Auditor General condemns decision to tip government money into WestConnex

The Auditor General has found that the Commonwealth Government funded WestConnex, knowing that there had been no demonstration of benefits.

The decisions by both parties to provide significant support for the project were inconsistent with the advice produced by both Infrastructure Australia and DIRD. … DIRD’s advice consistently flagged that the project was in the very early stages of development and could not yet be recommended for Australian Government financial support.

The subsequent May 2014 decision to make the $500 million advance payment led to the project being approved without there being any documented analysis and advice to Ministers that the statutory criteria for giving such approvals had been met.

[W]ithout more detailed information [WestConnex] cannot be considered to have real potential when considered in the context of Infrastructure Australia’s reform and investment framework.

Further, when the project missed payment milestones, rather than corrective action being taken, the milestones were shifted to allow payments to be made anyway:

in order not to delay payments, milestones were agreed to after the respective event had already occurred or amended shortly before the payment was due to be made where New South Wales (NSW) had not met the milestone.

Although the focus of the audit was on the decision to advance money to the project, the audit did reveal that in less than two and a half years, WestConnex Stage 2 may have slipped by  as much as 18 months:

DIRD’s April 2014 advice to Ministers indicated that … construction of Stage 2 could be completed by up to two years ahead of schedule.

On 11 May 2015, the Assistant Minister for Infrastructure and Regional Development and the NSW Minister for Roads jointly announced the commencement of Stage 2 construction 18 months ahead of schedule…

On 16 September 2016, NSW had reported to DIRD that the Stage 2 main works were not expected to be complete until early 2020. This timing indicates that Stage 2 is less than six months ahead of the delivery schedule outlined in 2013.

[N]one of the 2016–17 milestones agreed in 2015 had been met…

The audit also revealed that expenditure has not always been accurately project managed:

The ANAO notes that reported expenditure information within IMS for WestConnex may be unreliable

reported expenditure for September 2016 was overstated by at least $319.4 million

initial reporting did not reflect the correct split between state and federal [funding]

Paul Fletcher, Federal Minister for Urban Infrastructure, responded that the Auditor General had not criticised the benefits.

“Nothing in this report raises any questions about WestConnex’s design, the construction program, or the benefits that WestConnex will deliver to millions of people in western and southwestern Sydney…”

The Minister is being misleading. The Auditor General did not examine the benefits. It was not his job to do so. It was the job of the Federal Government and the State Government, and they did not do so.

But now that Paul Fletcher has brought up the issue of benefits, we call for the State Government to pause all further work on WestConnex while an inquiry can be held into the true cost benefit of the project.

The full ANAO report is here.

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