[Greens-Media] (VIC MLC Sue Pennicuik) Channel deepening economics come under the spotlight

[Amanda.Sharp at parliament.vic.gov.au]

28 February 2008

Channel deepening economics come under the spotlight

Greens MLC Sue Pennicuik successfully moved to have the economics of the
channel deepening project referred to the new upper house Standing
Committee on Finance and Public Administration in Parliament. The motion
was supported by the Liberal and National Parties and the DLP and opposed
by the government in parliament last night.

"The people of Victoria deserve to know just what the full cost of the
channel deepening project is. It has jumped by hundreds of millions of
dollars since it was first announced in 2001. The latest cost estimate by
the government is just under $1 billion, but this is certainly an
under-estimation as it excludes a raft of costs associated with the
project," she said.

"The cost blow-out has already demonstrated a lack of control in the
management of the project. An independent investigation is timely to ensure
that the PMC and the government are capable of delivering the project, that
is, if you assume the project should be delivered at all. We need to know
the reasons behind the cost blow-out.

"Given the size and complexity of the project, the costs will inevitably
rise even further. Who knows just how much it will end up costing.

"The claimed benefits continue to be shrouded in mystery - it is unclear
just who, if anyone, will benefit from channel deepening. I have spoken to
many small exporters and importers who say there is nothing in it for them,
as the levy on containers is set to double. How can a doubling of
containers levies reduce their costs?" she asked.

"The Port of Melbourne Corporation in its annual report says there are just
under $2 billion worth of benefits and with costs of $969 million, a simple
calculation leaves just over $1.2 billion of benefit over 20 years plus,
which is minuscule. The whole cost -benefit case put forward by the PMC is
an exercise in smoke and mirrors. If an appropriate discount rate is
applied to the analysis, the claimed benefits start to evaporate," Ms
Pennicuik said.

"I moved this motion on behalf of the Greens so that once and for all the
full costs of the channel deepening project can be revealed to the
Victorian public and to clearly identify what, if any, benefits will accrue
from the project and to whom.

"This is a debate about values. Melbourne is a city that is privileged to
have a bay in such good condition, and it is in good condition because
dredging has been minimised. Scallop dredging was stopped, and Melbourne
Water and other water authorities have spent millions of dollars preventing
nitrogen run-off in the bay. Melbourne is privileged to have this bay and
we need to look after it," Ms Pennicuik said.

"The channel deepening project is economically as well as environmentally
irresponsible," she said.

- - - - - - - - - - - - - - - - - - - - - - - - -

For Further Information:   Sue Pennicuik   0407 000 270

Back ground:
In 2001 the project was mooted to cost between $200 million and $230
million; by 2004 that had risen to $337 million; by August 2004 it had
risen to $498 million, and in another month it jumped to $545 million;
after the 2007 SEES was released the project was estimated to cost $763
million; and it is now listed in the government's statement of intentions
as $969 million.

The economic benefits, as stated in the government's Statement of Intent,
is around $2 billion over the life of the project, ie to 2030, and are not
expected to be realised before 2017.

The Standing Committee, which is due to report by the end of June, will
also investigate the legal and financial arrangements between the Port of
Melbourne Corporation and Boskalis Australia Pty Ltd. and/or its parent
company.





Parliament of Victoria Notice: 

The information contained in this email  including any attachments, may be confidential and/or privileged. If you are not the intended recipient, please notify the sender and delete it from your system. Any unauthorised disclosure, copying or dissemination of all or part of this email, including any attachments, is not permitted. This email, including any attachments, should be dealt with in accordance with copyright and  privacy legislation. Except where otherwise stated, views expressed are those of the individual sender.