.
In response, department secretary David Martine hit back at the report, questioning the “lack of substantiation of its key findings”.
“More than 93 per cent of the design and construction costs were competitively tendered, which by VAGO’s own admission, resulted in a ‘low risk’ that value for money would not be achieved in respect of these costs,” Mr Martine said.
He said the business case was “compliant with relevant guidelines” and that the benefits of the Monash works had been set out separately as well as part of the overall cost-benefit ratio.
Treasurer Tim Pallas also rejected the report’s findings this morning.
“The government rejects all of the findings of the market-led proposal report,” he said.
“It is illogical, incoherent and in many places impossible to implement.”
Government ministers had been nervously awaiting the release of the Auditor-General’s report, with some believed to have seized on it in recent weeks to argue against accepting a $5 billion private sector offer to help build the airport rail link.
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That bid has remained in stage 2 of the government’s market-led proposal process for more than a year. But the Auditor-General’s report shows Transurban’s bid progressed from stage 1 to stage 3 in just one month.
The West Gate Tunnel project has been plagued by soil contamination issues this year which have delayed major tunnelling works by at least six months and sparked fears of substantial cost overruns.