Researcher Patrick Gallagher posted this scathing critique of WestCONnex on Facebook a few weeks ago. It's well worth a read to understand the 'good', the bad and the ugly of WestCONnex. Republished with his permission.
So, WestConnex. Is it a good project?
Let's start with the obvious premise - Sydney traffic is at best poor, at and times borderline nonfunctional. There are large areas of poor traffic flow at peak times, many at borders of peak times, some so poor they never really empty. There are particular chokepoints that can become disastrous on the offhand. It takes a single bridge/tunnel accident to render the city entirely inacessible on one side, and badly choked on the other.
Public transport is messy. There are simply too few buses, and since the last big route cuts, too few routes. The trains are a mess - the system for getting them 'on-time' means cancelling any late train, and lying about the rest. That's proven information.
For this privilege, the recent opal card amounts to a sharp fare increase for most journeys. Price increases are being vetted at all times as the shit network is losing money anyway - even though the point of public transport is not to be profitable, and in fact it best serves as subsidised travel, as that gets cars off roads, saves money for minimum wage earners, and promotes tourism.
So there is a problem.
But what part, exactly, of this problem is WestConnex going to solve?
From the earliest phase of planning to the final step of post-rollout transition this project is at best dysfunctional and at worst catastrophic.
There have been multiple WestConnex-style projects designed in the last decades, since back when pre-Wran days they should have just done it – they even had the land, until old mate saw it as a way to make good with developers by selling half the pipeline off.
The WestConnex plan is less efficient at service delivery than any given prior plan; some by margin, some by a great deal. The route is comparatively inefficient – using existing motorways means that the ‘extra road’ is minimal in those areas, and by bulldozing the connections through, disastrous in the connectors.
It is not a ‘new road’. It is a marginal enhancement of an existing road system that is neither direct nor efficient, and so saddles itself with many of the failures of the problem it was meant to solve. From the initial planning it gave up trying to actually fix the problems, and resorted to merely adding capacity.
Adding capacity is not a solution to volume of cars unless it moves traffic from more congested routes. WestConnex does not. However, adding capacity works when you add throughput – and there is no throughput.
If the road was continuous at its full length, it would be very effective up until it terminates at either end, particularly the city. Currently, there are five clearly-visible chokepoints, where the road narrows drastically in lane number. Each one of these effectively cancels the ability for sheer throughput to benefit moving cars, because they will stop traffic.
A road is only as fast as its slowest area, and some of these chokepoints are in ineffective places – places between which nobody will get off the road and some will get on. A ten-lane highway with a four-lane zone is a four-lane highway. At best. In some cases, the merging area can make things much worse, because it amplifies the delay cost of each error made along its length.
Notoriously, various British highways were made faster in peak hour some 4-8 years ago by removing entire lanes ahead of chokepoints, because messy merging is a major time cost. This also doesn’t account for accidents at these sites, which are not only more likely to occur but more like to cause terrible delays as the road narrows further temporarily.
WestConnex’s viability also depends largely on its various tunnels, which are completely ineffective at actually providing broad transit. The only use of a tunnel for road management is to efficiently move cars from one place to another with no deviations. It can work when it is used to move cars from a place that can handle mass traffic, to a place that can handle mass traffic, while avoiding a formerly used place with lesser traffic ability. However, they are the most expensive way of doing this by far.
Worse, they do not replace roads. They are severely limited in their ability to manage complex input of traffic, and simply have an entry, and exit, and several other highly-expensive input-output points, all strictly limited in placement. As components of a transit network they are disastrous, as their only benefits are entirely negated, and reversed, as they become in fact chokepoints.
In any case, by dumping traffic into the city without a proper integration point, all possible benefits are decimated regardless, as this becomes a massive chokepoint that cannot be resolved. The current plan of running through King Street, in particular, is idiotic, like directing a major road down a footpath (more on that later).
And as it happens, the alleged 60,000 extra cars the road can allegedly handle (more on THAT later) have nowhere to park. City parking is currently beyond capacity - anyone who drives their own car can tell you that. It is actually slightly beyond capacity, and the only thing keeping it down is that the city enjoys the least-worst – I won’t say best – elements of our crippled public transport system. Not because people want to use it, but because they are forced by parking limitations to use it.
Unless there is a vast expansion of parking, where are these new cars going to go? If even a third of people using the WestConnex are going to the city for work, parking networks will simply not exist to cater for them.
So it is clear from the start that WestConnex doesn’t actually meaningfully resolve any road issues. It just allows more cars onto a road without making it easier to get off or go anywhere.
This is the good. It is a crippled-by-design solution that barely aids a real problem.
Now for the bad.
The pricing model for this road is batshit insane. $17 billion is an incredibly bad price – it is three times more than the maximum value that the road delivers in traffic improvements, and it is also MUCH less than it would meaningfully cost to actually resolve the west-to-the-city road issue that currently exists, which would cost some $50 billion to do right but then would be a real solution for the next 20-30 years, whereas WestConnex is already defunct.
$17 billion is the most cowardly number to spend on this project – far too much to achieve what it will, but too little to solve the problem. It purchases only the ability to claim you are doing something.
$17 billion is $2 billion more than the reasonable estimates for a total revamp of Sydney’s public transport system; bus, rail and ferry, to modern international standards of decent world cities. Train networks are limited by rail lines but not in capacity – more trains fixes most of the current issues, even if it doesn’t actually improve things. Buses can be made far more numerous in routes and number, making a meaningful expansion of scope and carrying capacity to the network.
This can all be at public expense, meaning no need to raise tolls. The $2 billion left over could easily fund a light rail system, too, if you wanted one. Or spend that in the forward estimates by reducing tolls on transport to get more people on it.
The project was originally slated at $10 billion in 2012, but costs blew out badly even during the planning phases. Let me make that clear – this was a project so badly designed that costs increased before a single piece of physical on-the-ground work was done.
They are already close to double the original figure, and costs have gone up in every single years since it was proposed, by an average of $1.5 billion. Less than half of these cost increases are due to design changes; overwhelmingly, they are simply things costing more money.
The business case put forward to parliament for these increases was so poorly handled that it failed to include designs for the final – and most complex – portion of the program. That isn’t no final design. That’s no design.
The WestConnex figures for public benefits, if you elect to believe the people with the strongest reason to mislead, are $20 billion. Another single major cost blowout and the project will no longer be viable even in the public-works sense, by the most optimistic possible estimates a strongly-motivated team could buy. The odds are overwhelming that it already is.
The question is not whether this will be a waste of money, but how much public money is wasted. Remember, they do not even have final designs for this project, and it will not be finished until 2023 – assuming that remains true.
This vastly-overpriced contract is, also, going to become a private enterprise. The current tolls used suggest that it will cost some $10 to go from the furthest extent away into the city. That is as expensive as using the M2 network and the bridge/tunnel, so it is reasonable.
But to do so, they are converting a currently free road into a toll road. At best, this introduces a vast amount of extra expenditure on road tolls a year to people who simply don’t use WestConnex as intended; just using the old M4, for what will be between $3 and $6, in an area known to have lower incomes than Sydney’s average.
Unlike the M2, which added by and large new transport to the mix, WestConnex does not – it just finds a way to charge the public money for a road they earned to pay for upgrades they do not want. Then consider that the use of the full road for a full-time job would amount to $100 a week in tolls. That is over 10% of the median weekly salary for Australia; more than most spend on utilities or home food. For a travel option that does not provide a new route but absorbs an existing, free one.
Considering that, confining income to Sydney, nearly half of people earn less than this, it’s easy to see that many people simply cannot afford to use this road. After all, a full time job on minimum wage would see this take some 17% of your weekly salary. With the M4 absorbed into it, they will be forced to seek an alternative. I’d like to tell you which, but I can’t. That is because there has been no meaningful modelling whatsoever of where this project will push non-using traffic.
Now also consider that as a to-be-privately-owned toll road, there are other issues. Foremost, that these often involve per State contract the explicit elimination or reduction in utility of alternate routes, a la Lane Cove Tunnel. Exactly what that would amount to for a project of this magnitude is impossible to guess, and we will never know thanks to modern commercial-in-confidence contracts for monopoly projects being treated more securely than classified military documents by state parliament.
What else is sure is that, as has been explicitly the case in such projects by these exact contractors, is that the state government will agree to provide no public transport alternatives to the road itself. There is no contract to prove this, as it is being kept secret by the government, but this has been done before by this exact collection of contractors. So this vastly expensive program is going to actively undermine the provision of public transport in the area. One of these will be true, as no major road toll charging program for the last ten years in NSW has not included one of these.
So this crippled-by-design solution that barely aids a real problem is, in practice, a catastrophe that even by the most optimistic estimates is not worth it, and contains so many flaws that any modelling data used to show its benefits is meaningless.
And now for the ugly. And it is very ugly.
This program is dubious, desperate, and corrupt on a scale that boggles the mind.
There are obvious, surface-level corruptions.
The first is that this project involves the compulsory acquisition of some 200 houses, so far, and 407 houses were valued for this process as of the last time this was made. These houses have been systematically undervalued prior to purchase, often to the scale of hundreds of thousands of dollars, with consistency and lack of transparency, using a mechanism that has been highly distorted for some years now, and that has been repeatedly admonished, including by Liberal-led parliamentary committees – whose Liberal members such as then-committee-chair Matt Kean have been utterly silent on since.
Submission made to the WestCONnex M4 East EIS by Cameron, 9, whose home was forcibly acquired for the toll road
A report commissioned by the finance minister of 2012, Greg Peace, warned that this system was unfair, confusing, badly-handed, was utterly failing to explain itself to homeowners, and effectively from the ground-up capable of undervaluing property – all specifically in the case of WestConnex-related compulsory acquisitions. This report has since been kept secret by the state government.
Instead of acting on this information, the state government has acted upon homeowners, at a level unprecedented in modern government.
The second is that all of the public land, mostly parkland, assigned to this project has been done so with the least quantity of review legally possible. The environmental impact statements (EISs) of every stage of this project have been farcically poor, literally mocked by most BOOT groups – and far from ‘greenies’, these are the corporations presiding over the highly-dubious 2013 Planning White Paper and its notoriously shitty environmental protections. Some EISs were literally discarded and secondary, more-favourable statements were following, to the surprise of nobody.
Then there is the question of urban impact. If this system is going to include King Street, it cannot be done. That is effectively a two-lane road, one each way. To remove the parking and replace it with a higher speed limit would effectively obliterate the street culture of the area. Shitty though travel through it is, for it to be fixed would require, in effect, Newtown to end. And make no mistake that this will happen – even though this will fail to remedy that this is a disastrous chokepoint in the network regardless of intent, to do otherwise would be to admit this.
And this is when it goes from merely corrupt to profoundly corrupt.
We’ll be looking at just two of the firms involved, Leightons (who are now called CIMIC but everyone ignores that), and AECOM (who used to be Maunsell). These are representative of the kinds of firms involved in this project.
Leightons (huge construction firm, if you don’t live in Oz) holds contracts for $8 billion of this project – around half of the project, and retaining enough each time costs increase to maintain that proportion. These contracts were awarded BEFORE EISs were prepared for this project, before approval was given.
To the surprise of nobody, these EISs, then given to the Dept of Planning, had no issue with the project bulldozing five separate protected habitat areas for the already-contracted project. This is not unusual – a Leighton’s subsidiary wholly controlled by the parent company is currently being investigated for giving a $20 million bribe associated with Unaoil and Iraq oil contracts.
The EISs were prepared by engineering firm AECOM, including traffic projections and various environmental projections. Before they prepared these EISs they had been awarded $33 million in contracts for WestConnex. They are currently the firm to prepare the EISs for stage 3 of the project, for which they also enjoy several million dollars in contracts. They are also being sued for faulty viability estimates given in five of their last toll road public works programs that led to project failure.
These are the last contracts we know about. Since the project was transferred to the Sydney Motorway Corporation all contracts have been sealed. As an example of this body’s diligence, a Rizzani-Leightons consortium is currently delaying payments to its contractors, leaving over $1 million unpaid at any time, an action associated with improving capital position on the book at future expense to ward off bankruptcy. The SMC has accepted a statutory declaration that its contractors were paid up to date, even though this is provably untrue.
Bad? It gets worse.
The entire project’s financial viability – already on the absolute brink, since $20 billion looks a lot prettier at $10 billion than $17 billion – depends wholly on the quality and accuracy of the data in AECOM’s projections. These projections have been widely criticised, almost mocked, by independent experts. The government has declined to look further.
To get an idea of this firm, we will look at the M7 in Brisbane (Clem7, after it became a debacle). This was built by Leightons in partnership with ABN Amro, a bank who funded the project. AECOM (the Maunsell) was paid some $3 million for traffic modelling to persuade investors to invest.
They projected 60,000 vehicles a day, to 90,000 after six months.
This projection was catastrophic. Even after the toll was more than halved, from $4.28 to $2, it was used by only 27,000 cars a day. The M7 went bankrupt. The $2.2 billion tunnel sold for just $618 million.
A class action by investors was settled by AECOM for $280 million – one hundred times what they were paid for the job. A second case by Maurice Blackburn, a class action for different investors, is currently in the Federal Court for $150 million. Both centre on the profoundly flawed traffic projections of AECOM.
During the case a wide range of emails surfaced, showing eight separate AECOM staff gravely concerned that the project lead in Leightons, also on the board of the Clem7 project, systematically denied AECOM’s ‘low case’ estimate, the more realistic model, in favour of the ‘base case’ model, the optimistic model. This was repeatedly in a chain of emails told not to bother providing in the Product Disclosure Statement. AECOM was concerned, explicitly, that this would amount to deceptive and misleading conduct not to show at least both cases. Peter Hicks was actively involved in preventing this being presented.
Denis Johnston said, among other things, in a post-Clem7 briefing: “sponsors are driving our T & R (Traffic and Revenue) people to the very edge on every possible factor that contributes to the revenue forecast – knowing that they can later cast the forecast as 'done by the experts' and pass the risk onto dumb equity at the end.” They are “pushed to the most favourable position for the revenue – still in the plausible range”. But his position was “I am not saying that we can’t resist the pressure and insist on more conservative assumptions, but the Sponsor is not driven by a proper assessment of risk – and is therefore not really interested in the longer term consequences – because he is really only taking bid stage risk (i.e. the risk of losing his bid costs).”
Forecast vs reality of recent Australian toll roads. Source
Because Leightons only builds the roads, and sells it to investors to own, they have literally no risk if the project fails. Their only investment is in getting it built. They do not care what happens next, and nor do AECOM. AECOM’s own position on Clem7 was “Staying with Leighton team will mean more of the same – so far not all that bad for business!!”
The next year they were sued over four disastrous toll road programs in the United States funded by Macquarie Bank, in which Macquarie Bank made very substantial payments to AECOM for projections conditional upon the success of its bid to build the project, while not disclosing these payments. It was sued by the firm who insured them, and in 2013 settled the case the day before judgment – presumed to be adverse – would have been given in court.
Three of the four Australian tollways assessed by AECOM have since financially collapsed: the Clem7, the Lane Cove Tunnel, and the Cross City Link. AECOM is notorious in the industry. They consistently have: “worked out what the investor was going to be happy with in terms of rates of return, and they worked back to a set of numbers which would produce that return for investors. Such forecasts do not properly relate to the interaction of land use and transport, and it is not surprising that they are not fulfilled.”
Despite their catastrophic performance, they continue to be hired by the major firms whose projects have failed; ABN Amro, Leightons, Macquarie, and Transurban. They have received MORE contracts since these disasters, not less. This is because these firms have made substantial profits off these financial failures, and have a strong incentive to employ them. A contract they do not get because it is not viable earns them nothing, whereas a disastrous financial collapse of a successful project based on ludicrous estimates makes them billions of dollars.
The only regret these firms had is that they were losing the ability to attract independent investors, who were also suing them. They were aiming for a new business model, where governments would fund the project under the premise that, after opening, it would be sold to investors. They continue to make money because they build regardless of its success.
The government is willing to fund the project because investors are eager to buy it off them – after a time. They see this as building expensive infrastructure for minimal long-term budget investment.
The government bears the risk for failure, though, as these projects fail in their first few years if they do fail, and notoriously will not sue for failed projects as that embarrasses sitting governments politically. The investors buy the project on the governments risk after the failure or success is known, and so risk nothing themselves.
In 2012, Macquarie was selected by action premier Andrew Stoner to perform the financial scoping contract on WestConnex. Leightons and subsidiaries were paid to assist them. AECOM were selected as the traffic modellers. After two days of this, $25 million was set aside by Anthony Albanese for ‘advance planning’.
Unsurprisingly, these firms found the WestConnex project was certain to succeed.
In the midst of several hundred allegations of corruption at Leightons revealed in 2012, they and their subsidiaries continued to make payments of some $1.6 million yearly in political donations; around $900,000 to Labor state/federal branches, and $800,000 to Liberal state/federal branches.
In 2013 the business case for WestConnex was presented by RMS staff on advice from Macquarie, Leightons, and AECOM, amongst others. Several independent reports on this case remain closed. It was criticised by the NSW auditor general, who amongst at-times spectacular criticism said "it was not able to form a view on whether the project is a worthwhile and prudent investment … for the NSW government".
Denis Johnston and Stuart Dalziel, who were involved in the Clem7 estimates, and made emails concerned about their profound flaws but refused to act on them, are engaged in estimates for WestConnex traffic modelling. Johnston is an ‘independent modeller’ on the project. Johnston in particular has strongly pushed to protect traffic modellers from being sued for providing inaccurate information, even misleading or false information to ‘protect the industry’.
Michael Batchelor, also involved, was instrumental in securing the WestConnex project, has since left the firm and was paid some $450,000 by RMS to ‘assist interfacing’ between the firms involved.
Jay Stricker of the RMS signed off on AECOM’s M4 EISs, and after a decades-long career in RMS within two years, became Transportation Director at AECOM.
The Federal government has ordered several reviews into the WestConnex project. None have been made public.
The State government has not ordered any reviews into WestConnex. RMS will not reveal any information about its contracting arrangements as it is ‘commercial in confidence’.
And now Mike Baird is directly involved. Despite receiving literally tens of thousands of public submissions into every aspect of this project, including hundreds directly related to AECOM and Leighton’s role in it, he has done nothing, nor has the government.
Instead, they have pushed ahead with council amalgamations. These amalgamations have been widely criticised as being poorly-designed, even inexplicable. I won’t get into the details of why they are so bad here as this is already four hours long. But, interestingly, the first wave of amalgamations, now complete, has happened along the exact group of councils that are opposing the stage 2 and 3 WestConnex proposals.
This merger, which proceeded to the planning phase immediately after local council elections, will see councillors removed and replaced by appointees for the two year period prior to the next council elections. Councils in areas of federal Coalition politicians who expressed concerns that public outrage would affect their electoral chances at the upcoming election. Every non-parliamentary government body associated with the merger outcome has distanced itself from the decision to merge.
These two-year appointees hold all powers of local councils, including those of agreeing to – or opposing, state-approved public works projects. The two-year window these appointees will occupy their offices is exactly the length of time required for the WestConnex project to proceed until all three stages are under construction, and no council action can now stop them – meaning nobody is now in a position of authority to stop WestConnex until it is too late to stop. All appointees have extremely strong ties to the State Liberal party. Most are members. Some are high-ranking members.
Another component are new anti-protest laws, which I have been angry about in such detail I needn’t repeat myself here. They entered parliament within weeks of protests about WestConnex and council mergers intensifying rather than dying down as the government publicly predicted, and have passed into law days before council mergers proceeded.
I am not finished. There is much, much more.
But I am done.
The WestConnex project has cost $17 billion, billions more to come, a likely financial collapse of the entire network, rare public land, the last major toll-free motorway to the West, any opportunity to establish a public transport system west-to-city that actually works, several public parks, some highly threatened areas of biodiversity, any trace of local democracy or the pretence that only local councils gerrymander local elections, the last scrap of faith anyone had that the Baird government is not openly corrupt.
In exchange a couple of people in cars will drive faster down the road until they hit the bottleneck built into the system because the dictatorial fuckbag who engineered this public farce to channel tens of billions of public dollars into developers' pockets couldn't even be bothered to build a real road network.