22 November 2012
Australian PPP failures a warning for Transmission Gully
New research shows that Public-Private Partnerships (PPPs) are a recipe for expensive, white elephant highways, Green
Party transport spokesperson Julie Anne Genter said today.
Recent research from Australian Professor John Goldberg shows that PPPs are a bad investment that routinely grossly
over-estimate traffic volumes and, therefore, the economic benefit of PPP projects. Professor Goldberg concludes: "The
public-private partnership concept has failed in Australia”. Additionally, analysis conducted for the Green Party
confirms a legacy of cost blow-outs and low traffic volumes.
“The failure of the PPP model in Australia should be a lesson for New Zealand. Yet the National Government is repeating
the same mistakes by announcing a PPP for Transmission Gully,” said Ms Genter.
“Private consortiums in PPPs know that they have an effective taxpayer guarantee on their investment. That results in
over-hyped projects that end up costing billions more than expected and fail to deliver the promised traffic volumes.
“In Australia, ordinary investors have lost their shirts and taxpayers have been saddled with multi-billion dollar
bills, while the investment banks and developers walk away with enormous profits.
“The companies operating Cross City, Clem7, and Lane Cove PPPs all failed soon after their projects opened and the
Brisconnections company is heading the same way. New Zealanders would face a similar debacle if the Transmission Gully
PPP goes ahead.
“National has already acknowledged that borrowing for the construction of Transmission Gully rather than paying for it
out of the National Land Transport Fund will add $300 million in interest to the cost of the project before it even
opens. If the Australian experience is anything to go by, this would be just the first of many cost blow-outs.
“Public-Private Partnerships have proven to be a very costly failure across the Tasman. Why would we repeat that mistake
here?” said Ms Genter.
Summary of major PPP roading projects in Australia
Australia PPP Roading Projects
Project
State
Initial Forecast Cost
Actual Cost
Traffic Forecast
Actual traffic
Clem 7 Tunnel
QLD
$1.2 Billion
$3 Billion
Opening 60,000
34,705 (2010 peak during lower toll period)
100,000 (2012)
28,086 (Feb 2012)
Lane Cove Tunnel
NSW
$1.1 billion
$1.6 Billion
110,000 (2007)
40,000 (2007)
120,000 (2010)
66,694 (2010)
67,795 (2011)
WestLink M7
NSW
1.856 billion
$1.9 billion
150,000 (2006)
100,000 (2006)
225,000 (2010)
128,973 (June 2010)
135,691 (June 2011)
Cross City Tunnel
NSW
$620 million
$1 Billion
87,600 (2006)
34,000 (2006)
Melbourne City Link
VIC
$1.5 Billion
$2.15 Billion
730,000 (2011)
710,483 (2010)
747,021 (2011)
Go between bridge
QLD
$120 million
$342 million
12,800 Oct 2010
11,700 (Sept 2010)
17,500 2011
Peak 15,783 ($1 reduced toll)
Brisconnections
QLD
$4.8 billion
135,885 (August 2012)
81,470 (August 2012, no toll for account holders)
53,172 (October 2012)
Eastern link
VIC
$2 billion
$2.5 billion
300,000 (2012)
200,000 (2012)
250,000 (2009)
158,900 (2009)
Compiled by the Parliamentary Library
ENDS