The reasonably big news is that Rudd won't fund Rees' infrastructure projects. That is to say, Nathan Rees asked for about $2billion and Rudd gave him about $100million. Part of the problem is that NSW seems unable to cost these things properly, given that we're out of practice in judging which and what kinds of infrastructure are required.
Instead we've built a fair few things like the Cross City Tunnel which has already claimed one operator and the Lane Cove Tunnel which has been given a reprieve by its underwriter after falling short in payments again. Not content with that, the road builders now have the desire to expand the Iron Cove Bridge against the wishes of almost everyone,
The Iron Cove thing is perplexing:
Having practised on the Alfords Point Bridge, Georges River, the RTA mob now wants to duplicate that duplication at Iron Cove.
The natives, however - the woad-wearers of Leichhardt and Canada Bay - are revolting. They noticed early on, as it's hard not to, that the RTA duple-bridge proposal was ugly, messy, profligate, pollutive and slow. It would disturb riverbed toxins, chop up through heritage, overshadow Drummoyne pool, shrink lovely Brett Park, and spell probable curtains for Dobroyd Sailing Club.
One native, architect Michael Morrisey, sketched a quick alternative. Forget the second bridge. Forget the poisons and the piling and the digging and destruction. Forget the whole dopey duplicity - sorry, duplication.
Simply fix broad steel beams to the existing art deco piers, cantilevering both sides - and there's your three new lanes (two bus, one car) plus pedestrian, cycle and maintenance ways.
This, with the help of some seriously bright engineers (including Arup's Tristram Carfrae, of WaterCube fame, and Sydney Uni's Professor Robert Wheen) was then developed into a serious alternative of such blinding simplicity it might be from Occam himself.
Largely prefabricated and with no new piling, it's constructible, estimates Carfrae, in half the time and for two-thirds of the cost, saving $65 million.
But does the RTA give this so much as a sideways glance? Not at all. What it does is rebadge, reallocate and regurgitate for a quick approval. What was the Victoria Road Upgrade becomes the Inner West Busway project (public transport being ipso facto climate friendly). There's a corresponding ministerial switch from Daley (Roads) to David Campbell (Transport). And, with barely a whisper of proper consultation, there it is, done and dusted, complete with the rubbery stamp of the Planning Minister, Kristina Keneally. Presto.
This, like the Firepower scam, leaves you rubbing your eyes. Why would they do that? Why knowingly ignore a cheaper, quicker, cleaner, prettier, more heritage-minded, more intelligent proposal for the dumb doppleganger? Could it relate to the 150-page contract signed back in 2007 by the RTA and Baulderstone Hornibrook (of the M5, Cross City Tunnel and Spit Bridge screw-ups) for, inter alia, the "duplication of Iron Cove bridge"?
And of course this is not surprising. The sheer wrong-headedness of the RTA is comical. But, it sort of goes hand in hand with the construction companies that need lots of random big projects to keep feeding itself - which inevitably means building these white elephant infrastructure all over the place. And by now, we all know it was money better spent on more rail instead of lining the pockets of these builders, all along. Thank you Bob Carr and Morris Iemma and Michael Costa and the rest of you weasel-y bastards, for your fine acumen - NOT!.
The bit that caught my eye about the Lane Cove Tunnel is this bit:
Connector Motorways is expected to be given its fourth stay of execution from the guarantor of the road's bond facilities, MBIA Insurance Corp, which will provide more time for a possible recapitalisation of the road.
It will also save the NSW Government further embarrassment over the latest infrastructure white elephant to dot Sydney's landscape.
Connector and MBIA have yet to agree formally to extend the latest standstill agreement on the debt, which expires on June 30, but it appears a foregone conclusion.
"Market conditions have not sufficiently improved, and it's likely an extension of the Standstill Agreement will be executed in the near-term," Connector said in an emailed statement to the Herald. "The Standstill Agreement allows the financial position and commercial prospects of the company to be maintained and preserved, and for the toll roads operations to continue as normal."
MBIA declined to comment. But sources close to the talks said it would be fruitless for creditors to move in. One problem is finding a buyer for the road in the current economic climate, or even a new investor willing to tip in more equity.
Another problem is that unlike other corporates that sell assets to pay off debt, Connector Motorways has only one asset, its toll-road. The major investors in the road - Cheung Kong Infrastructure, Mirvac and Leighton - have already written down their stakes in the road to zero.
On Friday the tunnel reported the average daily traffic for April had fallen to the lowest level since January, in part because of the Easter holidays. The average number of cars using the tunnel in the month fell 120 a day to 56,085. Including the Falcon Street Gateway, the tunnel had 70,711 average trips, which was up more than 3000 on the year, but still well short of the 100,000 trips originally forecast.
It is clear the tolls it is collecting fall short of covering its interest bill. In its accounts for the 12 months to December 31 Connector collected $48.7 million in tolls and paid $84 million in interest on its bonds. The road had $41.4 million in its "debt service reserve account" at the end of 2008.
Who in great-googly-moogli's name forecast 100,000 trips per month? Isn't this the model under which the Cross City Tunnel was also built and sent the operator to the wall within months?
If I were an investor in BrisConnections, I'd be worried about the forecast of trips in the prospectus because this is clearly where the builders are duping people. Even if the project survives the ructions of the unit trusts and the gyrations of the market, in the long term it's going to be a loss-generator if the forecast was grossly exaggerated to get you to invest in the first place.
So the $64,000 question ASIC should be asking is, is it, or isn't it an unrealistically inflated forecast on that prospectus?
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