local · Melbourne · Yarra

The financial case for the east-west link.


The financial case for the east-west link hinges on a prediction that toll road use will jump over the next 30 years because of rising wealth and shrinking petrol and CBD parking price rises.

A cabinet-in-confidence document, obtained by Fairfax Media, for the first time details key assumptions used to justify the $6 billion to $8 billion project, which the state government claims will produce a return of $1.40 for every $1 invested.

A discussion paper produced by VicRoads, the Linking Melbourne Authority, the Transport Department and Public Transport Victoria, reveals the government was able to boost its predictions for the road by as much as 15 per cent using a controversial assumption that time will be more valuable to future motorists because of rising wealth.

Behind the plan to justify the east-west link.Behind the plan to justify the east-west link.

The report, used to prepare the highly secretive business case for the road, says the methodology ”has not been used in any of [the Transport Department’s] other public transport projects or program modelling to date”.

Despite this, it says there is ”evidence to suggest that as the community’s wealth increases more people are prepared to pay tolls as they value their time more highly”. As a result, the business case assumes car drivers will be 1.4 per cent more willing every year to use toll roads over non-toll roads, while drivers of commercial vehicles will be 1.8 per cent more willing to pay tolls.

The document reveals that this assumption alone meant predicted traffic volumes were 15 per cent higher by 2031 than they otherwise would have been had the methodology not been used. ”This is … inconsistent with initial modelling for the Eastern Freeway undertaken for the Doncaster Rail Feasibility Study,” it says.

While the cost of inner-city parking is currently rising by about 4 per cent a year in real terms (above inflation), the business case assumes the annual rate of increase will fall by more than half to 1.6 per cent by 2041.

It also predicts growth in the cost of operating a car – mostly petrol prices, but also maintenance, insurance and registration – will slow from an annual rate of 2 per cent to 0.5 per cent by 2041.

A source said there had been internal concern that the government had been prepared to use ”garbage” assumptions to make the project appear to stack up, accusing it of manipulating modelling to produce a favourable result.

But another source familiar with the modelling work said the assumptions were standard.

While previous projects have relied on the ”in-house” Victorian Integrated Transport Model to assess major projects, the government outsourced the east-west link process to Brisbane-based company Veitch Lister, making scrutiny difficult.

Opposition planning spokesman Brian Tee accused the government of ”playing the public for suckers” by deliberately using spurious assumptions to justify the link.

”It is a fraud on the Victorian people, and the real price is the schools, hospitals and roads which could have been built if the government wasn’t so hellbent on delivering this dog of a project,” he said.

A government spokeswoman said the Comprehensive Impact Statement, due to be released in November, would include further, detailed traffic modelling information.

A government source described the earlier document, from mid last year, as out of date, saying it should not be relied upon.

The government has so far refused to release the full business case for the project, releasing instead a ”short form” version asserting the project will generate a return of $1.40 for every $1 investment. Earlier studies have found the link, connecting the Eastern Freeway to the Tullamarine Freeway, would be unlikely to be viable, generating just 50¢ for every $1 invested.

Read more: http://www.theage.com.au/victoria/secret-case-for-link-revealed-20131001-2ur5r.html#ixzz2hpPSa8Js


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