The rise of mega-projects: counting the costs
Australian governments are committing to a record number of ‘mega’ transport projects, and that exposes taxpayers to mega risks of cost blowouts. Ten years ago there was just one transport infrastructure project in Australia worth more than $5 billion. Today there are nine, and costs have already blown out by $24 billion on just six of them. Projects announced before governments are prepared to formally commit are also particularly risky. About one third of projects are announced prematurely; they account for more than three quarters of the cost overruns. Australian governments are now fast-tracking transport projects in the quest for an infrastructure-led recovery from the COVID-19 recession. But spending big on transport projects conceived before COVID makes little sense, because the pandemic has pushed population growth over a cliff, and fewer people will commute in future as working from home becomes part of ‘COVID normal’. The danger is that governments rush to build what may turn out to be white elephants. 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 pandemic should prompt governments to rethink major projects that have been promised or are under construction, particularly those announced without a business case. Governments should continuously disclose to Parliament material changes to expected costs and benefits, as listed companies are required to disclose to the stock exchange. And to avoid ending up here again in future, governments should collect data on and learn lessons from past projects. The key lesson is that megaprojects should be a last, not a first resort.
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Availability:
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Corporate Authors:
Grattan Institute
8 Malvina Place Carlton, VIC 3053 Australia
Carlton, Victoria -
Authors:
- Terrill, M
- Emslie, O
- Moran, G
- Publication Date: 2020-11
Language
- English
Media Info
- Pagination: 60p
Subject/Index Terms
- TRT Terms: Benefit cost analysis; Construction; Costs; Economic analysis; Evaluation; Infrastructure; Policy; Project management; Telecommuting; Transportation planning
- Geographic Terms: Australia
- ATRI Terms: Construction costs; Cost benefit analysis; Economic analysis; Infrastructure; Policy; Project evaluation; Telecommuting; Transport planning
- Subject Areas: Construction; Economics; Policy;
Filing Info
- Accession Number: 01759808
- Record Type: Publication
- Source Agency: ARRB Group Limited
- ISBN: 9780648738
- Files: ITRD, ATRI
- Created Date: Dec 9 2020 8:53AM