The NSW Government has encouraged private investment in major social infrastructure projects such as schools, and economic infrastructure projects such as toll roads. This has been an important part of the Government strategy to deliver services while constraining public debt.
Recently we examined the awarding of contracts for privately financed public schools. In this audit we examine the awarding of a contract for a privately financed toll road, the Cross City Tunnel project.
The approaches adopted in these projects are different, each bringing different risks, which need to be identified, understood and managed.
The Cross City Tunnel is part of Government strategy to reduce surface traffic in Central Sydney. At this time, it is not achieving its patronage targets and there is significant public criticism of the toll and the traffic management changes.
This audit raises issues relevant to agencies involved in privately financed projects. It highlights the importance of:
■ having value for money for motorists as an explicit objective of the bidding process
■ the need to define project costs
■ separate funding of costs not directly related to a project so the user-pays principle can apply in a fair way
■ handling contract variations transparently
■ effective community consultation
■ patronage projections in determining project impacts.
I believe the lessons learnt from this project would contribute to better management of future projects involving private investment.
Bob Sendt
Auditor-General
May 2006