Late last night, the Herald Sun unexpectedly published the entire East West Link business case, ahead of its official release today.
Some notes from me from a quick flick through:
p12 makes various high-level claims, particularly faster trips for motorists — but as we know, this benefit never lasts because traffic increases.
p17 flags the toll prices used in the modelling: (2012 pricing) cars $5.50 in peak, $4.40 off-peak. Light commercial vehicles $8.80 peak, $7.04 off-peak. Heavy commercial vehicles $16.50 peak, $13.20 off-peak. I wonder what regular motorists (especially those with commercial vehicles) make of these toll levels?
By comparison, bypassing the city along the Bolte Bridge or the Domain/Burnley tunnels (not both) currently costs $7.06 in a car, or $8.15 for both sections. It’s only marginally more expensive for both because there’s a cap… I assume it’s unknown if a similar cap could exist where adjoining motorways are run by different operators.
p17 says the funding gap between the toll revenue and the cost of construction is $5.3 to 5.8 billion.
p39 says north-south public transport is being degraded by traffic congestion, which may be the case, but that’s because authorities have allowed it to happen by failing to provide tram/bus priority through busy intersections such as Alexandra Parade. They continue to prioritise large numbers of vehicles (single-occupant cars) over large numbers of people. It’s important to recognise that while the greater East West Link project includes tram priority measures, these can be implemented without building a big road tunnel.
p41-42 appears to be cherry-picking statistics to try and claim there’s a lot of demand for cross-city traffic. For instance the diagram at the top of page 42 implies lots of cross-city traffic, but it’s mapping out in percentage terms the demand from different directions heading to the Eastern Freeway in the AM peak — in other words, feeding into the freeway in the counter-peak direction, as if counter-peak travel is where the congestion problem is.
A diagram on page 41 does look at AM peak from the Eastern Freeway, and like previous studies shows little traffic heading to the west of the city — 2% to the south-west (eg Newport area), 6% due west to Footscray and beyond, 7% north-west to around Essendon and beyond. The vast majority of traffic is heading to the CBD and inner north.
In comparison, here’s the screendump from VicRoads traffic status web site this morning (8:16am, peak hour). The camera image shows counter-peak the Eastern Freeway seems to be free-flowing. It also shows free-flowing traffic most of the way across to the west (in both directions), again underscoring that the east-west route isn’t the main problem; as per the page 41 diagram, it’s traffic going into the CBD and inner suburbs.
p100 forecasts traffic rampup to % of steady state volume: 91% by month 6. 96.5% by month 12. 100% by month 22. I wonder: Is this in line with recent experience?
A NSW Auditor-General report on Sydney’s Cross City Tunnel (see page 32) found that projections of 80% initially, and 88% after a year were about double the traffic levels that actually eventuated. Brisbane’s Clem7 and Airportlink tollways, and Melbourne’s EastLink had similar problems.
Note that in East West Link’s case the taxpayer bears the risk.
p165 Whoa! The construction cost is much much higher than theoretical revenue of $112 million/year (56x) relative to Citylink (8x) or Eastlink (20x). The average construction cost is also much higher per kilometre than those projects.
p168 The assumed tolling period is 40 years.
p176 Benefit Cost Ratio of stage 1 is 0.8 (eg it costs more than it makes) when “Wider Economic Benefits” (WEBs) are excluded. Including WEBs is 1.3-1.4.
Update: The earlier estimate, using the methodology preferred by Infrastructure Australia, came out at just 0.45. In later versions of the document, the methodology changed and the estimate rose to 0.8. The version released by the Herald Sun has the higher figure, and it’s been speculated that someone supportive of the project dropped that version to them deliberately to pre-empt reporting of the lower figure. Josh Gordon at The Age has some nice analysis of how the figure grew from 0.45 to 0.8 with some WEBs, and then to 1.4 by including other projects such as the Tullamarine Freeway widening, and even Wider WEBs.
WEBs are notoriously wibbly-wobbly in their calculation, and often controversial. For instance it’s not clear how they claim $2153m in agglomeration economies (specifically “growth in Melbourne’s competitive central core”) when the tollway doesn’t directly serve Melbourne’s central core.
It also claims a lot of benefits from travel time savings, but as I’ve already noted, we know these never last.
Compared to the 1.4 the road gets with WEBs, the metro rail tunnel (which is also an incredibly expensive project) apparently got 1.9. And compared to the 0.8 for EWL without WEBs, the metro rail tunnel got 1.17 — so at least it isn’t loss-making when evaluated without possibly dodgy WEBs.
p193. If they built the road elevated rather than underground, the BCR (excluding WEBs) would still only be 0.9. It’s only by building it as a surface road (eg a ground-level motorway, thus obliterating large areas of the inner-northern suburbs) that you can get a BCR above 1: 2.6 to be precise.
p209 summarises the revenues and outlays, and if I’m reading this right, seems to show toll revenue of about $200m per year against availability service payments from the government to the operator of about $345m each year. I assume by June 2023 that’s the “steady state”.
If the toll revenue doesn’t get that high, then taxpayers foot the larger bill. And remember this is only stage 1.
p211 ponders the state privatising the road later — that is, selling the toll revenue stream, presumably to offload the taxpayer risk in case revenue flops in the future.
I’ll keep dipping into the document as I get time in the next day or two, and may add some points as I find them.
Hopefully when there’s an official release in the next day or two, the PDFs available will be searchable — it’ll make finding things a lot easier!
And presumably there’s more detail coming as well — for me one thing that stands out is the courageous predictions of quick growth in tollway traffic and revenue, in the face of recent experiences with other Australian tollroads.
And I’d love to see detail on the modelling assumptions that show how well the traffic would flow if the revenue targets are met. It still strikes me that these massive tollroad projects can be profitable, or provide for free-flowing traffic, but not do both.
Update: The official release of documents has now occurred.