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Carr’s Column – The Cross City Tunnel

September 9, 2010

It is five years since the media panic that followed the opening of the Cross City Tunnel.

But this $680 million piece of infrastructure shaved 20 minutes off a 2.1km journey and eased up traffic movements in the CBD by directing east-west movement underneath the city. It was built without a cent of tax payers’ money and indeed earned the budget a $100 million down payment.

If in 2005 it had been defended as confidently as the Eastern Distributor had been defended in 2000 then the public would have understood its advantages.

Not the least advantage was the shift of risk so that when it failed to achieve its initial target for traffic the loses were carried by the owners and not a cent was drained from the budget. In this respect it was utterly different from Bruce Baird’s city to airport rail link, a flawed PPP, which failed to achieve targets and drained $800 million from taxpayers (and Baird signed up to that one on the eve of the 1995 state election, an extraordinary blunder and one for which he paid by never being made a Federal minister).

Because the state government wobbled in its defence of the CCT it drew still more savage media negativity. As a result of this political trauma they no confidence to announce a single subsequent roads project. None has been planned and none opened since the M7 Westlink – planned and funded under my government – was opened in late 2005. An alternative approach would have been to have immediately and defiantly announced to go ahead for the M4 extension.

Use of the CCT is now growing 10 percent per annum; I am assured that it is now definitely profitable, moreover, it will be indispensible given the development of Barangaroo. Indeed Barangaroo would have made it necessary. Instead we got it well in advance of need.

Because the CCT had been so rigorously constructed to protect the taxpayer future road PPPs are likely to have state governments assume part of the risk for traffic volumes. Melbourne and Brisbane experiences and that of the Lane Cove tunnel also figure in this. Still, that simply confirms the good deal the CCT represented for NSW taxpayers who got a superb slab of infrastructure, somewhat in advance of strict need, and got it without spending a cent.

Graeme Wedderburn, former Chief of Staff to Bob Carr said in The SMH (July 31, 2010):

To put the Carr record in perspective, compare it with the previous seven years of the Greiner/Fahey government, then the record under Carr’s successors. From 1988 to 1995, the Coalition government’s big contributions to Sydney’s infrastructure were the M4, M5 and M2 toll roads and the Anzac Bridge. Elected in 1995, Carr’s government started in office with about $10 billion of government-inherited debt – paid off over Carr’s term. It also inherited the botched deal on the Airport Rail Link which ended up drawing $700 million from the state budget.

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One Comment
  1. Rationalist permalink
    September 9, 2010 5:25 pm

    I cannot see any better model than a well planned and well executed public private partnership and it is something that I would welcome. I can’t seem to reconcile however economists like John Quiggin ( who argue vehemently against such developments.

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