Question on Notice to Transport Minister

[Fares_Fair]

From the Queensland Hansard ...

LEGISLATIVE ASSEMBLY OF QUEENSLAND
1ST SESSION OF THE 53RD PARLIAMENT

Thursday 24th March, 2011

405
MR POWELL ASKED THE MINISTER FOR TRANSPORT AND MULTICULTURAL AFFAIRS (MS PALASZCZUK)—

Will the Minister provide details of expenditure to date and total anticipated costings
(in 2011 dollar terms and each reported separately) for
(a) the Beerburrum to Landsborough rail duplication project and
(b) the Landsborough to Nambour rail duplication project?


I look forward to the answer to this QoN due on 27th April, 2011.

Edit 28/4/11 at 6:03pm
Scroll down 7 posts for the non-answer !

Regards,
Fares_Fair.

[Stillwater]

Is the purpose of this question to ascertain the sums involved so the Opposition can cost its policy to promise to fund both projects?

[Fares_Fair]

No.
It is part of a much larger (and ongoing) process.
As far as I am aware, no such rash promises would be made without knowing what condition the Queensland State Government finances are truly in.
Nor is there reason to do so, seeing this Sunshine Coast area is an LNP stronghold.

Regards,
Fares_Fair.

[Gazza]

Besides, the whole point of question time (And indeed "effective opposition") is to force the government to answer this type of question...Gotta counteract the Dorothy Dixers somehow.

[Stillwater]

So, what is Mr Powell's reason for asking the question?  It must be to:

- establish whether there has been any cost overruns since the costings were last published (good point)
- establish whether the state government is undertaking ongoing investigations into these projects (another good point)

Is there another reason?  Let's hope it doesn't result in some diatribe along the lines of: 'See Mr Speaker, the Hon. Member says she doesn't know these sums and will have to take advice.  How can she be across her portflio, Mr Speaker?  How can she tell the people of the Sunshine Coast that she is sympathetic to their transport needs when she doesn't know the fundamental facts.  We are in the lead-up to a state budget Mr Speaker.  One would hope that she has these figures at her fingertips and will be in the Treasurer's ear about getting them built, particularly as the grinning Cheshire cat over there (points to the Hon. Paul Lucas) promised to build the duplication to Landsborough by next year, Mr Speaker.  Yes, I withdraw the imputation that the honourable member has the demeanour of a cat.  The minister has just indicated by her answer that she doesn't have a clue ... blah, blah'

Hopefully, the Opposition will go to the election with a transport policy.  It would be too cute to argue 'we won't make any promises until we get into government and know the true state of the finances.' OR 'we will make this promise subject to the necessary funds being available when we are in government'.  Becausse then voters will be no more in front then where they are now.

[Jonno]

The Opposition will go to the next election with a transport policy but unfortunatley it will be "Build as many roads us possible and keep telling everyone that congestion is beng reduced whils the oposite is in fact occuring".

[Stillwater]

The level of debate on transport must rise above the mundane to become policy-driven and focussed.  And it must disclose the full picture, not (as is the case with Connecting SEQ 2031) list promises without disclosing the road map to get to 2031.  The government and the opposition must be held to the same set of accounts.

[Fares_Fair]

The Government's answer is ....
http://www.parliament.qld.gov.au/view/legislativeAssembly/tableOffice/documents/questionsAnswers/2011/405-2011.pdf

Question on Notice
No. 405
Asked on 24 March 2011
MR POWELL asked the Minister for Transport and Multicultural Affairs (MS
PALASZCZUK) —
QUESTION:
Will the Minister provide details of expenditure to date and total anticipated costings (in
2011 dollar terms and each reported separately) for
A) The Beerburrum to Landsborough Rail Duplication Project? and
B) The Landsborough to Nambour Rail Duplication Project?
ANSWER:
I thank the Member for Glasshouse for the question.
I refer the Member to the South East Queensland Infrastructure Plan and Program
2009-2026 (published in July 2009).

______________________________________________________________________________________________________

Fares_Fair additional information.
Here are the costs from p47 of the document.

Rail infrastructure                                                                       $M     Estimate category (see note D)
6.21 Caboolture to Beerburrum to Landsborough: additional rail line     673                      1 & 4
6.22 Landsborough to Nambour: additional rail line                         1,800                      1
6.23 Rail crossing grade separation: Beerwah                                    70                      3


D. For an explanation of estimate categories, refer to page 19.


And this from p19.

Type 0 = Pre-project estimate: the earliest
estimate of project cost and is undertaken
before a concept design. It is generally
based on the cost of similar projects plus
a contingency.

Type 1 = Concept estimate: typically
undertaken in the initial planning stages,
and based on a concept design.

Type 2 = Pre-market estimate: based
on a more detailed review of scope and
requirements. This estimate is determined
after the government has assessed the
costs and benefits of a project.

Type 3 = Market price: the price agreed
with the contractor. It is no longer an
estimate nor is it a cost, since it has not
been incurred.

Type 4 = Completed project cost: the total
cost of the project, which will normally
consist of the market price plus any
variations.

Regards,
Fares_Fair.

Edit: Added the costs and relevant excerpts from the South East Queensland Infrastructure Plan and Program 2009-2026 (published in July 2009)

[ozbob]

 

[colinw]

A meaningless answer from a meaningless plan.

We are well overdue from some sensible policy debate on public transport, and some real action on the NCL north of Beerburrum (and probably capacity upgrades Lawnton to Caboolture as well).

It is a complete disgrace that further duplication of the line suddenly dropped off the radar as soon as the opposition won the relevant seat.

Not that I would expect anything better from the other mob.  Australian politics as a whole is tainted by this kind of bastardry & inaction.

[#Metro]

So let me get this right- Landsborough to Nambour will cost 1.8 billion 

What is the absolute minimum required to get decent service? -- I am assuming no spur line to Caloundra for CAMCOS --

[O_128]

So let me get this right- Landsborough to Nambour will cost 1.8 billion 

What is the absolute minimum required to get decent service? -- I am assuming no spur line to Caloundra for CAMCOS --

or we could get workers from china who have experience and the thing would probably cost half that, Australians have priced themselves out of the market. 1.8 billion is ridiculous.

[#Metro]

The price tags on these projects are just unbelievable.
1.8 billion got Perth 70km of rail.

[Fares_Fair]

I just re-checked the report, and yes ! 1800 $M is correct.

Regards,
Fares_Fair.

[Stillwater]

No!  These figures are not correct, because they are estimates only, and they are in 2009 dollars.  The dollar amounts that count are (1.) the construction cost at the date on which construction starts and (2.) the actual cost after the project is finished and the last bill for the last not, bolt and batch of concrete comes in and is paid.

Inflation is running at over 3 per cent currently and it is a great pity that the minister did not at least run an inflationary ruler over the 2009 budget estimates; because that would have resulted in a figure different to that which she presented to the Parliament.

The $673 million figure she gave for Caboolture-Landsborough included money spent on the duplication to Beerburrum, which is complete.  For the sake of convenience, halve that to arrive at a $337 million figure for Beerburrum-Landsborough.  However, this is 2009 money, so the figure TODAY would be about $360 million.  Ten years from now (which is when duplication is scheduled), you could be looking at something upwards of $550 million.  Double Landsborough-Nambour for a 2031 completion date.

What the minister should have said is the infrastructure in question will cost taxpayers $3.9 billion in 2031 dollars.  Built today, or any time soon, it will cost less.

Casting forward 5 years (nothing would happen much before then), the cost of these works would be of the order of $450 million for duplication to Landsborough and $2.5 billion for Landsborough-Nambour.  So not much change out of $3 billion.

On rough analysis, the answer to the Honourable Member's question is $2.95 billion.

[Stillwater]

The disappointing aspect of the Minister's response is that she cast her response in a way that did not advance public debate on likely costs and how they could be met.  She dealt with the Member for Glass House as though he were a mosquito to be swatted -- quote a dubious figure from a report several years old.

What this shows is no-one in QR or the Department of Transport and Main Roads has their finger on the pulse of the Sunshine Coast Line upgrade -- it is just that thing that is going to happen in 2031, so why waste time on planning and costings in the interim.

Very disappointing.

[#Metro]

We know about the costs, what about the benefits in net present value? NPV?

This line is at capacity and the freight links as well are being impacted...

[Stillwater]

FF, reading the tea leaves, a sum of about $650m to $700m would make a difference.  It would allow for duplication to Glass House Mountains and then a series of duplications, separated by single track, to Nambour, as advocated by Mufreight and others here.  This would allow for additional duplication of track as money becomes available.

[Golliwog]

Let me get this straight. The government has said they're not doing the duplication for quite some time (or whatever they've said, its somewhat irrelevant to me for this argument, its the time thing that matters). We all know how tight the governments budget is (so tight that Mitchelton to FG was split into two projects, as was Darra to Springfield), yet here we are calling for the government to pay someone to sit around doing nothing but update estimate costs when all they are is exactly that.

Stuff that, I vote for do all that in one hit when they're gearing up to finish the design, which really isn't worth doing too long before you begin construction.

[Stillwater]

The design work for Beerburrum-Landsborough is done and land for realignment has been purchased.  It could proceed tomorrow, subject to confirmation of available funds based on 2012 dollars, not 2009 dollars (which would be out of date).  The section Landsborough-Nambour has not been completed in the same detail.

However, the govt would need to allocate some funds for preconstruction activities 4 to 5 years out from construction of the Landsborough-Nambour section, the builk of the funds for construction.

It would go something like this;  Year 1 - 10 million, Year 2 - $30 million (including some land purchases), Year 3 - $50 million.  Then construction:  Year 4 - $150 million, Year 5 - $200 million, Year 6 -- $300 million.  You could not spend $650 million in one year.

Budgets include forward estimates of likely expenditure and usually have a four-year forward horizon.  So, while construction would not start until five years from now under the supposed scenario, govt would need to start factoring into budgest estimates year-on-year likely expenditure.  If you 'commited to construction' now (that is, made the commitment to start construction in, you would not have to spend big sums now, but u would have to start spending on physical construction  in four years time, and allow for it, PLUS, do all the preliminary work, such and purchasing land and moving underground services and pipes in the alignment, EIS etc. ahead of constructing, but even this so-called 'minor work' would cost of the order shown.  And all the time, inflation marches on and erodes the value of the budget allocation.

[Stillwater]

Golli:  Here is an unrelated major project report to a council listing the list of measures to be in place before construction of a new road can begin.  Have a look at the list of 'to do' items starting on page 34.  Something similar would be required for Landsborough-Nambour, even before construction started.  These things cost money.  They have to be budgeted for during the lead-in years to actual building.

http://www.kempsey.nsw.gov.au/pdfs11/Kempsey%20Bypass_Issues_Paper.pdf

[Stillwater]

And here is a project business case for a project that did not get off the ground.  Note Page 174 where a spread of project costs is given over a number of years, as the project was to build up to eventual construction.

http://www.nationbuildingprogram.gov.au/publications/reports/pdf/Toowoomba_Bypass_Business_Case_Final.pdf

[Golliwog]

Ok, probably should have been clearer. I don't mean "in one hit" as all at the same time, but as you work through it. I just meant that if neither of these projects are starting soon (read within the next few years), why would you have someone sit there checking and rechecking the price. If you've got the design, and you know thats what you want, and its not going to change (by any massive degree anyway) then you would either not bother at all, or as part of the pre-construction phase re-check the cost then to take into account inflation and any other changes in costs. There's very little gain to be had doing that every year just to have an updated estimate when you're not going to do anything with it.

To be clear, my argument is not that the projects aren't needed now. If it were up to me, they would start ASAP. However, the government has indicated (for Landsborough-Nambour at least, not sure what the timeline is for Beerburrum-Landsborough) that they don't intend to get anywhere near construction for quite some time. Therefore, why waste taxpayer money today updating estimates, which are only going to end up being updated again when it comes to heading into construction/preconstruction.

[Fares_Fair]

Ok, probably should have been clearer. I don't mean "in one hit" as all at the same time, but as you work through it. I just meant that if neither of these projects are starting soon (read within the next few years), why would you have someone sit there checking and rechecking the price. If you've got the design, and you know thats what you want, and its not going to change (by any massive degree anyway) then you would either not bother at all, or as part of the pre-construction phase re-check the cost then to take into account inflation and any other changes in costs. There's very little gain to be had doing that every year just to have an updated estimate when you're not going to do anything with it.

To be clear, my argument is not that the projects aren't needed now. If it were up to me, they would start ASAP. However, the government has indicated (for Landsborough-Nambour at least, not sure what the timeline is for Beerburrum-Landsborough) that they don't intend to get anywhere near construction for quite some time. Therefore, why waste taxpayer money today updating estimates, which are only going to end up being updated again when it comes to heading into construction/preconstruction.

Questions on Notice are a part of how the Government is supposed to work and respond to the opposition parties.
Hundreds are asked every year by all members of the house, and from both sides of politics.
When asked by the same side as the Government they are called 'Dorothy Dixers'.

The (higher level) public servants are there to research, advise and provide the answers for their relevant Minister.
This information is (now was) required for a submission to Government.
It was in no way a waste of time, nor was it a 'stunt'.

Regards,
Fares_Fair.

[Stillwater]

Well, maybe if you were the Opposition and wanted to be the government after March 2012 and, say, you wanted to devise a policy that achieved just what you said, Golli, (Landsborough-Nambour track upgrade ASAP), you would need an updated costing.  Then you could plan and cost each of your policies accurately.  On the other hand, if you are the government, you do zilch, zippo, nothing for the Opposition and tell them to go look up a document that is out of date.

Then when the Opposition announces track upgrade as a policy, you shout and wave your fists from the government benches and demand the Opposition's costings.  When the Opposition hands them over, you toss the costings to the bean counters in the department who would pick them for flaws.  They would find a few.

Yippee, the government then says it has found a 'black hole' in the Opposition's costings.  Or, it issues a media statement saying that the dollars allocated by the Opposition would achieve only a half or two thirds of the job.

It's called politics.

[Stillwater]

The flip side is if the government continues to use the $1.8 billion, plus $673 million for Caboolture-Landsborough forever and a day for the next 10-15 years, at the point when you want to start construction, there is a shortfall in funding.  At that point in the future, $1.8 billion in 2026 does not have the same value as $1.8 billion today.

So what to do?  You scrap some other project to fund the '$1.8 billion' project, or you ask your department to apply just the $1.8 billion allocated to a single stage of the eventual project, or you scale back the project to just a single track on the new alignment, with the second track to follow when you get some more money.

There are plenty of examples of this piecemeal approach around the network, and let's hope it won't occur with CRR.  Half a tunnel or a bridge is a bit useless.

Not knowing the real cost of a project at any one time is false economy.

Look at Connecting SEQ 2031.  The government states it can do a whole lot of projects for a given amount, in today's dollars.  There is absolutely no certainty that this will be the case, thereby making the document a transport fools paradise.

[somebody]

Why is the price so much more expensive than what the ICRCS suggested?

[Stillwater]

Different time frames.  It's highly likely that the most recent document has the more accurate price.  The price just doesn't stand still.  Remember that $30,000 block of land in the 1970s that you had your eye on, but thought too dear?  Well, it now costs $300,000.

[Stillwater]

Remember, we are only talking about best guesses here.  Everything is an estimate up until the point that construction begins.  At that point, the tendered amount is most likely the cost, but even then there can be contract variations and cost overruns.  Just look at Leightons and the Airport Link.

[Fares_Fair]

Well, maybe if you were the Opposition and wanted to be the government after March 2012 and, say, you wanted to devise a policy that achieved just what you said, Golli, (Landsborough-Nambour track upgrade ASAP), you would need an updated costing.  Then you could plan and cost each of your policies accurately.  On the other hand, if you are the government, you do zilch, zippo, nothing for the Opposition and tell them to go look up a document that is out of date.

Then when the Opposition announces track upgrade as a policy, you shout and wave your fists from the government benches and demand the Opposition's costings.  When the Opposition hands them over, you toss the costings to the bean counters in the department who would pick them for flaws.  They would find a few.

Yippee, the government then says it has found a 'black hole' in the Opposition's costings.  Or, it issues a media statement saying that the dollars allocated by the Opposition would achieve only a half or two thirds of the job.

It's called politics.

yep, unfortunate but true.
My theory is that where you get more than one person in a room, it's politics.

Regards,
Fares_Fair.

[somebody]

Personally, I do not think the answer was that bad.  The question didn't include "When might such a duplication be proceeded with?"  The best available answer seemed to be given.  And with a bit of research, the question never would have needed to be asked.

[Fares_Fair]

Personally, I do.
I needed the answer for a submission to the Federal Government.
Perhaps the reason for their non-answer of 2011 dollar figures.

Regards,
Fares_Fair.

[somebody]

This page costs the Cab-Beerb bit at $298m: http://www.queenslandrail.com.au/NetworkServices/SEQIP/CompletedProjects/Pages/CabooltureBeerburrum.aspx

I expect the above price is also in 2009 dollars, as that is when it was completed.  That makes the answers: 673+70-298 = $445m Beerb-Landsborough and $1.8bn Landsborough-Nambour.

Is the conversion to 2011 that necessary?  If so, I expect you could find a factor on the internet.  ato.gov.au certainly has something for the captial gains tax calculator.

[Gazza]

http://www.rba.gov.au/calculator/

[Fares_Fair]

Hello somebody and Gazza,

Thank you.

Kind regards,
Fares_Fair.

[Fares_Fair]

This page costs the Cab-Beerb bit at $298m: http://www.queenslandrail.com.au/NetworkServices/SEQIP/CompletedProjects/Pages/CabooltureBeerburrum.aspx

I expect the above price is also in 2009 dollars, as that is when it was completed.  That makes the answers: 673+70-298 = $445m Beerb-Landsborough and $1.8bn Landsborough-Nambour.

Is the conversion to 2011 that necessary?  If so, I expect you could find a factor on the internet.  ato.gov.au certainly has something for the captial gains tax calculator.

Using the RBA Inflation Calculator (assumed 2.8% inflation) - link provided by Gazza above.

Results are:
$445m (July 2009) Beerburrum to Landsborough = $470,682,749.82 (July 2011 dollars).  say $471m.
$1.8b (July 2009) Landsborough to Nambour = $1,903,885.28 (July 2011 dollars). say $1.9b.

Regards,
Fares_Fair.

[somebody]

Good luck with your submission.

[Stillwater]

That's pretty good.  The question on notice was loaded with politics, as was the answer.  The whole Sunshine Coast Line upgrade needs to be disengaged from the politics (on both sides) and the argument put purely on the economics, the freight benefits and the passenger/population growth.  Also, there would appear to be credence in the case put by business interests on the coast that the congestion on the Bruce Highway is hurting and limiting the SC economy.

Unfortunately, they argue more lanes for the Bruce, similar to the monstrous rat run through Logan to get to the Gold Coast.  More freight onto North Coast rail and a decent passenger rail service (no more than what the government has promised) will relieve congestion and reduce greenhouse gas emissions.

If you need help, FF, give us a shout.

[Stillwater]

If we apply the same inflationary calculation to the cost of CRR, its price goes up another $290 million for every year it is not built.   :conf

[mufreight]

Right on the mark Stillwater     with both posts

That's pretty good.  The question on notice was loaded with politics, as was the answer.  The whole Sunshine Coast Line upgrade needs to be disengaged from the politics (on both sides) and the argument put purely on the economics, the freight benefits and the passenger/population growth.  Also, there would appear to be credence in the case put by business interests on the coast that the congestion on the Bruce Highway is hurting and limiting the SC economy.

Unfortunately, they argue more lanes for the Bruce, similar to the monstrous rat run through Logan to get to the Gold Coast.  More freight onto North Coast rail and a decent passenger rail service (no more than what the government has promised) will relieve congestion and reduce greenhouse gas emissions.

If you need help, FF, give us a shout.

If we apply the same inflationary calculation to the cost of CRR, its price goes up another $290 million for every year it is not built.   :conf

In relation to the CRR project this strengthens the argument for construction to commence now on borrowings, the interest would be covered by the inflationary increases and further offset by the reduction in costs of increased congestion, commuters time and a lessenung of road trauma.