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Adept Economics Submission to BaT Project EIS Process

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Adept Economics submission to Environmental Impact Statement process for the Underground Bus and Train Project.
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  1 13October2014 Barry Broe Coordinator-GeneralDepartment of State Development, Infrastructure & PlanningPO Box 15009City East, Queensland 4002DearBarry Underground Busand Train project  –  Submission to EIS consultation Thank you for the opportunity to comment on the Environmental Impact Statement for theUnderground Bus and Train(BaT)project.At an estimated cost of around $5 billion, the BaTtunnel is one of the mostexpensive infrastructure projects ever undertaken in Queensland, andhence the project warrants close scrutiny.I have strong reservations about the merits of the project, particularlythat:  the cost-benefit analysis provides very little confidence the projectwilldeliverpositive net benefits to the Queensland community, and  the EIS appears to assume that the approval of the BaT tunnel is a  fait accompli , but Iam unconvinced all optionsto avoidcapacity constraintshave been fully considered.I discuss these reservations further below.Cost-benefit analysis provides little confidence in economic viability oftheproject I am rather unimpressed by the BaT project’s benefit -cost ratio, estimated by Deloitte at 1.16(see p. 14-49 of the EIS). That is, benefits are estimated to be only 16% higher than costs overthe life of the project. That isfairlyconcerning for a $5 billion project that is likely to besubject to the same risks of cost blowouts and demand shortfalls as other mega-projects.Given the possibility of large forecast errors in costs and demand, you wouldwant a muchhigher benefit-cost ratio (i.e. definitely higher than, say, 1.5) to be confident it is worthcommitting $5 billion  –  or over $1,000 for every Queenslander  –  to this project. Indeed, Deloitte’s own sensitivity analysis shows that, under some scenarios, the benefit -cost ratio isless than 1 and costs exceed benefits over the life of the project (see Table 14-16on p. 14-49of the EIS).  2 The risks of mega-projects are well known. As mega-projects expert Bent Flyvbjerg observedin his book   Megaprojects and Risk  , co-authored with Nils Bruzelius andWerner Rothengatter ( 2003, p. 3 ) :  At the same time as many more and much larger infrastructure projects are being proposed and built around the world, it is becoming clear that many such projects havestrikingly poor performance records in terms of economy, environment and publicsupport. Cost overruns and lower-than-predicted revenues frequently place project viability at risk and redefineprojects that were initially promoted as effective vehicles toeconomic growth as possible obstacles to such growth. There is a risk that the BaT project will turn out to be another poorly performing mega-project, and this risk should be taken into account in the Government’s final decision regarding the project.EIS assumes project approval is a  fait accompli and does not fully consider alternativesI am concerned that the EIS assumes that the approval of the BaT tunnel is a  fait accompli .The EIS notes(p. 1 of the Executive Summary): The objective of the EIS is to ensure that potential environmental, social and economic impacts of the Project are identified so the benefits may be captured and the adverse impacts avoided or minimised and mitigated. Thisappears to suggest the project will go ahead. But for such a large, expensiveprojecttheGovernment should reserve the right not to proceed, because the EIS is really the firstopportunity for a full consideration ofall ofthe benefits and costs.The EISprepared for the project assumes there is no other feasible option to meet loomingcapacity constraints on the inner city public transportnetwork, but a comprehensive analysisis not presented in the EIS.Rather,existing studies have been cited, butthese studies appearto have mainlyinvestigatedinfrastructure options.Given the high cost of an infrastructuresolution to the capacity constraint, I would like to have seen a serious investigation of transport demand management options  –  e.g.sharper differences between peak and off-peak public transport fares, TravelSmart programs,and staggered starting times for public servantsworking in Brisbane CBD.Theproject should not be approved on the basis of the published EIS,and the Department of Transportshould seriously investigateand publicly report onother options, particularlytransport demand management options.I would be happy to discuss my views regarding theproject with you at a mutually convenient time.Yours sincerely, Gene Tunny Principal, Adept Economicsgene.tunny@adepteconomics.com.au
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