News That's Fit To Punt

About Time The Wider Public Knew About This

I have a friend who is in the business of consulting for governments and their urban planning. Over the years my friend has lamented that the best policy advice on the table by various parties to the government would get overlooked in favor of the policies that led to more and more private toll roads. My friend has told me that quite often, the business interests of such corporations as Macquarie Infrastructure Group would simply trump the sensible options. They would do this by inflating forecasts of just how much the public is likely to use such roads, and essentially lie and cheat to get their way.

The failures of the Cross-City Tunnel and Lane Cove Tunnel as businesses then, have come as no surprise whatsoever to my friend, and in turn I haven't been surprised by them in the least bit either. In fact I have taken some glee in seeing the absolute 'fucked-upt-itude' (how else do we describe such ineptitude of titanic proportions?) of these endeavors. Now, the SMH has this piece - It's worth reading all of it.

Three years ago, a 75 year-old academic from Sydney University, Dr John Goldberg, issued a paper claiming Australia's toll road companies were unsustainable unless the Government continued to prop them up with subsidies under its infrastructure bond scheme.

Goldberg was rubbished by the operators Transurban and Macquarie. How could all the broking analysts, institutional investors and other experts be wrong, and this bloke right? PricewaterhouseCoopers, auditor and consultant to most of the stapled infrastructure structures, was also wheeled out as an expert to debunk Goldberg's contention that the toll road model was flawed.

It got worse for Goldberg. Without telling him, the University of Sydney's Vice Chancellor Gavin Brown caved in to a demand from Macquarie to disassociate the University from Goldberg's work.

Documents obtained under Freedom of Information laws show a request to Brown from the former bank's lobbyist and Federal MP Warwick Smith: ''We request that the University of Sydney publicly disassociate itself from Dr Goldberg's paper and the grossly irresponsible remarks he made on the ABC's 7.30 Report on October 20, 2005''.

Brown duly issued a release putting distance between the uni and its academic, an honorary associate in the School of Architecture, Design Science and Planning on the grounds that he was honorary and not on salary any more.

Goldberg pressed on with his papers, predicting Sydney's Cross City Tunnel and the Lane Cove Tunnel projects would implode. They have. Overly bullish traffic forecasts and extreme debt loads were to blame, as Goldberg had forecast.

His thesis was that the projects' traffic forecasts were structured to fit with the financial model, not the other way around.

I don't know Dr. John Goldberg. He sounds like a fair and scientific minded man. It also seems like he is a man of proper convictions. It pains me to read that the person who presented the honest truth of how badly constructed these projections were, then got shafted by the University of Sydney through what can only be described as corporate interference is disgusting - but "Sydney U", is not exactly above it. More on that later. There's more:

And how's this for a response on oil price as a variable to consider over the next five decades?: "Oil price assumptions make up part of vehicle operating cost assumptions. Vehicle operating costs include many factors, such as tyres, servicing, fuel, depreciation and debt servicing etc - oil prices are not a separable assumption.

"That is a departure from the other operators whose line is, yes, oil price assumptions were factored into our traffic model but, no, we won't be revealing to the public what our oil price assumptions are because they don't matter. The price of petrol, you see, doesn't have much of an effect on motorists' behaviour and therefore toll revenues. ''Inelastic,'' apparently.

MIG in the cross-hairs
Nobody appears to have told investment bank Goldman Sachs, though, as a piece of research from last Friday on Macquarie Infrastructure Group's latest traffic numbers downgraded its recommendation thanks to ``the impact of higher petrol prices ... (and) a slowing economy''.

''Even the jewel in MIG's crown, H407, has felt the impact of higher petrol, prices having now recorded two consecutive months of negative traffic growth (-2.2% and -3.4% respectively), '' said the report.

The Toronto 407 is reputed to be the best infrastructure asset in the world, a massive highway with no regulatory constraints on raising tolls.

In its report on the same data, ''Breaking the Myth'', Citigroup wrote

''The recent under-performance from MIG's assets has broken the myth that toll-roads are largely immune to economic slowdowns.''

Macquarie Equities research too talked about the impact of ``price elasticity''. Most of the tolls had been jacked up and motorists, hit by the petrol price too, were apparently fed up.

The oil price is now $US100 above its level of three years ago. It is time the operators and Governments come out and say what their oil price assumptions are. We are talking about long-term leases here. In the case of Brisconnections, which floats in a few weeks, the concession lasts for 45 years.

In the absence of full disclosure it is tempting to suspect that a government could play fast and loose with taxpayers and ignore the long-term consequences by getting an infrastructure project up and defraying the costs to future generations.

That last bit has happened already, according to my friend. The oil price factors are not the only part of the total bogus projections used to nudge governments into making dodgy , shonky, lousy decisions. The projections of just how many cars *could* travel on the Cross-City Tunnel - what is known s 'Tunnel Capcity' - seemed to fall on deaf ears.

My friend said, "Look Art, it's like they just don't understand the notion of 'Tunnel Capacity'. Either that, or they actively don't want to hear about it. How do you explain this to the minister?"

I replied, "You tell him, 'Imagine you're naked on your bed, with your wife. And she's naked too. You have an erect penis, she has a wet vagina. You're both raring ready to have sex, but there's a problem: there's another naked guy in the room and he wants to place his erect penis into her vagina too. But she only has one vagina. Do you understand Tunnel Capacity now?'"
Anyway... I doubt my friend used that line of analogy on the minister.

What nobody in the press seems to have twigged to and my friend has been telling anybody and everybody who would listen for like 15 years now, is that those 800million to 1.2 billion dollar budgets could have/should have been spent on public transportation infrastructure. Instead, it was spent on making Macquarie Bank executives rich.

And now that oil prices have suddenly shot up to levels that these idiots did not predict and people are suddenly streaming towards Public Transport, they're saying they have a crisis. Of course they're having a crisis: they were always going to have a crisis given how faulty their reasoning had been when they went ahead with all these dumb, white-elephant roads.

And just how did they get here? By ignoring people like Dr. John Goldberg, and people like my friend. So much for common sense in this state.

More On Sydney 'Pond Scum' University
Now that we know that the University of Sydney prostitutes its good name... uh.., make that just 'name', we find that there's another article on just how crooked and greedy the Slut School of the Southern Hemisphere actually is:

Sydney Uni, meanwhile, has 50 per cent more students, four times as much building space, 10 times the campus space, half a dozen ovals (instead of none) and exponentially more gardenia bushes than UTS will ever have. Not to mention the adjoining park and pool. With it goes all the confidence (and perhaps pitfalls) of old money compared with new.

It also has several new buildings - IT, law and the catchily named Jane Foss Russell student centre (be thankful it's not her married name, Barff) with its clunky, pea-green footbridge. Not bad buildings, but guaranteed, once the new native-nazi landscape is complete, to feel more exurban office park than dreaming spires - the global campus look du jour, a bland-leading-the-bland, death-by-vanillacide catering to kids whose primary world experience is screen-mediated.

And so to Sydney's campus cravings. Apart from its main campus, it already has eight others, from Camden to downtown. But it wants more. Eveleigh, where it proposes 160,000 sqm of built space up to 18 storeys; Harold Park, if and when; Callan Park, slated for 100,000 sqm in four precincts - plus another three ovals.

This is already agreed. But the Callan Park Act bans building outside existing footprints and any for-profit education. To amend it, the argument is crucial. It hinges on Sydney's "demonstrated record, expertise and interest in heritage conservation". A year ago, maybe. But to see those fabulous sandstone gothics now, stripped of their evocative ivy-league habitat, left naked among the pitiless eucalypts, makes you wonder. How far will higher learning go to prove it is really just business?

Fucking hell, it's nauseating.