Auditor General’s report means Feb 14 won’t be roses for WestConnex

The Federal Auditor General’s Audit of WestConnex is due to be tabled this Tuesday, probably at around 2pm.

Once it is released, what should opponents or supporters of WestConnex be looking for?

The first thing to remember is that some things will be off limits. This is not a full audit of WestConnex.

The audit is of the Commonwealth’s decision to commit $3.5 billion in loans and grants to the project and the focus will be on the process by which that decision was made, including the information the decision relied on.

This is where things ought to get delicate for what is now the Berejiklian government, but also for the Federal Government.

If the Auditor General’s office have done their job properly, then we can expect them to identify the following issues, which are already known:

  • All of the claimed benefits of WestConnex depend upon it making significant and enduring reductions in congestion
  • There is no publicly provided evidence that WestConnex will make significant or enduring reductions in congestion
  • Projects similar to WestConnex have not made significant enduring reductions in congestion
  • The claimed cost of WestConnex has several significant acknowledged exemptions, such as network extensions and land acquisitions
  • The claimed cost of WestConnex has several significant unacknowledged exemptions, such the Hill Road Ramps
  • WestConnex has numerous acknowledged and unacknowledged risks, but there isn’t any contingency included in the estimated cost
  • Major changes to the project have not been reflected in an increase in forecast cost
  • Recent toll road projects similar to WestConnex have typically experienced significant cost overruns
  • Toll-road projects similar to WestConnex have typically failed to justify the investment in them.
  • A prudent evaluation of WestConnex would have demanded evidence that WestConnex was somehow different to other recent failed toll-road projects
  • The evaluation of WestConnex was based on an unquestioning acceptance of the claims made for the project
  • On the information published by the State of NSW, the decision should have been to not invest

In addition to the above ‘known knowns’, there are a number of ‘known unknowns’ which we can hope the Audit will shed light on:

  • what is the size of the viability gap? (The business case acknowledges the existence of a ‘viability gap’, a shortfall between revenue and cost, but it does not acknowledge the size)
  • why has the estimated net present cost of Operating Expenses gone down from $1.465 billion in the 2013 business case to $1.330 billion in the 2015 business case? (the value is published in the 2013 business case; in the 2015 business case an attempt has been made to redact (hide) the value, but it was not properly redacted and can be extracted)
  • why was the NSW Government allowed to submit ‘P50 estimates’ instead of the ‘P90 estimates’ that Infrastructure Australia normally requires? (A P50 estimate has a 50% chance of being right, and a 50% chance of being too low. A P90 estimate has a 90% chance of being right, and a 10% chance of being too low.)
  • were all competing projects also evaluated at P50, or were any competing projects evaluated at P90?
  • if any competing projects were evaluated at P90 (as is normally required), what steps were taken to ensure those projects were not disadvantaged in the comparison?
  • what are the costs of the associated but uncosted network enhancements, such as road widenings and new bridges to carry traffic created by WestConnex?
  • for the risks identified, what probability was assigned, and what impact? What is the allocated contingency, if any?
  • on what basis were traffic forecasts done? are these forecasts comprehensive and credible?

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