Cut the waste! Stop the boondoggles!

Junction Oval

Junction Oval

Victorian Premier Dennis Napthine announces a “plan” to spend $20 million upgrading Junction Oval at St Kilda to accommodate the AFL team named after the suburb, even though it hasn’t played or trained there for decades. The plan appears not to have been checked with the local council or the AFL, and would apparently need another $37 million in infrastructure funding from the Abbott government.  At first glance it looks to be a complete waste of money with few if any redeeming features.

The Melbourne East West Link tunnel is a vastly more expensive but equally dubious project in cost-benefit terms that Napthine has rammed through despite very widespread opposition, including from the ALP which has said it won’t build it under any circumstances if elected.

The Baird government in New South Wales is pressing ahead with grandiose motorway schemes which almost certainly wouldn’t pass any rational cost-benefit analysis, and the ACT government is also apparently proceeding with plans to build a 12 km light rail line which most definitely doesn’t pass any rational cost-benefit analysis.

Meanwhile, in the Northern Territory, the Giles CLP government is apparently about to announce a plan to sell the government-owned Territory Insurance Office, partly in order to qualify for infrastructure funding from the Abbott government, and partly to get out from under a huge potential contingent liability because TIO is apparently unable to reinsure risks for providing insurance cover for properties built in cyclone surge zone or on floodplains (many of which should never have been approved for development and construction in the first place).[1. I should emphasise that I actually agree with the (probable) decision to sell TIO.  But the policy and evaluative framework behind it, both at federal and NT levels, is almost completely absent.  It’s no way to run government.]

What will happen to Darwin foreshore properties if a cyclone surge arrives on a significant high tide.  The mooted TIO sale is partly the result of decades of bad planning, as well as the Abbott government's ill-considered infrastructure funding policies.

Nightcliff jetty in a fairly ordinary storm. What will happen to Darwin foreshore properties if a cyclone surge arrives on a significant high tide. The mooted TIO sale is partly the result of decades of bad planning, as well as the Abbott government’s ill-considered infrastructure funding policies.

What do these planning/infrastructure fiascoes in various states and territories have in common? Answer: – Tony Abbott the Infrastructure Prime Minister. Of course, the Infrastructure PM label is a false flag anyway, because as far as one can tell the Coalition government hasn’t committed any more funding to infrastructure projects than did its predecessor.  What it has done is to create an incentive for State and Territory governments to flog off existing publicly-owned enterprises and assets, seemingly without any form of evaluation as to whether a sale actually makes sense, in order to qualify for federal infrastructure funding that also appears to be granted without any meaningful cost-benefit assessment of the projects on which the federal money is to be spent. To the extent that there is any rationale behind the Commonwealth’s encouragement to sell existing state-owned businesses and assets, it appears to go no further than a universal blockheaded ideological “private good public bad” slogan. The objective of encouraging State and Territory governments with federal subsidies to use sale proceeds of public enterprises to fund new “core” infrastructure appears to be little more than an open invitation to the Premiers and Chief Ministers to indulge in massive and wasteful electoral boondoggles.

I wonder why no one in the mainstream media has noticed these patterns, and why no one is discussing them? They say we get the governments that we deserve, but surely we don’t deserve as bad as this. The Rudd and Gillard governments were a very long way from perfect, but at least they established a rigorous independent body called Infrastructure Australia to evaluate both the Commonwealth’s own projects and state and territory projects partly funded by the Commonwealth.  Rudd/Gillard conspicuously and unforgivably sidestepped IA evaluation when implementing the National Broadband Network, but in general terms IA provided a critically important accountability/transparency mechanism in areas involving huge expenditures of public money.

Infrastructure Australia has been almost completely sidelined by the Abbott government, a decision that has attracted almost no public attention. Except from Peter Van Onselen, that is:

IA is entirely independent of government, makes recommendations based on policy and research outcomes, and does not factor into its recommendations political considerations such as the marginality of seats being serviced by potential projects (or the need to help out state colleagues in the lead-up to elections).

In opposition, the Coalition pledged to retain this body, ­reappoint its chairman Rod ­Eddington (hardly a Labor stooge), and guarantee that projects costing more than $100 million go through the IA cost-benefit analysis.

In government, it has sought to bypass IA, hasn’t reappointed Eddington and won’t commit to cost-benefit assessments until after political decisions have been made. We have seen this in the announcements made concerning the East West Link in Melbourne, and WestConnex in Sydney. In fact on more than one occasion the government has proceeded with projects IA specifically concluded wouldn’t see a return on investment for taxpayers.

We are currently witnessing waste of public money on a gargantuan scale with little or no public scrutiny or discussion. And all this from a Federal Coalition government elected on a platform of cutting waste! It is truly bizarre.

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
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Hijinks
Hijinks
7 years ago

Hi
Interesting comments. I’m wondering if you could link to your criticisms of previous Labor governments abominable spending such as

The Victorian desalination plant
The insulation program
Handing over 250 million to the private TV networks
NBN
That’s just a start and I’ll offer more turkeys later.

Also give us the list of the spending backed up with cost benefit analysis.

Thanks.

GrueBleen
GrueBleen
7 years ago
Reply to  Hijinks

So Hijinx, what’s your point exactly ? That in order to criticise bad government you have to show that you’ve publicly criticised every previous example of bad government ?

Or what, that the moral and competence failures of others justifies equal or worse moral and competence failures by the current government ?

Hmmm ? Do please inform us.

conrad
conrad
7 years ago
Reply to  Ken Parish

The idea of securing the water supply was a good idea to many people in Vic (it still is given the long term predicted weather patterns and population growth), and at the time the government was really panicking as the dam levels were less than 20% and there were serious water restrictions, so I wouldn’t blame them for that. No doubt next time a drought comes around, which is more or less inevitable, the dams will quickly lower. However, there were cheaper alternatives, it’s just the public was paranoid and the government was too weak to go against this. So there is blame attributable to a number of parties.

Nicholas Gruen
Admin
Nicholas Gruen(@nicholas-gruen)
7 years ago
Reply to  conrad

Agreed. The thing to blame the Vic Government on was the way they funded the desal plant. Managed to nearly double it’s cost to Victorian taxpayers.

Paul Montgomery
Paul Montgomery
7 years ago
Reply to  conrad

Plenty of infrastructure projects have massive cost overruns, from the Sydney Opera House (~500% overrun) to the West Gate Bridge (~820% overrun). It’s too early to say whether the desal plant will be worth the money.

But of course, arguing about these things accomplishes the goal of Hijinks which was to distract attention from the Liberals’ complete incompetence. I guess we’re just lucky that Abbott isn’t building massive monuments to his own ego like Campbell Newman. Yet.

john Walker
john Walker(@johnrwalker)
7 years ago
Reply to  conrad

Paul the incompetence is bi-partisan.

Paul Montgomery
Paul Montgomery
7 years ago
Reply to  conrad

john, the evidence from this post re Infrastructure Australia suggests otherwise. If you are hanging the entire argument on the NBN, it’s a pretty flimsy argument since the NBN was projected to make a profit.

This sort of “both sides do it” equal opportunity pox-granting is gainsaid by the facts in cases like this. I know this blog strives to be centrist, but Ken has the right idea in that if one side is clearly doing the wrong thing, they should be called out on it without reference to positioning.

conrad
conrad
7 years ago
Reply to  conrad

Paul, both NSW and VIC Labor had appalling records on infrastructure projects. The Libs generally solve this by doing nothing (and will get voted out in part for it). Some of these things were caused by politics (“we don’t like flushing our toilets with recycled water”), and some were sheer incompetence.

For example, if a desal plant goes over budget, I might excuse that, as they are not the most common things (although this is moderated by the fact that we didn’t really need a desal plant anyway, since there were cheaper alternatives). Alternatively, if your electronic ticketing system goes massively over budget, despite them being pretty simple systems available off the shelf and extant in thousands of places, or if you build a train line where trains don’t have enough room to stop or can’t fit through a tunnel you dug, despite trains being around for the last 100 years, my ability to be sympathetic about cost over-runs becomes much less.

There are also other issues, like financing, where the governments appeared to try and get some of the worst public-private partnerships deals possible. I’m also not just saying this because I don’t like PPPs, as I’ve lived in places where they have worked well.

Paul Montgomery
Paul Montgomery
7 years ago
Reply to  conrad

The fact remains, conrad, that Hijinks is merely trolling to appeal to the “both sides do it” meme, when the OP is all about one side’s failings. Two wrongs don’t make a draw, and in this case it doesn’t make what Abbott is doing any less wrong.

conrad
conrad
7 years ago
Reply to  conrad

I think Abbott will be gone before he gets any chance to do anything :-) so the article is probably more relevant for how Labor can do a decent job in two years. In this respect, I agree with Ken that things like Infrastructure Australia are a good idea. Making the deals transparent to all in sundry would be an especially good idea.

Historically, in Victoria at least, the movement towards trying to make everything an in-confidence business secret was started by Jeff Kennett and was one of the worst things that could happen, as there is now a general trend to hide anything and everything. This was used by the current government to hide how the East-West link would work, and they will be kicked out next week. So at least people are annoyed by it all so something might happen, and I think this is catching.

john Walker
john Walker(@johnrwalker)
7 years ago
Reply to  conrad

As I said I might be seeing too much of Canberra but Complexity, reducibility, integrity and bullshit: struck me as very close to the sort of management culture we see in Canberra, a bit too often these days. And it is a culture that is still there regardless of who wins the election.

BTW Labor in 2008 did make some really needed moves in the cultural area, for example labor introduced a lot of needed and stringent requirements re the approval of funding of regional cultural projects (which included projects such as a big car racing track somewhere in Nth Qld). However At the very same time they introduced the Artists Resale royalty, without a RIS and the PIR has still to be released (that is if it has been done). The harm done has been significant, the cost to the public purse for arts projects has been large, but it was something for administrators to do.

Paul Montgomery
Paul Montgomery
7 years ago
Reply to  Hijinks

The next El Nino, which is now 70% likely to come this summer, will show us how valuable desal plants can be. The insulation program was actually 70% safer per installation than normal, according to the CSIRO. The Labor NBN was projected to deliver a profit, unlike the disgracefully sabotaged Liberal version. Nice try, Hijinks.

Abbott is just treading the pathway of Campbell Newman and many other “leaders” who can’t think past the short-term provincial concerns of their financial backers. He’s still in the Party of No: no vision, no accountability, no competency.

conrad
conrad
7 years ago

Perhaps I’m biased because I’m in Victoria, but people are sick of it at the State level. I (and I presume many others), can hardly even name the likely new premier, and I don’t think I can name any other members of his cabinet, but that’s not stopping the Libs getting flogged for all their crappy schemes and corruption — the East-West link/tunnel is pretty much dead already. Looking around Australia, the only place the Libs arn’t going down in a seriously fast way (including WA!) is NSW, but that’s against one of the most disgraceful backgrounds since Joe. So whilst IA might be sidelined, I think at the ground level a lot of the waste is not going to make it through thanks to people being getting sick of it at the state level. I don’t think this gets attributed to Abbott’s crazy schemes, but it is making the State Libs suffer a lot.

Mark Beath
7 years ago

Your comments on the TIO are interesting because it has been prominent in discussions around insurance issues in tropical Queensland. Warren Entsch has even floated extending its coverage to tropical Queensland and WA as part of his Northern Australia plan. I wasn’t aware that TIO may have issues with reinsurance cover.

I think I’m correct in saying TIO is also not regulated by APRA. This came up a few years ago at the parliamentary inquiry on insurance in Cairns and it turned out that neither the politicians or the representative of the Insurance Council were aware of this. However my understanding was that it was still the objective of TIO to comply with APRA prudential requirements.

There is a lot of misinformation being promoted on tropical insurance risk and comparisons, particularly by Entsch who remains in denial that despite Cyclone Tracy Darwin really is a lower risk than Cairns. Slightly off the main theme of your post but thanks for that and something to follow up on.

john Walker
john Walker(@johnrwalker)
7 years ago

Doubt that this can be simply sheeted home to corruption,foolishness or lack of cost/benefit controls like IA.
Some of it seems to be a ‘design feature’. Nicholas in Complexity, reducibility, integrity and bullshitwell described management systems where people who are good at crafting things will inevitably be “restructured, reengineered, taken advantage of. And so lots of the good ones leave.”
And lots of the good ones have left. More and more whats left is people for whom ‘announcements’- ribbon cutting , rearranging the furniture and hiring more people of the same ethos, is the only thing they know how to do.

Maybe we live too close to Canberra (it might just be confirmation bias) but “Complexity reducability integrity and bullshit the general untheory” really struck a chord . But what to do about it ?

derrida derider
derrida derider
7 years ago

Of course sales of public assets do not generate money to spend on infrastructure or anything else – the loss of future dividends immediately offsets the capital gain from the sale as far as any funding of government debt is concerned. Whether something should be private or public depends on which sector can run it most efficiently and fairly, not on counterproductive cooking of the books.

Even serious proponents of privatisation understand this – after all, they generally want government to spend less, not be enabled to spend more by dodgy accounting that tries to temporarily hide their true position. And lefties and righties here can agree that windfall funny money is indeed very likely to be pissed up the wall by pork barrelling pollies.

john Walker
john Walker(@johnrwalker)
7 years ago

The Office of Best Practice Regulation report for 2011 pg 11:

“For regulatory proposals announced in 2010-11, of the 63 RISs required at the decision-making stage 47 RISs were prepared and assessed as adequate, giving a compliance rate of 75 per cent. The Prime Minister granted exceptional circumstances exemptions in 14 cases. A compliance rate of 84 per cent was achieved in 2009-10 (see table 2.1).”

In 2007 the compliance rate was 90%.
Among the projects granted ‘exceptional circumstances’ by the prime minister and therefore exempted from the requirement to do a Regulatory Impact Statement prior to enactment were the:
National Broadband Network implementation plan
Response to Super System (Cooper) Review
Australia’s Future Tax System Review – Fringe benefit tax reform of the car fringe benefit rule
Australia’s Future Tax System Review – Minerals Resource Rent Tax
Australia’s Future Tax System Review – Not-for-profit – better targetingnot-for-profit tax concessions
Among the regulations that were not granted ‘exceptional circumstances’ but were none the less not compliant with the requirement to do a RIS was :
“Suspension of live cattle exports to Indonesia, DAFF, A RIS was not prepared for the decision”

If a proper RIS had been done before the NBN was legislated for, would it have gone ahead in the way it did? And if a RIS about live cattle exports had been done, it would have never happened, at all.

Chris Lloyd
Chris Lloyd
7 years ago

“I wonder why no one in the mainstream media has noticed these patterns.” I think Ken Davidson has.