At the point of signing the FAD, the RTA faced a clear choice. It could pass these costs on to the motorists or pay them from its own capital budget. The RTA says the option of paying itself was not possible because its capital funds were fully committed to other projects.
In our view, the option of re-prioritising the RTA's own funds was possible. The Treasurer had clearly put it to the RTA in writing. If the RTA considered that this option would have delayed other vital projects, it might have gone back to government for new guidance.
It was in the interests of both the RTA and CCM to pass cost increases on to the motorists. CCM wanted to preserve the business case it had submitted. The RTA wanted to avoid cost to government, preserve as much of the upfront payment as it could, and not use its own funds. There was no one representing the tunnel users in these negotiations.
A key part of the patronage assumptions is the affordability of the toll. What will motorists pay to realise the benefits of the tunnel? By the time the tunnel opened, the toll had reached nearly $35 a week for a commuter using it in both directions. It is reasonable to assume that a significant proportion of potential users will have been put off. This may detract from the objective of removing traffic from the surface streets.
We saw no evidence that the RTA robustly assessed this risk. We also saw no evidence that the RTA reviewed the affordability of the toll as it made the two decisions to increase the toll.