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Janet questions Infrastructure Australia

Estimates & Committees
Janet Rice 23 Oct 2017

Senator RICE: I'm interested—you won't be surprised—in an update as to where Infrastructure is at with its assessment of the West Gate Tunnel, also known as the Western Distributor, in Melbourne.

Mr Davies: Since we last met, we've had some meetings with the Victorian government agencies in July, and they are preparing some additional material for us which we hope to receive in the near future.

Senator RICE: Your website says that it's in progress, but you're awaiting further information from the proponent.

Mr Davies: That's correct.

Senator RICE: What information specifically are you waiting on?

Mr Davies: This information is regarding some of the issues we've raised quite some time ago, around questions around the project and its costs and its benefits.

Senator RICE: Can you be more explicit about what information you've requested?

Mr Parkinson: As I think we discussed last time, we have sought further detail about some of the modelling and the benefit estimation associated with that project. We wouldn't want to go into more detail about that here, because that is an evaluation which is still underway. I just echo what Mr Davies has said: we're actually very pleased that the Victorian government has re-engaged with us on this, and we are looking forward to receiving further input from them.

Senator RICE: So you met and they agreed to give you further information. That was July?

Mr Parkinson: They have indicated that further information will be forthcoming.

Senator RICE: It's October, so we're now three months on from that July meeting. Do you have an expectation as to when the Victorian government is going to furnish you with the information?

Mr Parkinson: No, we don't have an indication at this stage.

Senator RICE: And did the Victorian government propose a time line, or did you have an expectation of a time line, as to when you'd get the information from them?

Mr Parkinson: The work that we've asked for is fairly complex. It's not unreasonable that they will take some time to address the questions that we have asked. Some of them are difficult questions.

Senator RICE: So what is your expectation of what a reasonable time line would be to get the information back from the Victorian government?

Mr Parkinson: That really depends on when they were able to bring the consulting team back on board, what their availability was, and what the capacity was to look at things like modelling and get the right experts. As I said, these are difficult questions and it's not unreasonable that they'll take some time to address them.

Senator RICE: Would you expect that the Victorian government should delay any announcement of proceeding with the project until they have given that information to Infrastructure Australia?

Mr Parkinson: As I understand it, the Victorian government has committed to going ahead with this project, regardless of any Commonwealth funding support. That's really a matter for the Victorian government.

Senator RICE: So you could envisage a scenario where they hadn't got the information back to you and they would decide to take the next steps and proceed with the project?

Mr Parkinson: It's really up to the Victorian government to come back to us.

Senator RICE: But you could envisage that that could be a reasonable scenario that could occur?

Mr Parkinson: I couldn't speculate on what their intention is.

Senator RICE: But you haven't got any commitment from the Victorian government that they won't proceed until they've done this further work?

Mr Parkinson: It's not a commitment.

Senator RICE: Have you got a commitment from the Victorian government that they won't proceed until they've done this further work?

Mr Parkinson: They've made no particular commitments to us about this evaluation. We're working with them in good faith and looking forward to receiving further information, as they've indicated they will provide.

Senator RICE: Okay. So your expectation of that further information is that we're not looking until next year? Would that be your expectation?

Mr Parkinson: We would hope that we would get that information sooner. But, as you and I have discussed previously, we've been waiting some time.

Senator RICE: We certainly have. I presume that Infrastructure Australia is familiar with the evidence that was presented at our Senate inquiry into toll roads in August.

Mr Parkinson: Yes.

Senator RICE: And the evidence given by the experienced transport planner William McDougall, who worked with the department.

Mr Parkinson: Yes.

Senator RICE: He was involved with the independent assessment of the transport modelling that was undertaken, and his evidence was that the transport modelling was based on traffic data that was significantly higher than recent travel surveys and used an untested model for future forecasting, instead of the government's own forecasting model, and there was a methodological fudge rather than a real attempt to improve the modelling process. Are these issues similar to why you have asked the Victorian government to undertake a review of the modelling?

Mr Parkinson: Yes. Obviously we have a number of concerns with the business case as it's presented, and we've been pursuing those concerns over some time now.

Senator RICE: Yes. In terms of the specific criticisms that Mr McDougall had of the modelling, are they the same issues that you have asked the Victorian government to address?

Mr Parkinson: We don't want to discuss the details of our interaction with Victoria on that evaluation while that evaluation is still underway. Suffice it to say that we have asked some difficult and complicated questions around the formulation of that business case.

Senator RICE: Mr McDougall said it was an illogical model that overestimated the number of projected car trips and kilometres travelled for the proposed road and used a wider area to boost the population numbers using the business case. Are they concerns that Infrastructure Australia has as well?

Mr Parkinson: Infrastructure Australia undertakes its own assessment based on the material provided in the business case. Clearly we do have some substantial concerns, which we are working with the Victorian government to address.

Senator RICE: Yes. But can you confirm for me whether they include the overestimation of the number of trips in the model? Is that a concern that you have about the modelling that's been done?

Mr Parkinson: Clearly we have substantial concerns with the business case as it's presented, including the underlying model and detail, as I've mentioned. We have sought further modelling and further input from the Victorian government to address our concerns.

Senator RICE: Thank you. Mr McDougall also had criticism in general about the development of business cases for transport projects like this, saying that in his experience those trying to justify major transport projects like toll roads created biased business cases that produced bullish forecasts and optimistic economic and financial projections and said they would not stand up to independent review or scrutiny. How does Infrastructure Australia overcome these concerns, which are widespread concerns about the development of business cases for these major transport projects?

Mr Davies: A large part of our work is scrutinising these business cases and the underlying data or modelling that results in the benefits that are being claimed. We do that through direct scrutiny of that supporting work, but also through our own analysis, looking at some of the upsides and downsides of some of the assumptions that are being made. That is a substantial part of our work. Certainly we're not taking any assumption that's provided to us at face value. We are scrutinising everything. As we've said before in this place, that's really the due diligence we do. We're not being paid by the proponents—we're actually being paid by the Australian taxpayer to do a peer review. That's the function that we fulfil.

Senator GALLACHER: Can I ask a question on notice on that? Can we have the projects for the last 12 months geographically and your assessment of them? So Queensland, South Australia, Western Australia, Victoria—the last 12 months of business cases that have come to you, and your stage or rating of those?

Mr Davies: Can you just clarify the question in terms of the stage?

Senator GALLACHER: I will put it very simply. Victoria does not appear to get such an easy run, so I would like you to demonstrate that you're fair and equitable in terms of the taxpayer's investment across every state in Australia.

Mr Davies: We take the same approach to every project—

Senator GALLACHER: I just want it on notice. On notice would be absolutely fine.

Mr Davies: If you read over the last 12 months, all our assessments are on the website.

Senator GALLACHER: Thank you for telling me to go to a website. You come here at estimates, and I am entitled to ask you questions on notice. I would like that assessment supplied on notice, reasonable amount of time, to see what has happened geographically around Australia in terms of assessments.

Senator RICE: So you do these independent assessments of the project, not dependent upon the assessment that is in the proponent's business case. But clearly you do rely on data from the proponent, or in the West Gate Tunnel case, the Victorian government, to be able to do that assessment, don't you?

Mr Davies: We do, but we also check that data against our own databases and other publicly available information.

Senator RICE: If you do not get the data from the Victorian government—and I think you're going to continue to be waiting for a while, given how slow it's been up until now, and given their unwillingness to be transparent with that data, will you do an assessment? Will you end up completing your assessment of the West Gate Tunnel anyway?

Mr Davies: We can't currently complete the assessment without the additional information we've been asking for. If we could, we would have done it.

Senator RICE: From the Commonwealth's perspective, essentially it's good governance to do that assessment before a project is proceeded with, isn't it?

Mr Davies: When we received that business case, I think it was potentially the intention of the Victorian government to seek Commonwealth funding. In the meantime they have 100 per cent funded the project themselves and are proceeding with its implementation.

Senator RICE: But in general terms, it's good governance to do that independent assessment before you decide to proceed?

Mr Davies: It is always helpful to get an independent assessment of projects.

Senator RICE: Thank you. I'll move on to the Northern Australia Infrastructure Facility. I'm sorry I missed the questions earlier where there were some questions asked about the NAIF. I am interested in their consultation with Infrastructure Australia. According to the NAIF investment mandate they are required to consult with Infrastructure Australia where an investment decision is greater than $100 million. Infrastructure Australia has previously stated that it has not been approached by NAIF in relation to the Adani Carmichael mine or Aurizon's North Galilee rail line. Has NAIF consulted with Infrastructure Australia in relation to any project?

CHAIR: Sorry to interrupt you, Senator, but this has been canvassed this morning in this committee quite extensively.

Senator RICE: All I need is a yes or no answer.

CHAIR: You should probably refer to the Hansard. It will give you a very comprehensive answer to your question. Very comprehensive.

Senator RICE: Can I?

CHAIR: As long as 'yes' doesn't lead into the 10 questions we heard earlier.

Senator RICE: I have got three very straightforward questions as to whether the NAIF has consulted with Infrastructure Australia in relation to any project.

Mr Parkinson: Since we last spoke the NAIF has consulted with Infrastructure Australia on one project, for which Infrastructure Australia has seen only very preliminary information. We have not undertaken an evaluation. We have not provided advice back to the NAIF. We are awaiting NAIF providing us with further information so that we can undertake some evaluation of that proposal. What you might have missed is that that is a renewable energy proposal in Queensland.

Senator RICE: So NAIF has not contacted Infrastructure Australia in relation to a rail project?

Mr Parkinson: That's correct.

Senator RICE: At what stage of the NAIF assessment process do you understand that Infrastructure Australia is consulted?

Mr Parkinson: That is a matter for the NAIF, but it's usually when the NAIF is undertaking due diligence on the proposal.

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