Benefits deliberately distorted to support road, says expert

The economic and traffic benefits of Transurban’s proposed $5.5 billion motorway through Melbourne’s west were deliberately distorted and misrepresented in Victoria’s assessment of the road, a former transport consultant on the project for the Andrews government says.

And it has emerged that the team that produced the dumped East West Link business case – repeatedly ridiculed by Premier Daniel Andrews – is the same group behind the West Gate Tunnel business case.

Six weeks of hearings into the environmental effects of the massive freeway expansion plan begin on Monday.


On Friday, a Senate inquiry into Australia’s toll roads made public previously confidential evidence by William McDougall, a respected transport planner and engineer hired by the Andrews government in 2015 to help assess Transurban’s proposal.

The government has embraced the planned toll road, which will see Transurban’s contract to run CityLink extended.

It is a financial bonanza for Transurban and will also shift much of the new freeway’s cost off Treasury and onto motorists.

Mr McDougall has decades of experience assessing major transport projects for the Victorian government, working on the Bracks-Brumby government’s Melbourne Metro rail tunnel plan and later leading Ted Baillieu’s Rowville rail study.

He also worked as a transport engineer on bids for CityLink and EastLink.

Treasurer Tim Pallas described Mr McDougall last week as “an engineer who has done considerable work for the state. … I have a lot of respect for his advice”.

Mr McDougall was contracted in 2015 to review traffic modelling for the West Gate Tunnel business case.

But Fairfax Media revealed this month that Mr McDougall was removed from assessing the road when he personally raised his concerns about it with Mr Pallas, whom he knew from earlier consulting work.

In his evidence, Mr McDougall said the justification for taxpayers spending billions of dollars of public money on the proposed road was “based on flawed traffic modelling and cost-benefit analysis”.

His detailed written evidence to the Senate says traffic numbers produced by consultants justifying the need for the West Gate Tunnel were “significantly higher” than recent travel surveys showed.

Roads Minister Luke Donnellan said more than a dozen independent experts with decades of experience had worked on the modelling that underpins the proposed road.

Roads Minister Luke Donnellan said more than a dozen independent experts with decades of experience had worked on the modelling that underpins the proposed road. Photo: Simon Schluter

These same figures employed a “methodological fudge” to show traffic booming – despite widespread acknowledgement that people are travelling fewer kilometres in cars in Australia, and particularly in Melbourne.

Mr McDougall says consultants PwC used these “fudged” figures in their cost-benefit analysis of the road, and also incorporated overseas guidelines for assessing the road that showed a higher benefit than local guidelines.

This added up to $780 million of extra supposed economic benefit to the business case.

“No other Australian cost-benefit analysis I am aware of has incorporated this effect,” he writes. “Its inclusion has overstated the benefits of the [West Gate Tunnel] compared to other projects.”

Parts of the business case also used a “technicality” to exclude the massive costs to Melbourne’s transport network that would result from the extra traffic that would be generated in the west when the project opened – thereby rendering any benefits short-lived.

Mr McDougall said in his Senate evidence that the officials and consultants appointed by the Andrews government to review the traffic projections justifying the West Gate Tunnel were largely the same group behind the East West Link assessment.

The government does not dispute this, but points out the cost-benefit ratio these experts assigned to the East West Link was 45 cents for every $1 spent, while their West Gate Tunnel assessment shows a return of $1.30 for every $1 spent.

Labor dumped the East West Link at a cost of around $1 billion to taxpayers and has poured scorn on its business case.

“The East West Link did not and does not stack up,” Premier Daniel Andrews said last month.

Mr McDougall said appraisals of toll roads often suffered from “optimism bias”.

“This is a polite term for what I consider to be deliberate distortion and misrepresentation of traffic forecasts and the economic benefits that flow from them,” he said.

Greens senator Janet Rice is on the Senate inquiry and said Mr McDougall’s intervention cast into serious doubt on the Victorian government’s decision to proceed with the road.

State opposition roads spokesman Ryan Smith said Mr McDougall’s submission “should ring alarm bells for Victorians footing the bill” for the toll road.

Roads Minister Luke Donnellan said more than a dozen independent experts with decades of experience had worked on the modelling that underpins the proposed road.

“Their work is world class and unequivocally supports building the West Gate Tunnel,” which would slash congestion and reduce travel times, he said.

“It stacks up and we’re getting on with it.”

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