Treasury has betrayed its core mission

Their words:

We achieve our purpose by providing advice, analysis and legislation to the Government that aim to support the effective management of the Australian economy by:

• Promoting a sound macroeconomic environment.
• Promoting effective government spending arrangements that contribute to overall fiscal outcomes and influence strong, sustainable economic growth.
• Developing well-functioning markets that encourage consumer and investor confidence.
• Supporting effective and sustainable structural reform.

Treasury has served the Government well for over a century by providing solid fiscal, revenue and economic policy advice, analysis, legislation and regulatory reform, and the stewardship of major changes in our economy. As we move through our second century, we must innovate, demonstrate our value, and pursue opportunities related to a changing world, to continue to be the Government's trusted adviser on the economy and economic policy.

MYEFO used strong words but lacked substance.  Who could disagree with this (except "put pressure"evades the following flaws):

• Population growth in recent years has put pressure on our big cities, even as a number of our regional areas and smaller cities call for more people to grow their communities and fill critical skills gaps. The Government is committed to improving the quality of life for all Australians. This includes maintaining our economic prosperity but also focusing on supporting necessary infrastructure, services and social cohesion. 

The 2018 Budget items needing repair remain as:

 1. $400 million to the duplication of the Port Botany Freight Line, PM Turnbull heralding the reduction in truck movements but

• a 2015-16 econometric study, the only one of its kind in Australia at that point, found that duplication would not put a single extra train on the line, meaning no reduction in trucking – DIRD gave every impression they knew naught of such published work, which is not surprising
• the Botany approach is the outcome of a Baird-led distortion of competition principles which ACCC is investigating, the effects being a long-term intensification of truck congestion in the PM’s own electorate. Berejiklian and the Nats Ministers have broken promises and lied – with the PM staying stumm (cf https://www.theleader.com.au/story/5660061/morrisons-backyard-problems/?cs=4012)
• my proposal was publication of a Green Paper based on my Eastern Seabord Long Term Rail Development Plan (2012 to now, ignored by Albanese, Truss, McCormack and Gay/Pavey et al). That could be funded within the $400 million.  It is reflective of the Property Council's call to "bite the bullet"

2. A $100 million lucky door prize to favoured consultants for an insignificant and implausible “business case”, being a Hail Mary Metro stub from nowhere to nowhere gift from PM Turnbull and Premier Berejiklian to the biggest blunder in Australian planning history - with the decision on who-gets-what resting with Mrs Lucy Turnbull who has significant inter-involvements across many fields, despite

• the project being completely illegitimate, with no adequate pre-studies, no “business case” BEFORE decision (which was clearly made in the Eastern Suburbs of Sydney, and is wrongly immutable), and no system integration, Minister Constance lying that Badgerys SSA will have transit support when it opens
• the concept permanently damaging the Inland Rail national priority, commuting effectiveness and congestion in the Illawarra and South West, Parramatta CBD (that City was excluded by GSC, Dr Kennedy and Minister Taylor, as were Wollongong and Blacktown), and Sydney/Parramatta faster rail
• the real motive being Premier Berejiklian’s embarrassment at the revelation of sodden assumptions under the NW and Bankstown “Hong Kong MTR Model” – in fact, the repudiation of the Baird Model, for reasons that were stated by this analyst as the beginning of the chaotic “planning stench” (BOF’s term)
• my solution being, reducing the largesse and potential corruption from $100 million to $0.5 million, with the balance going to what is most needed namely a proper planning process based around a Green Paper (my Eddington Bedrock: from Christie to Greiner to Gibbons).

NSW Deputy Premier, and leader of the Nats, John Barilaro, said on 24 October that “$4.2 billion reaped from the sale of NSW’s share of the Snowy Hydro Scheme would be used to deliver transformational projects that would "help secure a future" for young people in regional NSW”.

He also talked about more support for the Parkes intermodal terminal on the Inland Rail “bridge” that runs from Melbourne to Brisbane.  Parkes gets preference for collating regional products over Newcastle under his Government’s new Freight & Ports Plan.

He added, “the government was also investigating the potential for an "international air freight hub" to be established in a regional centre, with the aim of giving local producers "significant competitive advantages" to deliver beef, dairy, fruit, nuts and seafood around Australia and overseas”.  (Where could that be to be economically feasible?  Parkes too?  He’s from Canberra which has been pushing for that role.)

A day before (23 October) Barilaro had said that “absolutely …”, western district farmers and primary producers would “benefit from a container port at Newcastle” which had been obliterated by that same Plan.  Newcastle has no economic rationale for major container investment under even its own mantras.  Jake Saulwick said in the Herald that “The question was met with muted laughs from the audience”.

Politicians seem to confuse communities and to be confused within their own Parliaments, with NSW Nats’ Roads and Ports Minister tied to Port Botany and fighting her leader’s Newcastle  push (which he, himself, denied Snowy funding to);  while the Federal Nats are siding with many disastrous legacies left over from the same city-centric Turnbull’s Botany conspiracy.  That includes downplaying the freight capacity at the new Badgerys second airport.

Barilaro also excluded Wollongong from the $4.2 billion, even though the Illawarra is hitting a passenger capacity problem in 2020 and coal capacity crunch by 2031.  Turnbull’s metro train obsession cut off Kembla through the replacement of heavy rail in Sydney’s south west by lower metro standards.  As with Newcastle, it’s BOHICA (“bend over, here it comes again”).

The dominant Botany freight monopoly is down-playing Badgerys as having insufficient space and requiring significant infrastructure.  (Botany has the same challenges, of course.)  Moorebank’s Q&A section contains these two passages.

Why isn’t Badgerys Creek being considered as an alternative site for the intermodal terminal?

The Badgerys Creek airport site is unlikely to have enough spare space to also accommodate a container freight precinct. New rail and road connections to Badgerys Creek would also be needed if an intermodal terminal were to be built there.

To show that the Botany monopoly is all but irrelevant:

• Freight in the Sydney basin is heading towards 7 million import-export shipping containers a year. Asciano has announced that the port shuttle rail service to Chullora will ultimately handle 135,000 IMEX containers a year on top of the capacity the Chullora terminal provides for interstate freight. Moorebank will be able to handle a further 1.05 million IMEX containers a year and another 500,000 containers of interstate freight.
• After 71 weeks of negotiation, Botany’s meisters, , Turnbull and Berejiklian, dumped freight links and snuck in a completely different scheme which was designed to bolster the failing economics of the initial North West Metro.  Theirs is a metro stub from St Marys to Badgerys, running without metro connections in any foreseeable future.  It make no sense at all;  and there are no proper studies that say otherwise.

The Second Airport and Aerotropolis have gone from the best-connected to the worst in the world:  no passenger transit, no transit in the rapidly-growing South West, no support to the Illawarra which hits a rail passenger wall in 2020, and no connection from Port Kembla to the airport freight hub (which is now officially sterilised) and the Inland Rail Bridge.

Inland Rail cannot but has to connect with Kembla, Botany and Newcastle, if it’s to make sense.  Theoretically, if our Governments were smart, that “bridge” could build community sustainability along the communities it reaches. 

So the Bush is looking at an Inland Rail that doesn’t connect with NSW Ports, and possibly not with Brisbane, we’ll see;  and a CLARA fast train that cannot be built with no other option on the table.  Putting more money into Parkes brings headlines but not better services.  An air cargo hub would be nice but could it really be anywhere other than Badgerys?

All in all, it’s the city’s Botany monopoly versus the bush’s everything-else-you-can-think-of.

Date: 14 December 2018 at 5:34:24 pm AEDT
To: josh.frydenberg.mp@aph.gov.au, josh.frydenberg@treasury.gov.au
Subject: MYEFO risks

Josh

I took all of Peter Costello’s provisions into account and believe that there is an obligation under the Act to, inter alia 

1) review previous (2018) Budget provisions that will damage future generations - two nominated in specific terms

2) resolve economic risks, and stability and predictability of the tax burden - above and also two or more unconstitutional schemes set by by former PM Turnbull and Treasurer Morrison

3) restore sound fiscal principles where major financial commitments were undertaken on personal whim and without electoral or Parliamentary/ planning legitimacy such as grants to NSW projects with benefit/cost ratios under 1.0 and lacking risk and community engagement protections.

I make it clear that I reserve the right to make comment on Monday’s document if it fails to consider the dire circumstances I have outlined.

I am distressed at signs of rejection of my goodwill. 

The idea of using MYEFO as a medium for sensible adjustments by our national leaders came from Phil Coorey in the last Insiders program of 2018. Then Treasurer Morrison’s MYEFO of a year before had that spirit, and using it, here (again) are the reasons why the coming MYEFO should contain a compensatory clause (Treasury's own headings):

INFRASTRUCTURE

• Western Sydney Airport has not been given adequate transit infrastructure, in fact the St Marys Metro is inarguably the worse transit option in Sydney and even the world. The Aerotropolis has been crippled and the Inland Rail threatened. The 2018 Budget decision on the business case needs to be re-visited*.

                      * $100 million to lucky consultants will be a scandal. A better use lies in 

                         re-balancing “planning” across the Illawarra, SW and West and Sydney/Parramatta

• Inland Rail’s business case has been invalidated by the exclusion of all three NSW  Ports (detailed analyses have been provided/published) and emergence of independent air freight hub/s.
• Regional Rail attention in Victoria has not been matched in NSW and the population debate has been wrongly focussed on migration while the biggest factor is “city Vs the bush” – capital imbalances.

GUARANTEEING THE ESSENTIALS

• Housing affordability has been found to be damaged by the Metro in both Bankstown and North Shore sections, with an overall 5% of new dwellings committing over 90% of available budgets. Bankstown housing targets have been demolished, even that is being repeated on the Lower North Shore where the Greater Sydney Commission surreptitiously increased the housing target by 300 between 2017 and 2018
• Related congestion has been found to be worsening with axial densification without rail and road augmentation, fringe growth centres taking up interurban freeway space, and WestConnex adding 20,000 (20%) to daily traffic in the Rozelle area**. Trucking through St George and Sutherland is growing inexorably due to over-focus on Port Botany and Berejiklian’s broken promises on the Portals and F6, indicating a need to divert wasted money on the Botany duplication to re-panning of Eastern Seabord port and freight planning (part of my offering since 2012)
• The Sydney media are now reporting what I have been saying, the climate for investment in Sydney has been damaged by Baird/Berejiklian decisions and disappointing results for Chinese corporates and families. The Eastern Suburbs tram will be traffic chaos, traffic across the Bankstown and NW Sector commuting belts will be crippling in the run-up the March/May. (All aspects have been documented previously.)

                ** worsened by Berejiklian’s exclusion of the Goanna  – the only possible relief

The suggestion was for the careful exposure of population, project and governance factors producing adverse trends so as to ensure better outcomes i.e. the beginning of a “re-planning” exercise through iA as was intended from its inception:

• Make provision for a review of influences on congestion and housing affordability in Sydney/NSW and Melbourne/Victoria, and of options to improve outcomes.

This is a community engagement cycle that will be informed by release of Green Papers – “Eddington Bedrock” and of “The Eastern Seabord Rail Freight Plan”.

It is needed because of changes in the housing market, excessive concentration of container trades at Port Botany and withering of Pts Kembla and Newcastle, genuine calls from communities to have a bigger say, and the need for increased spending on infrastructure in regions, together with a responsible re-balancing of immigration flows, patterns and placement.

• Includes revelation of what BOF called “planning stench” as well as failed PPPs and recycled “promises”.

In the Property Council’s words in 2009 (still valid), echoed by COAG’s since-ignored 2009 directive to prepare a plan (killed by Berejiklian and Lucy T – or so it seems), and by the Planning Institute’s call for a pause, during Labor’s Metro’s death throes:

• NSW has stumbled along for years without a comprehensive transport plan for Sydney. NSW has planned project by project with no big picture to set priorities and look at overall system  management. It’s time to bite the bullet, admit past mistakes and develop an integrated long term transport plan for Sydney.

MORAL & "CARE FOR COMMUNITY" CONSEQUENCES OF ILLEGITIMATE DEFERRALS

It also included this:

• My legitimate recompense will cover a major donation to Save the Children (and the Smith Family’s campaign to save Australian children), 10 demonstration fire- and storm-proof homes that are cheaper to build than conventional styles, a national institute for prosperous regions (honouring past heroes from every State and Territory), commencement of the world’s first pure solar train, and a community Crystal Theatre that will be on Grand Designs. 
• Regional prosperity is my theme and there are many elements. The costs of recusal and delay sit on the heads of the ratbags who have mistreated me.

These sections in Treasurer Morrison's 2017 did not appear in Treasurer Frydenberg's 2018 MYEFO:

• Returning the Budget to balance by living within our means ...............8 
• Progress on budget repair measures......................................................10 

Initiatives in the Morrison MYEFO included $23.5 billion for schools, $2.1 billion for PBS, and $1 billion for housing. Snowy 2.0 came in at an unspecified amount. Several items were cancelled due to Senate and other reasons such as changing waiting periods for migrants and Higher Education thresholds. There was emphasis on “non-legislated”.

Frydenberg’s MYEFO included this extraordinary amount for purposes which Professor Tomlinson described as “unconstitutional” and which go through no due diligence protocols (with a strong risk of corruption through such gifting as pre-specifying $100 million for consultants to do less than $0.5 million worth of work, instead of scoping the work properly and then getting the best value for money bids):

• City Deals worth a total of $4.2 billion are being delivered in Townsville, Launceston, Western Sydney and Darwin. The Government has also announced its commitments for the Geelong City Deal while continuing to negotiate deals for Hobart, Adelaide and Perth. In addition, the Government has announced its intention to adapt the City Deal framework for regional communities through pilot Regional Deals.

The City Deals are non-legislated and variable, their performance indicators and outcomes are unclear (contrary to accepted practice for large projects), and it has been proven that local governments are incapable of going past local character matters into proper strategic network planning. (This has been contaminated further by Turnbull’s and Baird’s practice of offering lollies to mayors such as naming rights over stations (on a maybe basis) and for agreeing to amalgamations and City Deal compromises, especially where the decisions hurt their communities.)

The MYEFO contain mountains of “parameter changes” and other adjustments which are not specified in normal ways. The “budget aggregate” figures across the two MYEFO for 2018-19 are different: the convention is that estimates and actuals are stated so that there is transparency; but the Treasury practice here is obtuse.

My proposals would address all such issues and Treasury’s recalcitrance is unacceptable in my opinion.

• The Prime Minister's desperate call for "busting congestion" was repudiated, he has been seen to deny the only chance to achieve that and to be relying on under-skilled political appointees.  The 2018 Budget was wrong and Treasury is hell-bent on enforcing stupidity & ideology instead of economics & engineering

• Sydney's sustainability is in the same parlous state - but worse - as when Labor was defeated in 2011: no local government reform (a mess of on/off amalgamations, the same faces continuing), no planning reform (Part 3A having metastasised), $billions wasted on a metro that has in-built capacity limitations and wrong routes - the broken "Baird Model" serving some 5% of Sydney's growth as WestConnex's capacity is exhausted by 2031 - and on it goes, the destructive path of Cyclone Bairdijiklian.