The Morrison/Frydenberg Budget Bonanza - oops

$100 billion, good or bad? What the Lobbies and PR don’t want us to know

Past elections saw genuine political battles such as over the Snowy, Warragamba, sewerage backlogs and Infrastructure Australia. There are two constants in the current blaumange: both sides want more metro trains; and neither, no one, wants us to delve into “$100 billion over 10 years”.

There are always choices, even if the choice is a blind eye, and with the increasingly sloppy, politicised way that “decisions” are made, there are always “unintended consequences”. The simplest question is, what does the balance sheet look like? What are the benefits and what are the costs? 

The $100 billion comprises a bucket of previously announced projects such as $10 billion on Inland Rail and $5.2 billion to Badgerys Airport, both being off-Budget. As Mark Ludlow of the AFR commented, this “could create a fiscal timebomb for future governments if the projects do not deliver commercial returns and the equity investment has to be moved back onto budget”. Inland Rail is a real worry as its economic case has been destroyed by the Western Sydney Metro (below). 

Large amounts go to congestion works which will cause construction-related congestion, if not longer-term through induced demand increases, and create resource cost increases by stretching construction capabilities across the country. The Government has not acknowledged or calculated these effects even though they were debated during PM Rudd’s GFC programs.

The promise of a fast train from Melbourne to Geelong is stated to be $2 billion, receives just $50 million over three years, and is said by the Victorian Government to be really $20 billion. $3.5 billion goes to a Western Sydney metro that will cost no less than $20 billion, and indeed an extra $20 billion and more if alternative rail freight lines have to be built as a consequence of putting metro trains across the plains.

The PM gave nothing to Berejiklian’s broken promises in his own electorate, primarily the deferral of the Gateways and F6 which would reduce truck impacts. Nor did he fund Berejiklian’s incredible 5 fast train routes but did put $40 million in for detailed assessments of five fast rail corridors from Sydney to Wollongong, Sydney to Parkes (via Bathurst and Orange), Melbourne to Albury Wodonga (duplicating CLARA?), Melbourne to Traralgon, and Brisbane to the Gold Coast. There would be no change from $100 billion and none will happen.  And that is only the Big Ticket items ....

The $100 billion thus becomes $200 billion.  That is a recipe for increasing community cynicism.

As an aside, Turnbull promised innovation. There are no signs anywhere of clever solutions to chronic problems in small areas like Bondi Beach, large areas like the Northern Beaches, and whole regions like South Eastern and Western Sydney, Wollongong and Newcastle. O'Farrell failed to deliver sensible planning and local government legislation (despite having the answer in the form of "Creative Reconstruction"), while Baird made both worse than before 2011. We should not forget the costs of digging muddy holes deeper.

The overall consequences include increased congestion in areas that are not receiving attention, including all fringe growth areas whose commuters congest interstate freeways. 

They include economic damage to the Inland Bridge’s communities and to the three port cities which have been cut off: Newcastle is said to need a $10 billion long rail bypass of Sydney which is an hallucination; Wollongong a new rail line from Port Kembla to near Campbelltown and across the plains, including a long tunnel under shale geology, say $25 billion; and Port Botany – it is digging in to increase trucking instead of railing.

The previous Turnbull/Morrison Budget put $400 million into a rail duplication at Port Botany which is expected to put not one extra train on the tracks. That is a waste of half a billion. Conversely, Morrison’s Backyard will have increased truck numbers, accidents and diesel fumes. WestConnex will be out of capacity by 2031, meaning the whole tollroad system in the South East is up in the air. There have been no known comprehensive health- and congestion-related valuation studies on such scenarios.

The $3.5 billion into Western Sydney is code for a desperate attempt to camouflage Berejiklian’s NW Metro disaster which was shown to have a benefit/cost ratio of about 0.5, by the only independent such study of metros (Jim Steer’s for the then Treasurer Michael Costa). The metro is being incrementally grown from a fulcrum at St Marys, both to the NW and SE to Campbelltown. There will be a destruction of freight capacity through the Sydney Basin.

Parramatta CBD is being hit by the St Marys mishap as well as the under-funded and ill-directed Greater Sydney Commission axial tram which replaced the ParraCity network strategy. It and the CBD/Eastern Suburbs and the Newcastle trams seem to have been designed to cause maximum damage and produce minimum benefits.

Both Coalition and Labor support St Marys and a West Metro which is probably infeasible as a tunnel, ill-placed considering residential densification potential, and too expensive, too long term, and too risky compared with the obvious options both refuse to consider. The economic costs in that corridor will be massive, taken with WestConnex’s drastic impacts at Rozelle – 20,000 more vehicles every day and all Berejiklian can do is spend $4 billion moving an intersection 1 kilometre to no effect, instead of $1 billion on a clever transit bridge.

Against all that, transit capacity in the Illawarra hits a crisis in 2020 and coal in 2030 – which are within the long lead times for major works. Sydney will be short some 14 million TEU container capacity versus the 5 million it will have, a shortfall of 70 per cent, in that timeframe, with none of the needed support from Newcastle, Brisbane and Melbourne. Newcastle, Kembla and general logistics reports are all pie-in-the-sky.

Treasurer Frydenberg pointedly refused to “repair” the City Deal/ports situation through MYEFO in December 2018. 

Former Treasurer Peter Costello’s Budget Honesty Act suggested the proposal to repair was appropriate; and the refusal included the involvement of Baird’s Treasury CEO who is now head of the Federal Treasury. In effect, the initial damage and the non-repair are linked.

Governmental economic and infrastructure incompetence at Federal and State levels is breathtaking. The Morrison $100 billion program, and NSW’s port and metro programs, are so illogical, so mis-directed, that their negative impacts will be many, many times larger. They will extend over Sydney and its regions in just the manner one would expect of a State Government which has no plan, no housing strategy, no matching of infrastructure with needs, no budget, just baloney.