IA rejects ‘significantly overstated’ Cross River Rail business case

Infrastructure Australia has rejected the business case for Cross River Rail, in a massive blow for multi-billion-dollar project’s chances of getting federal funding.

Infrastructure Australia chief executive Philip Davies said on July 27 the patronage growth and project benefits estimated by the Queensland Government in its business case are unlikely to be realised.

The Queensland Government says it is going ahead with the project, but Malcolm Turnbull has committed to not provide federal funding to urban rail projects until they are rated as ‘Priority Projects’ or ‘High Priority Projects’ by Infrastructure Australia.

Thursday’s official verdict means Infrastructure Australia will instead keep Cross River Rail as a ‘High Priority Initiative’.

“We have reached the conclusion that the benefits of the proposed project, as set out in the business case, are significantly overstated, and that the costs of the project as currently presented are likely to exceed its benefits,” Davies said on Thursday.

“Based on a thorough evidence-based analysis of the business case, we have found that the rail patronage growth projections and the estimation of project benefits are unrealistically high.”

CRR’s business case predicts rail patronage in the Brisbane region will increase by 6.9% per annum from 2015 to 2026, even in the absence of Cross River Rail. This figure, Infrastructure Australia noted, would be “a rate of growth not previously seen in Australia over such a sustained period”.

Infrastructure Australia also noted a 2011 business case for CRR predicted Brisbane’s rail patronage would reach 374,000 passengers per day by 2016, an estimate which has panned out to be off by roughly 230,000.

“The projected rail patronage growth in the [2016] business case is 7 times faster than actual growth in Brisbane over the last decade, and 2.5 times that of comparable projects in larger Australian cities,” Davies said.

The 2016 business case also incorporates a benefit of $2.56 for every car kilometre avoided thanks to the project in 2026, escalating to $4.14 by 2036.

“As a comparator, Sydney CBD and Melbourne peak heavy traffic decongestion costs have previously been estimated at just over $1 per avoided car kilometre in 2015,” Infrastructure Australia said.

“The methodology used to estimate growth in the value of time, and the methodology used to estimate vehicle operating costs, are both likely to substantially overstate benefits accruable to road users.

“The high proportion of benefits expected to accrue to road users is unusual for a public transport project, which would traditionally be expected to deliver a higher proportion of benefits to public transport users.”

Davies indicated the verdict did not mean CRR was a dud project, instead suggesting the State Government’s business case did not include all possible benefits of the project.

“We would welcome the opportunity to consider a revised business case from the Queensland Government addressing our concerns about the assumptions and projections used in the business case,” he said.

“A revised business case should also quantify potential benefits from land use change and urban renewal expected to result from the proposed project, and potential benefits from better integration of Brisbane’s rail and bus networks.”

Queensland public transport minister Jackie Trad rejected the verdict.

“We have been backwards and forwards with Infrastructure Australia since they’ve had the business case and supplied additional information at their request,” the minister was quoted by the Courier Mail.

“None of that information has been included in their analysis of the business case. This is incredibly disappointing.

“What they are telling Queenslanders is Cross River Rail shouldn’t be built until we reach a crisis on our network, until we see patronage figures increase to 150%.”

Shadow federal infrastructure minister Anthony Albanese also criticised the decision, saying the Turnbull Government should “stop the excuses” and fund CRR.

“While Mr Turnbull is happy to hand out money to projects in southern states with no evidence of their value for money, he is stonewalling on Brisbane’s infrastructure needs,” Albanese said.

“The only thing stopping Commonwealth investment in the vital Cross River Rail project is politics. Queenslanders deserve better than that.”

Federal urban infrastructure minister Paul Fletched defended Infrastructure Australia and its analysis.

“Infrastructure Australia has made its assessment based on the business case provided to it,” Fletcher said.

“But it has also indicated that it stands ready to consider a revised business case which might include benefits from land use change and urban renewal which are not included in the business case it has assessed.”

Source: Railexpress.com.au