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Estimates: Rural and Regional Affairs and Transport Legislation Committee (Infrastructure and Regional Development Portfolio)

Estimates & Committees
Lee Rhiannon 27 May 2015

Senator RHIANNON: In response to my question on notice No. 33 from last February, you provided a table listing each project that is in line to receive more than $100 million in federal government funding. In that table, alongside the WestConnex road, you state that Infrastructure Australia had conducted an assessment of the project at the time the funding was allocated. Given the funding was allocated in the May 2014 budget and Infrastructure Australia only began its assessment of the WestConnex business case in June 2014, and you detail that it was finished in December 2014-that is set out in the response to question on notice No. 76-how can that be accurate? Your timeline seems out. Can you clarify, please.

Ms O'Connell : Are you saying it is a question on notice from last estimates, No. 33?

Senator RHIANNON: It is No. 33 from February.

Ms O'Connell : And where in answer to question No. 33? I can see WestConnex on the very first page.

Senator RHIANNON: At 33, on the first page you have a whole lot of information. I was referring to question on notice No. 76. In that one, you answer some of my questions. In the first and second questions, I asked what date IA began its assessment of the WestConnex business case. You answered June 2014. I asked what date this concluded. You answered 10 December 2014. We know the funding is allocated in the May 2014 budget. You only begin the WestConnex business case in June 2014, concluding it in December 2014. I did not understand how that could be accurate. Can you explain the process, please.

Mr Foulds : The New South Wales government provided the 2013 business case to IA some time after June 2013. That is the reference case. The initial business case was provided to IA by the New South Wales government. I do not know the exact date.

Senator RHIANNON: You said 2013 then.

Mr Foulds : At some point after June 2013, the New South Wales government provided the business case to IA. I do not have that-

Ms O'Connell : I think it reflects the business case. It is not a one-time process, particularly for a project as significant as WestConnex. It is an iterative process, so there is an initial business case. That gets submitted to IA. They begin their assessment. There are then refinements to the business case. So the business case is at a point in time.

Senator RHIANNON: Could you just clarify. Are you saying that there are a number of different business cases, or it is built on and it is further developed?

Ms O'Connell : It is an iterative process. So you have a business case at a point in time. It is subject to some scrutiny. Questions are asked and changes are made to it. Then it can be resubmitted. There is not one single version of the business cases. It is an iterative process over time. That is what the assessment model is intended to do. It is intended to ask questions about it, to seek clarification, to refine and to make it a better project and a better business case. That is the process that happens. So it is a business case at a point in time.

Senator RHIANNON: Under question No. 76, my second question refers to the business case, because that is what I am talking about in question No. 1. Question No. 2 states:

On what date was this concluded?
In fact, my interpretation of what you have just said is that it had not been concluded because it had only been partially done. Is that a more correct answer for my question No. 2?

Ms O'Connell : These are questions that were taken on notice by Infrastructure Australia. They are on next. I think they are probably best placed to answer the precise dates in which they did what. But the answer to the question does say what date IA began its assessment of the business case. It says June 2014. What date was it concluded? December 2014. That seems to be a reasonable thing at that point in time. It can continue on, though.

Senator RHIANNON: You have just given quite a detailed explanation that it is an ongoing process. So that is why I am querying why you use the word 'concluded'.

Mr Mrdak : I will just add to Ms O'Connell's answer. It is important to recognise, and I think it is on the record from previous hearings, that around June 2013 IA placed the project on its priority list based on the initial information of the business case that it had at that time. Subsequently, as Ms O'Connell indicated, further iterations of the business case have been provided. But the first priority listing of WestConnex was in June 2013, which predated the current government.

Ms O'Connell : So there have been successive evaluations and submissions of the business case.

Senator RHIANNON: We will continue that with IA. I also understand that you have said that no payments have been made in relation to WestConnex as of 30 April 2015. I want to check whether that is correct. Does it include the concessional loan?

Mr Mrdak : It does not include the concessional loan. That is yet to be provided. There has been an initial payment.

Mr Jaggers : An initial payment of $500 million was paid last financial year for WestConnex.

Senator RHIANNON: So $500 million last year, and nothing apart from that and nothing with the concessional loan?

Mr Mrdak : No. There have been no payments in the 2014-15 financial year.

Senator RHIANNON: How much federal government funding has been committed to the second Sydney airport?

Mr Mrdak : At this stage, the government has committed $2.9 billion for the Western Sydney infrastructure program. In addition, the government has made an allocation of funding to the department for work on undertaking the negotiations with Sydney (Kingsford Smith) Airport and developing the program and the concept design for stage 1 of the airport. That is an allocation made in last year's budget in the order of about $70 million.

Senator RHIANNON: The way you answered that question, it sounds like there are two separate tranches of money. Is that correct?

Mr Mrdak : That is correct. There is an allocation under the Infrastructure Investment Program of $2.9 billion, which supports the development of the roads program in Western Sydney. Separate to that is the work that is being undertaken by my department in relation to the development of the airport site itself.

Senator RHIANNON: How much is that, please?

Mr Mrdak : At this stage, the allocation-I will check it-was around $70 million over the forward estimates for the department to undertake its work in relation to the environmental impact statement, the concept design and the negotiations with Sydney Airports Corporation.

Senator RHIANNON: Is it correct that no money has yet been allocated for the actual building of the airport?

Mr Mrdak : That is correct. We are currently in negotiations with the Sydney Airports Corporation. There is money being spent on the site now by my department in terms of geotech work on the demolition of buildings on the site preparatory to the site works and the environmental impact statement.

Senator RHIANNON: That comes out of the $70 million?

Mr Mrdak : That is correct.

Senator RHIANNON: And the $2.9 billion is for the roads around the proposed airport site, is it?

Mr Mrdak : That is correct. That is for the roads package, which includes a number of components, such as major upgrades to three key roads-Bringelly Road, Elizabeth Drive and Northern Road-as well as a local roads package, which has been put together to provide immediate traffic enhancements and improve roads in the local area.

Senator RHIANNON: Does that mean that the needs of the airport have been identified in terms of traffic movements and not public transport, or do you anticipate public transport to come at a later time?

Mr Mrdak : No. The roads will facilitate public transport from the opening of the airport. Essentially, the bulk of the public transport will be bus, as it is in Western Sydney. People sometimes forget that for the majority of Australians, public transport is a bus, which is actually the most flexible and probably the best solution to their transport needs. Obviously that requires roads.

Senator RHIANNON: I want to go back to the question that we were talking about before. I understand that you said to take it up with Infrastructure Australia. Going over my notes, from what I can see, you had said it was infrastructure investment before.

Ms O'Connell : This is on WestConnex?

Senator RHIANNON: Yes. I am back on WestConnex. I am still trying to work that out, because I know often if I end up in the wrong section, I lose my spot. I would really like to sort this out.

Ms O'Connell : Infrastructure Australia's role is to assess the business case. We were talking about the timing of that assessment of the business case. I was explaining that it is an iterative process. They may have assessed it over a lengthy period of time from the first submitted business case to the one that they referred to in their answer of June 2014. We talked about the funding of WestConnex. As Mr Jaggers explained, the funding for the WestConnex project to date has been $500 million paid in 2013-14.

Mr Jaggers : June 2014.

Ms O'Connell : June 2014.

Senator RHIANNON: Does it not come under infrastructure investment division, because we are actually talking about the assessment, not the business case?

Ms O'Connell : We are happy to talk about the assessment and the payments.

Senator RHIANNON: That is what my question is about.

Ms O'Connell : Would you like to re-ask the question? I am sorry if we were distracted by the dates of the business case assessment.

Senator RHIANNON: Question No. 6 is:

On what date did IA begin its assessment of the WestConnex business case? On what date was this concluded?
You answered that it kicks off in June 2014 and ends in December 2014. That is the information you provided. Given the funding was allocated in the May 2014 budget and IA only began its assessment of the WestConnex business case in June 2014 and it concludes it in December 2014, I do not see how that time period can be accurate. That is what I am trying to understand.

Ms O'Connell : Mr Foulds gave the first date of the IA's assessment of the very original business case for WestConnex, which was in 2013.

Mr Foulds : It was.

Ms O'Connell : So it was on the list and had been on the list for a period of time. I think in your question No. 72, IA was referring in their response-we can check with them when they come-to their most recent assessment of the WestConnex business case, which were the dates they gave of June to December 2014.

Mr Mrdak : I think that was published in February this year.

Ms O'Connell : They had done previous assessments of the WestConnex business case, including one in 2013, as outlined by Mr Foulds.

Senator RHIANNON: Considering those questions I put in-I am again looking at question No. 76-there were 21 parts in all. It is very detailed. I am trying to understand how you are undertaking this. You did not include that the initial payment of $500 million was made last year. Again, why was information not included?

Ms O'Connell : Your question No. 72?

Senator RHIANNON: Seventy-six. I am referring to question No. 76, which is made up of 21 parts. It is very detailed about all aspects of the assessment of the WestConnex business case and the overall process. It is only now, in questioning you, that I understand from your answer that there was an initial payment of $500 million made last year. I would have expected that would have been in those very comprehensive questions that covered that very issue. Why was that not included?

Ms O'Connell : I think we answered every question that was asked. I believe we answered it accurately.

Senator RHIANNON: You have said in the answer that the budget allocation was made after IA did an assessment. From what I am hearing you say now, the conclusion one draws is that that is incorrect?

Ms O'Connell : No. There was an early assessment done by IA in 2013.

Mr Mrdak : As I indicated earlier-I am sorry for the confusion-the IA listed WestConnex on their priority list at an early stage in June 2013. The government, in its pre-election commitments, made a financial commitment to the project, including a payment of $500 million to progress the project quickly. That was processed in the 2014 budget and paid in June 2014. Subsequently, IA has considered a further stage of the business case and currently progressed the project from the early stage-it was pre the 2013 election-to where it currently sits with their assessment that was published in February.

Senator RHIANNON: Thank you for that. Can you clarify again when that initial payment of $500 million was made?

Mr Mrdak : In June 2014.

Senator RHIANNON: It was made in June last year. Considering we had the estimates at the end of last year and the February estimates and lots of questions on notice, I cannot understand why that information has not been released. There have been many of us trying to ask that.

Ms O'Connell : We covered those estimates. We stated that the figure of $500 million was paid.

Mr Mrdak : I am happy to check the Hansard, Senator. I recall you and I having a conversation at the previous estimates.

Senator RHIANNON: I will go back and check. I went through all the questions in preparation for that.


Senator RHIANNON: I want to return to the IA assessment for WestConnex. Again, I refer to those two lots of questions on notice that I drew your attention to before. My reading of it really does set out, if it is accurate, that there are two assessments. What is the difference between the assessment that is set out in the table in response to question No. 33? I am referring to the fourth column. When it comes to WestConnex, you say the IA assessment was at the time the funding allocation in 2014 was done. Therefore, it had to be done before May 2014, because that is when the budget comes down.

Ms O'Connell : That would be the June 2013 assessment, as Mr Foulds outlined earlier.

Senator RHIANNON: We have yes to that assessment. Then we go to question No. 76. That is where I asked 21 questions. The first two are again about the assessment. You say that it starts in June 2014 and is concluded in December 2014. That is a second assessment?

Ms O'Connell : That is correct. These are questions that IA answered. They are coming up very soon, if you would like clarification from them. We are very happy that you do so.

Senator RHIANNON: No. These are responses from you. Question No. 33-

Ms O'Connell : Question No. 33 is a response from us. Question No. 76 is a response from Infrastructure Australia.

Senator RHIANNON: Surely, you can clarify this for me?

Ms O'Connell : Yes.

Senator RHIANNON: Going on these two lots of answers, it is set out that there are two assessments.

Ms O'Connell : That is correct. There will be more than two business cases for WestConnex and more than two points of time when they were assessed. That is correct.

Senator RHIANNON: When we go to the website, there is only one assessment. Where is the other assessment, please?

Ms O'Connell : There are multiple assessments through the process. The business case was submitted originally in 2013 and assessed. With the benefit of IA advice, it was modified, changed. That is the intent of that process-to test the business case and come up with a better business case.

Senator RHIANNON: I am talking about the assessments. Are you saying that this assessment that I can see on the website is an updated version of the first assessment?

Ms O'Connell : I would have to ask IA to say which version is on their website of the assessment-whether it is post 2014 or the earlier one. It most likely would be the post 2014 one, but I would have to ask them.

Senator RHIANNON: Mr Jaggers, can you elaborate and clarify this, please?

Mr Jaggers : Infrastructure Australia, when they publish their report, which they have done annually, include any updates in assessments that they have taken. WestConnex has been on that list or in those updates on a number of occasions. So there is an early assessment, which I think had the project as classified at an early stage. Then they went through the threshold under IA's assessment process. The most recent assessment is the one that is referred to, I believe, in IA's answer. Again, I would have to check with Infrastructure Australia.

Ms O'Connell : The only way a project moves up the categories is if further work is done to the business case-it is modified and resubmitted and further work is done. In terms of the date, your third question on 76 is to ask what date and time the 2014-15 assessment brief was uploaded and made publicly available. IA have said in their answer that that was 23 February 2015.

Senator RHIANNON: That is a useful answer. But, reading this, there is a contradiction or a lack of clarity. We have one assessment that is publicly available. When you look at these two answers, it becomes apparent that there are two assessments. That is not made clear anywhere. It is not made clear what you are saying is that it is developed.

Ms O'Connell : It is an iterative process. It always is for all projects. The point of the assessment that IA undertakes is to improve the business case of those projects. That is not WestConnex's alone. That is all projects. It is an iterative process. The reason for having peer review IA assessment is to improve the case so it is modified. That is how a project moves from early stage up the category ratings for IA.

CHAIR: Are these questions that should also go to IA?

Ms O'Connell : Yes.

CHAIR: Can we go to IA?

Senator RHIANNON: They have answered half the questions and IA have answered half the questions. That is partly why there is confusion. Can you explain why we are getting the answers from two sections-you and IA? One lot of questions was answered by infrastructure investment and one lot was answered by IA. I guess that they were put to them, but I am just trying to understand your process. It has added to the confusion.

Mr Mrdak : Certainly, Senator. Anything to do with the assessment by IA or their processes has been IA. I presume the answer you got from us was because it related to the payment last year of the first payment on the project.

Senator RHIANNON: It is about the assessment. You have a whole column. You have lots of information about WestConnex, NorthConnex and the Pacific Highway. It is all about the assessment.

Mr Mrdak : That is a question that was put to the department to collate the information on every project that was subject to an IA assessment.

Senator RHIANNON: And the answer comes from infrastructure investment?

Ms O'Connell : That is correct.

Mr Mrdak : That is right, because the question was put to the department.

Senator RHIANNON: Can you understand how it appears? Some of the information has come from infrastructure investment and some has come from IA.

Ms O'Connell : But that is because question No. 76 actually says, 'On what date did IA begin its assessment?' So it is appropriate that IA would say that. The earlier question is a question for the Australian government about its commitment. The answers are not inconsistent. The first time that WestConnex appeared on IA's priority list, I am advised by my colleague, is June 2013. That is what we are referring to. IA, in answering the question that you asked them in 76, is referring to the last, in this case, evaluation of WestConnex that they conducted and their published assessment of it. The answers are correct. It is-

Senator RHIANNON: It appears that you are saying that 'it is not incorrect', because you are saying that the assessment has changed incrementally. But I have come to realise that what appears to be inconsistent has not been released. You do not say it on your website. You have not said it here.

Ms O'Connell : It is. It is in the IA methodology. It explains how a project moves up the categorisation. If you had one single business case that was frozen in concrete and could not be changed, it would never improve and it could not move up.

Senator RHIANNON: I understand that. Here where you have the 2014-15 assessment brief for WestConnex, that is the assessment brief. I am still not sure if we have two assessments or if it is continually being changed. Surely, on the website it should be explained that this has been updated from a previous version?

Ms O'Connell : I think it does in terms of IA's history of publication of all of the projects based on the categorisation and how they move from one category to another. The reason they do move is that further work is done on the project and there is further assessment by IA.

Senator RHIANNON: Sorry. I just-

CHAIR: Just pause. Can I plead that the present discussion ends shortly because I have committed ARTC to get home to a meeting tomorrow morning. I have to get them on in the next few minutes.

Senator RHIANNON: Fair enough. I have a couple of questions. Ms O'Connell, I understand what you have said. Somewhere on this website it sets out the process. But members of parliament and the public need to understand what is a very complex project. When I come to look at the assessment case for WestConnex, I see that there is the assessment brief. There is no explanation of the process that this has gone through and, I am assuming, is still going through. Is that correct?

Ms O'Connell : It is the result of a process of undertaking assessment.

Mr Mrdak : We have a project that is being assessed and is now being built, so I am not sure what the issue is.

Senator RHIANNON: The issue is that it is very hard to get information from you that is accurate. You have the 2014-15 assessment brief. I understand from the questions that it has been changed to some degree. This is my final question. Do we therefore conclude that this will be changed again? Will that information be updated with the new assessment brief?

Mr Mrdak : There will be further assessments. Let us be very clear: the project is being built. Construction is underway on stage 1. The Australian government has made its funding commitment. We are all pressing on to implementation.

Senator RHIANNON: That was not the question. I am not disputing that.

Mr Mrdak : You continue to suggest that the process here is-

Senator RHIANNON: The question was specifically about the assessment brief and trying to get transparency in how you run this. Will you be undertaking further changes to the assessment brief? Will this change on the website?

Mr Mrdak : It may, depending on whether there are further alterations to the business case. But the most important thing is concrete is being laid and the project is being built.


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