“The Commonwealth’s largesse is a bad deal in that it foists a project on the ACT that we, quite clearly, cannot afford.” JON STANHOPE & KHALID AHMED reveal how the federal government is pork barreling the tram. But why?

The Department of Infrastructure, Transport, Regional Development, Communications and the Arts has confirmed that the Commonwealth Government has, to date, committed $343.9 million to Stage 2A of the ACT’s light rail project, against a total project cost estimate of $687.77 million. 

The Department has itemised the project’s benefits as including : 

• Improved passenger rail services.

• Reduced congestion and improved travel times.

• Improved connectivity between people with jobs and services, and goods with markets.

• Supporting a more integrated and effective transport system.

While this exceeds the level or depth of information that the ACT government has chosen to reveal to the residents of Canberra, it could not be reasonably claimed to justify the expenditure by the Commonwealth of $344 million and clearly does not meet the requirements and guidelines traditionally demanded by the Australian government as essential in the analysis and ranking of capital projects to be funded by it.

The obvious questions raised by the decision of the Commonwealth to fund light rail stage 2A include:

• Do the claimed benefits justify the costs (the $344 million to be paid by the Commonwealth or the total of $688 million)?
• Could some of the identified benefits, for example, reduced congestion, improved travel times and connectivity between people with jobs and services be achieved through other means at relatively lower costs?
• What goods will be transported on this 1.7 kilometres of the tramline, and how, as claimed by the Commonwealth, will their connectivity with markets be improved?
• What are the economic costs generated by road closures and business disruption etcetera as itemised for transport projects in the department’s cost-benefit analysis (CBA) tool?
• Has a CBA been undertaken by the federal Department of Infrastructure, and/or did it ask for one from the ACT government?
• If a CBA exists, why has it not been released, and what are the national security or commercial secrets that are presumably being protected by its non-release?
• If a CBA was not submitted by the ACT government, or prepared by the Department of Infrastructure, what was the basis on which the department concluded and presumably advised the minister, Catherine King, that the project met the criteria for funding from the Commonwealth?
• How did the department and/or the minister determine that this project in the ACT was more beneficial and deserving of Commonwealth funding than project proposals in other jurisdictions?

Advocates of the project may ask why we are objecting to an apparently good funding deal for the ACT? 

In response we insist, as we explain below, that it is in reality not a special gift for us, but rather a bad deal in that it foists a project on the ACT that we, quite clearly, cannot afford.

In any event, in principle, there should be rigour and objectivity in the allocation of public funds – and we had assumed that “whiteboards” and “coloured cells on a spreadsheet” were tools of the past. 

There should also, of course, be transparency in respect of the allocation of public monies so that communities in, say, outback NSW or Queensland have a right to know why a project important to them received a lower priority than one in Canberra.

Needless to say, we were stunned by the recent announcement by Minister King that despite the absence of a CBA together with apparently no formal costing of stage 2b of light rail, ie from Commonwealth Park to Woden, having been undertaken let alone announced, that a federal Labor government would nevertheless make a significant contribution (presumably one half) to the project, which we believe will be costed at more than $3.5 billion.

The minister then went on to assert that any such support would be under threat were Labor not returned to power, thus revealing the apparent rationale for her decision to fund the project.

We make two relevant observations on Ms King’s comments.

Space considerations prevent us from providing detailed examples relating to the ACT and other jurisdictions where the Commonwealth Grants Commission adjusted/reduced the GST entitlement if a state or territory’s expense needs had been covered by a relatively higher (than its due share) payment from the Commonwealth and vice versa.

Minister King would know, if she has been properly briefed, that the ACT along with every state and the NT will ultimately get its fair share of capital funds, for state functions, through adjustments to its GST entitlements. 

That is, of course, unless she or our other federal representatives can convince Treasurer Jim Chalmers to issue a direction to the Commonwealth Grants Commission to grant the ACT funding over and above our quota. 

Such directions are rare and would necessitate convincing Australians in other jurisdictions that the ACT deserved more money than its independently assessed share. 

One can imagine how that would go over with not only the residents of remote and isolated communities across Australia but with the federal member of any marginal seat.

In other words, as Minister King would surely know, whether a state or territory has a Labor or Coalition government is irrelevant to the quantum of Commonwealth funding that it receives.

While we support the demand by Minister King and her Labor Party colleagues that the Coalition release a CBA of its nuclear power generation proposal and an assessment of its costs and impost on households, we think it reasonable to expect the Labor Party to apply the same discipline and rigour to the ACT light rail project that is, in relative terms, larger than the nuclear power generation proposal.

What we have observed to date in respect of the light rail project is an extraordinary level of support from the Commonwealth (Labor) government albeit at a potential cost of abandoning due process, acting arbitrarily and being non-transparent; all criticisms it has levelled against its political opponents. 

This, for a project that was initially instigated by the ACT Greens through a power-sharing arrangement, but for which they have gone tepid in view of their own members’ resentment. 

It is also not as if ACT Labor is overly enamoured of the project, noting that it has clearly delayed it as much as possible, is floundering in its efforts at explaining a string of billion-dollar deficits, a mountain of debt rapidly approaching the $10 billion mark, maceration of services, and a denial of even small, highly needed expenditures. 

Ms King on the other hand has reportedly asked Chris Steel to come back, whenever he likes, for more money.

Jon Stanhope is a former chief minister of the ACT and Dr Khalid Ahmed a former senior ACT Treasury official.