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Vic govt won't hand over Western Distributor peer review

Estimates & Committees
Janet Rice 19 Oct 2016

Senator RICE: How is the assessment of the Western Distributor proceeding?

Mr Davies: That is another one where we are in the middle of a process of toing and froing with the Victorian government—the normal process of doing our due diligence reviewing the business case, asking questions, getting the answers and so on.

Senator RICE: Can you tell me—and maybe you will again need to take this on notice—as to what documents you have requested from or that have been provided by the Victorian government to help with your assessment?

Mr Parkinson: Senator, we could take on notice the documents that we have been provided. Again, it is quite a long list of documents.

Senator RICE: Are there documents that you have requested that you have not been provided with?

Mr Parkinson: As we have discussed in this forum, and by correspondence previously, we have requested peer reviews of the Western Distributor project. The Victorian government has not forwarded those to us. We do not have those.

Senator RICE: So you have requested them actually. The answer to the question on notice said that you had not requested them.

Mr Parkinson: The answer to the question on notice preceded the letter, which is why they have different responses.

Senator RICE: Okay. So you have requested it. Has the Victorian government refused to provide them, or has it just not responded?

Mr Parkinson: I think 'refused' is a strong word. I would say that they have not provided them.

Senator RICE: Is this of concern to you?

Mr Parkinson: As Mr Davies said before, peer reviews are of interest. They are not fundamental to our assessment. We do not require them in order to complete our assessment. We appreciate the opportunity to review them when we have them.

Senator RICE: Tell me what you know about these peer reviews.

Mr Parkinson: We have not seen them. We do not know anything about them.

Senator RICE: Do you know the name of who undertook the reviews?

Mr Parkinson: No, we do not.

Senator RICE: Have you been following the case by my colleague in the Victorian parliament, Colleen Hartland, the member for Western Metropolitan, who has had a case in VCAT, Victorian Civil and Administrative Tribunal, to try and be accessing documents relating to the Western Distributor?

Mr Parkinson: No, I am sorry. I have not followed that case.

Senator RICE: She has been attempting to get the redacted parts of the business case, including the transport and economic modelling. So, those documents that have been redacted from the public business case that Ms Hartland has been attempting to get, do you know whether you have been provided with those documents?

Mr Davies: Senator, outside of the complete business case and any normal supporting documents, we are often relying on the proponent, whoever it is, on a project to provide us with relevant materials. As I mentioned, we look at that and, on occasion, we request additional information. That is not usually targeting a specific document. It is occasionally provided in a document that we perhaps did not know existed. So we do not know— it is more directing the questions and getting the answers to the questions rather than targeting specific documents which we are unaware of.

Senator RICE: So is it a concern to you that there are documents that you do not even know exist and that would be relevant to your assessment?

Mr Davies: It comes back to one of the earlier points; the broader planning of a transport system in any one of our cities, or anywhere for that matter, is a matter for the jurisdiction or government. There will necessarily be a whole suite of investments that they will be planning and projects they will be planning that come together to provide the overall transport solution. Therefore, there are many documents that we do not get to see.

Senator RICE: I know that you are strong proponents of open, transparent, accountable assessment of projects. So to me it would seem to be something that Infrastructure Australia should be advocating for—at least, to be told that there are documents relevant to your assessment—and not to have to go scrabbling for them.

Mr Davies: Again, we will ask the questions and often be provided with supporting documents as the proponent sees fit.

Senator RICE: In particular, with the transport and economic modelling of the Western Distributor, there have been serious criticisms made of it, from as much information as is in the public realm—and there is a lot that is not in the public realm. Particularly, the City of Melbourne has made the criticism that the transport modelling seems to stop at the edge of the city and does not take account of the impacts on traffic as it moves into the Melbourne CBD. And another criticism that has been made is that the benefit-cost ratio seems to be inflated in the public project as it is proposed because it is including the Monash Freeway as part of a project where they could be considered as two quite discrete projects. Given the level of criticism that has been made, and that a lot of the critical information obviously you still do not have, how can you be undertaking a thorough assessment? You do not do your own transport modelling; you have told me that in previous estimates. It is verging on negligence, it seems to me, if there is critical information that is being hidden from the public. It is apparently being hidden from you as to how a proper assessment of the project can be done.

Mr Davies: Again, Senator, we are doing our due diligence. We identify gaps in perhaps our understanding often, or from the information provided or indeed data, and that is the basis of the often long period of time of toing and froing with the jurisdiction to get the information we need to do our assessment. We are right in the middle of that process at the moment on this particular project. This is normal for us; we have this toing and froing.

Senator RICE: So is it of concern to you that you do not have the full transport modelling and the full economic modelling that has been done for the Western Distributor? In doing your due diligence, does that impact upon the quality of the assessment that you can do?

Mr Davies: We continuously to and fro until we have got the information that we feel is necessary to complete our due diligence.

Mr Parkinson: Can we just clarify, Senator, that we would not say that we do not have all of the economic modelling material or transport modelling material that is relevant for the assessment. You are correct. There may be other documents out there that we have not seen. That does not mean that we do not have everything that we do need. That assessment is still underway

Senator RICE: If you could list for me all the documents that you do have—in particular, there are documents that are publicly known that are not available, that have been redacted from the business case, and then there are these independent peer reviews that were not even listed as having been undertaken. If you could list all the documents that you do have and the documents you have requested, that would be valuable.

Mr Parkinson: Yes.

Senator RICE: There is another criticism of the project that has been put to me and I wonder how you consider it. I loathe to get into too much of the detail, but it is detailed in Attachment J of the economic modelling, looking at cost-benefit analysis. It is with regard to the inclusion of an unusual extra benefit of the road, and that is the extra value that it is said people will give to travelling in uncongested traffic. That is the travel time savings from reduced traffic congestion. Do you know about this particular aspect of one of the economic benefits that has been included in the economic modelling?

Mr Parkinson: In broad terms, I would be loath to make reference to that specific attribute, since I have already made an assumption which proved to be incorrect on WestConnex.

Senator RICE: I have been told that consideration of this benefit has not been used in an Australian project before and it is not standard practice, and yet it makes up 10 per cent of the economic benefits of the road.

Mr Parkinson: Certainly, it is standard practice to include travel time savings.

Senator RICE: Yes, but this is an extra benefit, not just travel time saving. It is the extra benefit that people are said to give. It is the top-up value if they are travelling on a road that is uncongested.

Mr Parkinson: We would have to have a look at that and take that on notice.

Senator RICE: Take that on notice and tell me what your assessment is as to whether this would be appropriate. Is it an appropriate thing to use in an economic assessment?

Mr Davies: As part of our overall assessment, that is obviously part of the work that we are still to complete. We would be looking at that as part of our due diligence.

Senator RICE: I would appreciate your feedback on whether you think this is an appropriate benefit. I am told that it has not been used before and it is 10 per cent of the benefits of the project. If you did not include it, it reduces the cost-benefit ratio very significantly—I am told probably down from 1.3 to about 1.1. I presume that the independent peer review would have looked at these things. So I return to what you feel the value to you would be to actually see what the independent peer reviewers have made of such concerns about the transport and economic modelling.

Mr Davies: Once again, our role as an independent adviser to governments is to do our own peer review and that is very much what we do. That is why these assessments take a period of time. We do not have access to a whole state government's library, so there is a necessary toing and froing with the jurisdictional proponent to seek answers to all the questions we have as part of our peer reviews. It is completely normal process.

Senator RICE: In response to your answer when you were talking about Melbourne Metro, you said you knew of the KPMG economic peer review but not of the peer review that was done by John Allard. Will you be requesting that peer review?

Mr Parkinson: As indicated, we are trying to move that evaluation towards its conclusion. We would have to consider whether we needed any additional information to be able to finalise that.

Senator RICE: Can you take on notice then whether you will be requesting that peer review?

Mr Parkinson: As I said, we would only request that peer review if we thought there were particular—

Senator RICE: That was released under a freedom of information request to my colleague, Ms Hartland. I put it to you that it may be valuable to you to include in your assessment.

Mr Parkinson: Thank you, Senator

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