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Government warned over ‘megaprojects’ recovery
The Australian government is being warned that multibillion-dollar mega transport projects flagged to stimulate the economy post-COVID-19 could have blowouts in costs and lack benefits.
Government warned over ‘megaprojects’ recovery
The Australian government is being warned that multibillion-dollar mega transport projects flagged to stimulate the economy post-COVID-19 could have blowouts in costs and lack benefits.
A report commissioned by the Grattan Institute, which analysed every transport project valued above $20 million since 2000, casted doubts over “megaprojects” – projects above $5 billion benefits to the economy.
The report states that 10 years ago, there was just one transport infrastructure project in Australia worth more than $5 billion.
Today there are nine, and costs have already blown out by $24 billion on just six of them.
The problem has been found to impact various states and territories.
Grattan noted the Inland Rail from Melbourne to Brisbane was cost at $4.4 billion in 2010; it’s now estimated to cost $9.9 billion.
While Melbourne’s North East Link was cost at $6 billion in 2008; it’s now expected to cost $15.8 billion.
The problems also extend to Sydney, with The Sydney Metro City & Southwest costed at $11 billion in 2015; this year the NSW government announced the latest cost estimate is $15.5 billion.
The report warned that pursuing projects conceived pre-COVID – particularly those without a business case – made little sense given population growth had stalled and the way people commute post-pandemic may change.
“The danger is that governments are rushing to waste our money on what may turn out to be a herd of white elephants,” lead author of the report and Grattan Institute transport and cities program director Marion Terrill said.
“The key lesson is that megaprojects should be a last, not a first, resort.”
However, the Australian governments are now fast-tracking transport projects in the quest for an infrastructure-led recovery from the COVID-19 recession.
But spending big on transport projects conceived before COVID makes little sense, because the pandemic has pushed population growth over a cliff, and fewer people will commute in future as working from home becomes part of COVID normal.
“The danger is that governments rush to build what may turn out to be white elephants,” the report concluded.
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