With gold-plated South Road, we don't know what we're missing – InDaily David Washington@davidwashingto2  22 Dec 2022

What’s $5 billion and change between friends? The rapidly expanding budget for the final upgrade of South Road hasn’t been subjected to anywhere near enough scrutiny, argues David Washington.

Paved in gold? An artist's impression of the northern portal to the Torrens to Darlington upgrade of South Road. Image: State Government

South Australians have many aspirations, but the dream of being able drive on a “non-stop motorway” from Gawler to Old Noarlunga wouldn’t be a common one.

Yet, this is the project that will dominate South Australia’s transport investment for the next decade.

Let’s consider some numbers.

The final section of the North-South corridor upgrade – 10.5 kilometres from the River Torrens to Darlington – is now projected to cost the community at least $15.4 billion.

That’s $1.47 billion per kilometre, or $1.47 million per metre.

The Marshall Government’s plan was costed at $9.9 billion – still an eye-wateringly huge amount and, as noted by Infrastructure Australia, not a particularly good investment and at risk of blowing out.

Infrastructure Australia reported in February that the then government’s business case had found the net present value of the project had a negative benefit-cost ratio of 0.7. Any figure below one means the project’s costs outweigh the benefits.

The most complex part of the South Road project, this section would be in positive territory – 1.2 – if the modellers took into account “urban development benefits” and “wider economic benefits”.

The new Government, which questioned the feasibility of the old plan and has comprehensively reshaped it, ran their own assessment which found the Liberal design couldn’t be delivered for anywhere near that price.

They say they’ve improved connectivity and safety, and have thrown in another $850 million in infrastructure upgrades to “complement” the project.

Another $5.5 billion – at least – will be spent.

And yet, we are told the benefit-cost ratio is even better now.

We don’t know exactly how that figure was obtained – the consultant’s report won’t be released publicly.

So let’s compare what we’re getting in Adelaide to another massive Australian road project.

Westconnex in Sydney is budgeted at $16.8 billion – $1.4 billion more than the Adelaide project (so far… it’s had numerous blowouts). Westconnex, due to open next year, is more than three times as long as Torrens-Darlington, with 33 kilometres of motorway and a reach across vast expanses of Sydney’s road network.

The Sydney project – billed as Australia’s largest road infrastructure project – includes 14km of above-ground roads and 19km of tunnels and will link western and south-western Sydney with the city, the airport and the Port Botany precincts.

Westconnex also involves the private sector taking on much of the risk, with cost recovery via tolls: in South Australia, the government won’t consider that option.

Here’s another interesting number – $700 million.

Labor was elected on a promise to scrap Steven Marshall’s riverbank arena – a multi-use venue derided as a ‘basketball’ stadium. That project was worth just under $700 million.

Labor said they would reinvest this money in health.

In the best case scenario under the South Road deal, Labor has committed South Australian taxpayers to spend $700 million on average each year for the next 10 years. And that’s if the federal government comes to the party to fund the increased costs 50:50, and there are no further cost blowouts.

Imagine if that much money – even half of it – was being spent on things that more directly improve the lives of all South Australians?

Labor shouldn’t have a problem with such imaginings, because it used this argument to help win the state election.

Governments increasingly see roadworks as partially an end in themselves – make-work enterprises on a grand scale.

An economic study to be released by the Government next year will contain all sorts of claims about economic benefits, but what these sorts of infrastructure assessments don’t commonly measure is the comparable economic and social impact of spending the money elsewhere.

For example, the new Women’s and Children’s Hospital is budgeted at over $3 billion. If just a small proportion of the new South Road money was shifted to this project, the Government could avoid any incursion on the park lands and the destruction of a heritage place.

In its first Budget, the Malinauskas Government promised an additional $2.4 billion in health expenditure over five years: its South Road project will cost the taxpayers at least $3.5 billion over the same period.

There are other options that aren’t on the table. With an investment north of $5 billion, we could transform South Australia’s moribund/waning public transport system, perhaps rebuild the tram network. We could supercharge our public education. We could invest in a world-leading, intensive support package for families in crisis – one of the driving forces behind our child protection issues. We could choose a massive investment in social housing, easing the housing crisis. We could do something creative about drug addiction, rather than slamming our heads into the brick wall with the usual failed policy prescriptions.

If you’re arts-minded, that much money would fund a generational transformation of South Australia’s arts infrastructure, easily covering the cost of a new concert hall, a  reinvigoration of arts education, and allow a comprehensive spruce-up of the SA Museum and Art Gallery of South Australia, with change left in the bank.

It is hard to make keen judgements, though, because there is, at this point, little transparency about the risk profile of the Malinauskas Government’s gold-plated bit of road.

As mentioned above, back in February, Infrastructure Australia released its assessment of the previous government’s plan.

The new Government’s plan hasn’t been subjected to the same scrutiny at this stage. Yet, they’re saying that the cost-benefit ratio has actually improved, despite whacking north of $5 billion onto the project cost.

The Government says a “rapid cost benefit analysis”, factoring in land use and wider economic benefits, has produced a benefit-cost ratio of 1.4.

A project audit by consultants Price Waterhouse Coopers won’t be released yet, because it’s “commercial in confidence” ahead of procurement processes, so we won’t know for a while at least how the project is now better value for money, despite increasing in cost by a third.

PWC looked at all of the options, including assessing how far $9.9 billion would take the upgrade: obviously, not far enough for the new Government’s liking.

The Government says it is completing “a detailed economic analysis on the complete new design, which is anticipated to be available in February 2023”.

What about Infrastructure SA, the body whose role it is “to ensure better planning and more transparent decision-making for critical public infrastructure projects for the State”?

It assessed the previous Government’s plan and gave it an amber rating, meaning there were “major issues and/or risks identified with appropriate mitigation measures provided”.

The rating means that Infrastructure SA does not believe the project is “likely” to be successfully delivered – nor “in doubt” – but rather “feasible”.

Not particularly encouraging with nearly $10 billion of funds at risk.

But the current government doesn’t appear to have asked Infrastructure SA for its view yet.

Asked by InDaily’s Stephanie Richards whether Infrastructure SA or Infrastructure Australia would be involved in assessing the new plan, Transport and Infrastructure Minister Tom Koutsantonis said: “Infrastructure South Australia are not a design agency. They’re an assessment agency. They basically go through gates. They’ll be involved throughout the entire process and the procurement. As we did the design work we’ve had it independently verified … by Price Waterhouse Coopers.”

It is at least arguable whether that is the scope of Infrastructure SA’s job, and whether a private consultant hired by the government is more independent than a statutory body.

Regardless, the question for the moment is how we have sleepwalked into a situation where a state government can decide to spend $15.4 billion on such a short and, for many South Australians, irrelevant stretch of road, and receive very little serious questioning of its priorities and opportunities lost?

There has long been a policy fetish among Australian decision-makers for gigantic road projects.

Governments increasingly see roadworks as partially an end in themselves – make-work enterprises on a grand scale.