5.54 As noted at paragraph 5.45, the Final Priority List included nine projects that had been assessed as being consistent with the Infrastructure Australia's seven themes, would contribute to Infrastructure Australia's strategic policy goals and had demonstrated long‐term economic benefits (through their BCR). In addition, whilst concluding more broadly160 that the projects submitted to Infrastructure Australia had not resulted in initiatives that were truly nation building, these nine projects were considered to be of national significance.
5.55 Four of the nine priority projects had been ranked highly throughout the entire process by which the Final Priority List was developed.161 In particular, in December 2008 they had been included within the Office of the Infrastructure Coordinator's recommended list of six priority projects162 that had:
• performed well in the profiling assessment;
• the initial economic appraisal concluded that the BCR was above 1.5; and
• the proponent's BCR was methodologically robust and supported by sufficient information.
5.56 In respect to each of these four projects, further information was provided to Infrastructure Australia in response to the December 2008 request for additional information to support the economic appraisals and deliverability assessments. The analysis of this further information reinforced the Office of the Infrastructure Coordinator's earlier assessment. Three of the projects were announced in the May 2009 Budget to receive funding (the F3 to Branxton Link in New South Wales,163 the Regional Rail Express Line in Victoria164 and the East‐West Rail Tunnel also in Victoria165) but the fourth (the Majura Parkway Stage 2 project in the Australian Capital Territory) has not to date been announced to receive any Commonwealth funding (this project had the highest BCR of the nine priority projects).
5.57 A further two of the nine priority projects had been included in the Office of the Infrastructure Coordinator's December 2008 recommended list of 22 projects for which further information was needed to support the proponent's economic appraisal. These two projects were the Queensland Government's Gold Coast Rapid Transit project and the South Australian Government's Gawler Rail Line Upgrades (re‐sleepering and electrification) project. In January 2009, the proponents for each project submitted further information to Infrastructure Australia. The additional information and further clarification with the proponents resolved the Office of the Infrastructure Coordinator's concerns with the Council advised at its 30 January 2009 that each was likely to have a BCR less than claimed, but that the BCRs were likely to remain at or above 1.5. Both projects were included in those announced in the May 2009 Budget to receive funding.166
5.58 A further two projects submitted by the South Australian Government were included as priority projects on the Final Priority List. At the Interim Priority List stage, the proponent had initially submitted BCRs that were below the evaluation threshold adopted of 1.5.167 Later submissions increased the claimed BCRs, as follows:
• in respect to the Seaford Rail Extension project, the January 2009 submission to Infrastructure Australia increased the claimed BCR above 1.5 with the Office of the Infrastructure Coordinator advising the Council at its 30 January 2009 meeting that there were 'substantial questions' about the project costs that would need to be resolved before any funding was committed to the project and that more accurate measurement of time savings could reduce the claimed BCR but that 'it would be unlikely to reduce it below 1.5'.168 At that meeting, the Council decided to include the project on the 'pipeline' list and it was later promoted to the 'priority' list169 with the May 2009 Budget including $291.2 million for this project over five years; and
• the Adelaide Rail Freight Junctions and Level Crossing - Goodwood and Torrens project was originally submitted in October 2008 with a BCR of below 1.5 but which was increased in November 2008 and again in January 2009 (to above 1.5). The Office of the Infrastructure Coordinator advised the Council at its 30 January 2009 meeting that, whilst 'the basic structure of the analysis is robust' there were 'questions regarding nearly half of the claimed benefits identified' in respect to the claimed BCR.170 In February 2010, the Office of the Infrastructure Coordinator advised ANAO that:
The results of further consideration, including written clarification from the South Australian Government (12 February 2009), are reflected in the final assessment, which seeks to give a view on the degree to which the concerns would affect the BCR. In the subsequent final appraisal assessment, a view of both upside and downside risks was judged to put the BCR in the region of 1.5.
5.59 The final project on the priority list, the Pacific Highway Corridor in New South Wales, had been assessed by the Office of the Infrastructure Coordinator in developing its recommendations on the Interim Priority List, but had not been put forward to the Council as a priority project. This was because the claimed BCR was not seen as sufficiently high. No further information in respect to this project was provided after publication of the Interim Priority List. This project was included as a pipeline project on the initial drafts of the Final Priority List. As noted at paragraph 5.27, at its 27 March 2009 meeting, the Council decided to move the project into the priority list:
on the basis of a recommendation from the Infrastructure Coordinator that further analysis was undertaken with the same rigour as other projects and the national significance of the Pacific Highway justified such a decision.
5.60 Except for one project (the East‐West Rail Tunnel), the Office of the Infrastructure Coordinator advised the Council at its 30 January 2009 meeting that the projects had economic merit. However, for some of the priority projects there remained unresolved issues concerning the proponent's economic analysis. For example:
• for the Gawler Rail Line Upgrades project, the Council was advised: 'Issues with project costs and validity of the base case could significantly affect the economic validity of the project';
• in relation to the Seaford Rail Extension project, the Office of the Infrastructure Coordinator noted that 'the questions about projects costs are substantial'; and
• in respect to the Adelaide Rail Freight Junctions and Level Crossings‐ Goodwood and Torrens project, the Council was advised that there were concerns regarding the claimed benefits associated with this project (see further at paragraph 5.58).
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160 As reflected in the Chairman's letter of 7 May 2009 transmitting the updated Final Priority List to the Minister.
161 These were the F3 to Branxton Link in New South Wales, the Majura Parkway Stage 2 in the Australian Capital Territory, the East-West Rail Tunnel in Victoria and the Regional Rail Express project also in Victoria.
162 The remaining two projects included in the Office of the Infrastructure Coordinator's December 2008 recommended list of priority projects were included as pipeline projects on the Final Priority List. These projects were the Northern Connector Road and Rail Corridor and the Mornington Peninsula Connector Road.
163 Specifically, $1,451 million over six years (including $158.0 million in 2008-09 and $162.0 million in 2013-14) towards the construction of 40 kilometres of dual carriageway for a project now referred to as the Hunter Expressway.
164 Specifically, $3,225 million over six years towards the separation of V/Line (regional) and metro rail services between West Werribee and Southern Cross Station via Sunshine.
165 Specifically, $40 million over two years from 2011-12 for preconstruction work towards a rail tunnel from Dynon to St Kilda Road.
166 Specifically: $293.5 million over five years for the Gawler Rail Line Upgrades (re-sleepering and electrification) project and provision for 'an equity contribution' of $365 million in relation to the Gold Coast Rapid Transit project.
167 The Office of the Infrastructure Coordinator's Evaluation Report for the Interim Priority List recorded an economic appraisal of Poor for the Seaford Rail Extension project but a rating for the Adelaide Rail Freight Junctions and Level Crossing - Goodwood and Torrens project was not recorded in the Evaluation Report.
168 In February 2010, the Office of the Infrastructure Coordinator advised ANAO that: 'In February 2009, South Australia drew Infrastructure Australia's attention to a technical issue relating to a long-term growth rate used in the demand modeling, including the impact of this change on the BCR results and sensitivity tests.' This reduced the BCR but it remained above 1.5.
169 As noted at paragraph 5.27, the Minutes of the 27 February 2009 and 27 March 2009 meetings do not record this decision having been taken, or the reasons for it.
170 For example, the Office of the Infrastructure Coordinator advised the Council that 'treating capital expenditure for rolling stock in line with conventional analysis, excluding Wider Economic Benefits and deleting property uplifts from Transport Oriented Development would reduce the BCR' to below 1.5.