Report highlights cost overruns on major infrastructure projects

A report released by the Grattan Institute has found over the past two decades, Australian governments spent $34 billion more on transport infrastructure than first stated.

The report has found of the nine transport infrastructure projects over $5 billion dollars in Australia, six have suffered cost blow outs adding up to $24 billion.

In a press release the institue stated some examples. Inland Rail from Melbourne to Brisbane was costed at $4.4 billion in 2010; it’s now estimated to cost $9.9 billion. Melbourne’s North East Link was costed at $6 billion in 2008; it’s now expected to cost $15.8 billion. The Sydney Metro City & Southwest was costed at $11 billion in 2015; this year the NSW Government announced the latest cost estimate is $15.5 billion.

An analysis, in the report, of all projects valued at over $20 million or more built in the last 20 years shows that the actual costs exceeded promised costs by 21 per cent.

Big projects were found to be riskier, as more than one third of overruns since 2001 came from seven big projects.

The report found one third of projects are announced prematurely, and these account for more than three quarters of the overrun cost.

It warned that as governments are fast-tracking transport projects, spending big on projects conceived before COIVD “makes little sense” because the pandemic has slowed population growth and fewer people are expected to commute in future.

“Taxpayers would get bigger bang for their buck if politicians steered clear of what they like to call ‘nation building’ and ‘city shaping’ mega projects, and instead spent more on upgrading existing infrastructure and on social infrastructure such as aged care and mental health care,” the press release states.

The institute suggests the pandemic should prompt governments to rethink major projects, specifically ones that do not yet have a business case.

“The key lesson is that megaprojects should be a last, not a first resort.”