22 July 2024

Museums, white elephants and white whales

| Peter Strong
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Is more light rail infrastructure for Canberra destined to be a ‘white whale’? Photo: Michelle Kroll.

My recent article about a Museum of Political Scandals and Controversies got a lot of interest.

One worthy comment was that we could have a hall in that museum dedicated to Australian infrastructure projects that cost a whole lot more than planned.

We all know that a ‘white elephant’ is an expensive infrastructure project that fails to meet expectations.

Australia, surprisingly, doesn’t have that many examples of infrastructure that were never used.

Overseas, we see airports that are constructed and not used (Spain), whole cities built that no one lives in (China) and military projects that create useless war machines (US).

What we do have in Australia are what I term ‘White Whales.’

These are infrastructure projects that are actually used but were delivered at a total cost wildly above the original contract price agreed by governments – and ultimately paid for by us as taxpayers – and also took much longer to finish (in the US, these projects are called boondoggles).

There are plenty of examples. There are various rail and tunnel projects in Melbourne and Sydney.

One is the West Gate Tunnel, which was originally costed at $500 million and is now, unbelievably, at least $10.2 billion.

The new Melbourne Metro Tunnel has blown out by at least $1.3 billion.

These tunnels will be used, but they are bankrupting that state.

The Sydney Metro West Line was originally costed at $18 billion and is now exceeding $25 billion.

While these projects will be useful, are they worth the money?

READ ALSO Sad day for America, lessons for Australia

We have the Inland Rail. Designed to keep Barnaby Joyce and the Nationals happy during a period of coalition government.

It will be used, but the original cost of $4.7 billion has blown out to $31 billion and counting.

There are plenty of other examples. Sydney Light Rail. Snowy 2.0 Hydro Project. The Humpty Doo rice project. Waverley Park AFL stadium in Victoria. Even the Sydney Opera House, for all its wonderful glory, had a huge cost overrun.

Most things eventually worked and were used.

We love many of them, but they could have been done much more efficiently, and were they value for money when considered on a cost-benefit basis?

Would other projects have delivered a better return for taxpayer funds?

What triggered the name is whether the ACT’s next White Whale is light rail.

We don’t know what it will cost, but if it is built, it will definitely be used. It’s just that, according to some, our grandchildren’s children will likely be paying for it.

I have found that mentioning light rail extracts a lot of emotion from people.

There are those who get very angry if anyone dares challenge their great infrastructure project that will bring the ACT into the future.

They do not wish to discuss costs.

Then there are those who believe we are wasting a lot of money on something that they believe most people won’t be able to access and will not be finished for decades.

They always ask that annoying question, ‘How much will it cost?’ and the government, annoyingly, doesn’t tell them.

So, I have decided, when in conversation, to call it the White Whale.

There is then confusion around that name. Do I have a speech problem? Exactly what am I talking about?

But it does cause anger to dissipate and furrowed brows to disappear.

READ ALSO Open light rail leg to Parliament first, urges public transport lobby

Then we have a more balanced, less emotional conversation discussing the pros and cons.

Why are so many infrastructure projects so poorly costed and planned?

Could it be the fact that the public servants involved have limited understanding and experience with contract law when it comes to the execution of large ‘fixed cost’ construction projects?

As a result, the construction company would be able to seek repeated variations in timing and costs due to poor contract specifications or limited project scope.

Then there is the politics.

Either the politics of getting elected (many infrastructure projects are announced in election years) or a pet or vanity project of a senior minister or political power broker.

There is also the relationship between big construction companies and big unions, which appear to be increasingly involved in government decisions to award large construction contracts.

Let’s make sure infrastructure projects are properly costed and planned; otherwise, there will continue to be billions of dollars spent on the wrong projects.

Or there will be billions of dollars spent that we can’t afford and could have gone to health and education.

In most jurisdictions (but not the ACT for some reason), there are independent infrastructure commissioners and bodies to help governments determine what is best.

These should have increased expertise on contracts, and more say in contract management and oversight.

It adds some complexity but could save many hundreds of billions of dollars.

If we aren’t careful, Victoria and the ACT will need a new version of Jeff Kennett to rescue them from bankruptcy by implementing draconian budget cuts and slashes.

If these costly projects were included in the Museum, then retired public servants could escort their grandchildren and tour groups through the displays and point to a project and say, ‘I told the government it would cost much more, but they wouldn’t listen’.

Excellent retirement opportunity.

Peter Strong was a Canberra business owner and CEO of the Council of Small Business Australia (COSBOA) for 11 years. He has announced his candidacy as an independent in the 2024 ACT election.

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The old military adage of Prior Proper Planning Prevents Piss Poor Performance unfortunately has become Piss Poor Planning Produces Piss Poor Performance in recent times and the lack of planning is a common theme running through the White Whale honourable mentions. In the case of our own light rail, despite it being a feature of sorts in Walter Burley Griffins vision for Canberra in reality it only got legs as a Greens condition for their support of a minority Labor Government, and this goes to the crux of the issue as highlighted in the article – politics.
If this had been a properly planned and costed model for ALL of Canberra (e.g. why does it not service the airport, pick up Russell on the way and go via Kings avenue through the office space dense area of Barton to Woden and onto Tuggeranong) then there may have been some buy in from the general Canberra populace and the horrific costs would have been laid bare for all to see with perhaps a realistic cost benefit analysis on the proposal. Alas, this was a thought bubble at best and made up as they went along.
Not having a proper cost estimate and some subject matter expertise then make for ripe pickings for the developer tasked with this endeavour who have of course done their profit margin/risk due diligence, have plenty of contract negotiation horsepower at their disposal and have written in sufficient wiggle room and a few contract variations up their sleeve when the government signs on the bottom line. The government of the day and their long-suffering public service minions never stood a chance. Nor did rate payers pockets!

Lefty Boomer3:13 pm 24 Jul 24

I love the light rail, and a route such as this through the spine and hopefully a few branches will make this a very liveable city. Planning my next trip now!

Yes if there is one thing this theme park Woketopia is missing is a good train ride that will permit all its visitors to explore the ACT and all its self righteousness!

There is a question that I have not seen addressed in the light rail debate. Canberra is by far the wealthiest city in Australia in terms of the average income of its citizens. Australia is one of the richer and more politically stable countries in the world. Perhaps those decrying the cost of light rail are correct, and we will be paying for it for generations. How did we come to live in a world where as wealthy and privileged a city as Canberra cannot afford an infrastructure project of this scale? Why are our governments so starved of cash?

I don’t think they are. Light rail costs around 1% of the Budget and is being co-funded by the Feds as much of it is on Commonwealth land. So no problem there – it’s just that some people don’t like to see any significant infrastructure go to public transport because they don’t use it.

Musicle,
The point isn’t that we can’t afford it, its whether it provides value for money or whether that expenditure could be more efficiently used.

Why should we use limited government funding for vanity projects, when that funding could provide a greater benefit if used elsewhere?

Canberra is a very disperse city which is why it’s very difficult to justify the huge expenditure on light rail, when other options would be far cheaper for the same transport benefit.

You’ll hear some people say it’s only a small proportion of the total budget but that amount is only for 1 stage on the easiest, most justifiable Stage 1 route.

Future stages are far more expensive, for even lower benefit.

It’s actually a huge impost when you look at the transport budget and how a better overall benefit could be achieved with the same expenditure for all Canberrans.

The ACT Government is drawing in the most revenue it ever has (more population paying higher rates) and yet is failing even in basic upkeep of existing infrastructure… where exactly is all the extra money going?

Leon Arundell1:36 pm 24 Jul 24

Light rail stage 2A is a classic White Whale. The government said it would cost $268 million. So far it has cost over $800 million. For a project that the government expects to provide only $150 million worth of benefits, that’s an enormous waste of public money. If the government had instead extended Adelaide Avenue’s transit lanes, then for about $50 million we would have rapid public transport all the way from Civic to Woden, 15 minutes faster than light rail, and with enough capacity to meet demand until 2046.

Peter Strong is running as an independent candidate in this year’s election and it is valuable that he has been given space in RiotAct to get his ideas out into the public. It is less than three months out from the election and I have not heard much from the other independent candidates and only negativity from the Liberals. I hope other independent candidates have the same opportunity as Mr Strong, to provide more clarity on what they have to offer voters should they be successful.

I am disappointed in this article. There is no mention of the complexity of the light rail project, nor the success of the first stage. This is the most complicated infrastructure project the ACT government has ever undertaken. Stage 2B will be the biggest change to the Parliamentary Triangle since the construction of the new Parliament House. Only a quarter of the project is completed at this time. Contracts for stage 1 and 2a are public and stage 2b will be released when finalised.

Mr Strong seems to be running on the same anti-tram, anti-government negativity as the Liberals. He does not express an alternative vision for our city and its public transport network or how it can be developed to support a vastly increased population and work force into the future. The very same negativity we have seen from independent candidates who stood unsuccessfully in the previous three elections.

You’re still leaving out the “Written and authorised by” part of your shill post.

Incidental Tourist11:30 am 24 Jul 24

Ask teenagers where they go tonight and they can’t tell. Modern adults are like them – their planning horizon is one day at most. Hence populism and grand standing is easy sell in politics. Politicians read this and they act like this. They make big announcements today promising everything with bells and whistles here and now knowing that their constituents do not expect to them to take any responsibility for what will happen tomorrow.

Correct.
I’m not going to get into an argument about whether or not we need light rail, but I think the point here is that so many of these projects could be run so much better with a little research prior to “turning the first sod”.
A lot of these things run by the goverments do start out as knee-jerk reactions and vote grabs with little fore thought, but the problem also exists in the private sector.
Look at the building industry with their people silos.

Planners need to look at not just what they want to build, but what exists in their footprint already.
Project Managers need to scrutinise the quotes they receive and check the quality of works and materials continuously through the build cycle.
It just doesn’t happen.

Anyway, by the time these clowns get the train down to Tuggeranong, I’ll be to old to want to go to Civic.

HiddenDragon9:56 pm 23 Jul 24

“Why are so many infrastructure projects so poorly costed and planned?”

It might have something to do with the fact that Australian politicians (and the officials who dance to their tune) have, for many years, insisted on pretending that every dollar of public expenditure is “investment” – our governments never spend money, they only ever “invest” it.

If you tell yourself this fairy tale often enough, you may well eventually come to believe that any “investment” of public funds will produce worthwhile dividends of some sort (even if it’s only in the form of bought and paid for votes) and that the more of it that is done, the better – regardless of whether public debts grow to unmanageable levels as a result.

On the latter point, every time the cost of light rail to the ACT budget is raised on this site, the light rail true believers are quick to assert that the costs are modest and easily affordable.

If that is so then we really do have a big fiscal problem in the ACT, because aside from light rail and the new hospital, there is not all that much else happening – beyond the provision (one way or another) of the usual services expected of the ACT government – which would explain the rapid growth in ACT government debt such that, on current projections, annual interest payments on that debt will equate to a few thousand dollars per household per year.

So true… I’ve often wondered how much of the ACT Government’s infrastructure spending is actually beneficial, having observed a lot of it that is actually detrimental (eg. the cycleways around Woden and Belconnen town centres that direct cyclists up the wrong side of the road, or the one in Tuggeranong that adds no function that wasn’t already provided by existing infrastructure, instead adding traffic congestion and vehicles idling uselessly at traffic lights while waiting for a green light to turn left – used to be ‘any time with care’)

I have never attended or used the services of Centrelink (substitute any service here), along with the majority millions of Australians. Does that mean because the majority of people don’t use this faciity then it should be deemed a ‘white elephant’……..

David Flannery5:42 pm 23 Jul 24

Once light rail extends all the way from Gungahlin to Woden, there will be 25 stops along the combined route. Passengers will make journeys between any two of them. ..the combinations are numerous (I count 600 in one direction, or 1200 if you also include the return journeys!). So, Light Rail Stage 2B will provide so much more than just the trip from Woden to Civic… but that’s all most complainants want to talk about, or even can see is its purpose. Connectivity along a north-south spine and sustainable suburban develop are just two of the very worthwhile benefits of light rail for generations to come.

David Flannery6:50 pm 23 Jul 24

Ok maths nerds, maybe it is only 600 combinations. But my point about LRS2 being more than just the Woden to Civic trip still stands.

A cleverly written article that highlights the numerous problems of poorly planned and implemented government infrastructure, hinting at current issues without directly attacking anyone.

Anyone remember the Sydney monorail?

It was fun but totally impractical. Sound familiar?

We only award tenders to the organisation that lies the most about the real cost of the project.

I actually think a large part of the issue with cost overruns is that the original estimated costs are so often ‘back of the envelope’ jobs by people who have little to no idea of what they are actually estimating. It is very, very hard to effectively write a contract to lock in such prices, without a million and one get out clauses that allow for variations.

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