Friday, April 17, 2015

Expected value for money from Canberra light rail project 'as good as it gets', report says

Professor Derek Scrafton

ABC Online are running a report titled 'Expected value for money from Canberra light rail project as good as it gets' which features the views of Derek Scrafton, the former head of the South Australian Transport Authority, and now a Professor at the University of South Australia. The Canberra Times are running a similar article titled 'ACT Government releases review of Capital Metro business case'.

Professor Scrafton and a university colleague were asked to independently scrutinise the Government's Capital Metro business case. He is quoted as saying:
"We didn't have to have a view about the tram one way or another, we just had to comment on the business case itself,"  "My view was it was fit for purpose. That it would do exactly what [the ACT Government] wanted it to do."
"Some data that might have been useful in interpreting the aspirations for the project is absent or is not readily discernible"."It's always the same, it doesn't matter where you are in the world, there's a load of people who think (light rail) is wonderful and a load of people who think it's a waste of money. "Is there enough material there? I would say for most people there is. But I can understand why somebody with a very specific interest would say 'I want more detail on this'."

"Whether the analysis is realistic will only be determined later, when it can be compared with responses to the [expressions of interest from business consortiums] and the [request for proposal phase], particularly the latter."

"Even if you ignore that, even if you take away 1.2 and work with 1.0, my comment was that if you can get a public transport project that really comes out at 1.0, you're doing pretty well. 
"I worked in the business for 40 years and I've seen plenty of benefit-cost ratios in excess of 1.0 but I don't particularly believe them. In any case, one the best projects that we ever delivered had a benefit-cost of 0.7 and in public transport terms, it is still a good project," he said. 
"You spend a lot of money, and you have low fares, where do you think you are going to get these returns from to get a high benefit-cost?"

"The financial impact on the bus system is uncertain" "So long as the bus system continues to be owned and operated by a government agency, any issues can be internalised. However, if the bus system was to be privatised or contracted out, there could be problems, particularly if the light rail [public-private partnership] included protection clauses that limited competition."

Highlights of the report are:
  • Professor Scrafton describes the Capital Metro business case as highly professional.
  • Professor Scrafton said the inclusion of wider economic impact to reach a 1.2 benefit-cost ratio was standard international practice. 
  • The expected cost and benefit of Canberra's $800 million dollar light rail project is "as good as it gets"
  • How accurate the Government's projected cost-benefit return of $1.20 for every $1 invested was wouldn't be known until the two selected consortia chosen to bid for the project return their proposals.
  • If proposals come back at say 30 per cent over the ($783 million) estimate, the ACT Government reserves the right to say 'that's the end of the project!'. 
  • The government has flagged the possible introduction of private operators on some of the ACTION Bus network. 
Read the full ABC Online article here and the CT article here.

Capital Metro Minister Simon Corbell has issued a press release saying:

“Prior to the public release of the business case, Capital Metro Agency engaged academic reviewer, Professor Derek Scrafton from University of South Australia, who has extensive experience in the public transportation field, to provide independent, high level advice on the appropriateness of the methodology adopted in the document,” Simon said.
“The ACT Government has been committed to openness and transparency throughout the light rail project and while the independent review was primarily undertaken for internal purposes, it seems appropriate to release it publicly now to add to the current conversations about the business case.
“Professor Scrafton’s review confirms that the methodology used in the business case is sound and that the document overall contains sufficient details and makes realistic conclusions and recommendations.
“It concludes that the business case is fit for the purpose for which it was prepared, uses appropriate and realistic methodologies in the analytical sections and follows guidelines which are recommended and approved by national organisations.”
“Professor Derek Scrafton is the Professor of Transport Policy and Planning at the University of South Australia and has 50 years direct experience in transport planning, research, regulation, finance, construction and operation.
“The first stage of Capital Metro has also been approved by the Federal Government, which determined the project was a suitable, productive infrastructure project to receive $60 million dollars from the Commonwealth’s asset recycling scheme.”

For more frequent updates on Capital Metro and light rail related news, please visit our Facebook page 'Light Rail for Canberra'.  

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