2016-05-09
Senator RICE: Mr Davies, my questions are about the Western Distributor business case. Infrastructure Australia is assessing the Western Distributor—is that the case?
Mr Davies: Yes, that is correct. We are currently assessing the business case for the Western Distributor.
Senator RICE: What stage are you at with the assessment of the Western Distributor?
Mr Davies: We have started the assessment and we are in the stage of seeking clarifications and having an ongoing dialogue with the Victorian government.
Senator RICE: What documentation do you have from the Victorian government, in terms of the business cases that have been provided to you?
Mr Davies: We are assessing the Victorian government business case for the Western Distributor.
Senator RICE: Is that the complete business case? When I was talking to Mr Mrdak earlier, he said that the department only had the reference case. Do you have the full Victorian government—
Mr Davies: No. It is the reference case. It does not include any material from Transurban.
Senator RICE: Will you be getting the full business case with material from Transurban?
Mr Davies: No, I do not believe so.
Senator RICE: Do you think that is an issue with your assessment of the project—that you do not have the full, detailed business case?
Mr Davies: Our assessment is in regard to potential future funding from the Commonwealth. That business case has come from the Victorian government.
Senator RICE: In your assessment of how valuable a project it is, I would have thought that you would need to have all of the detail that the Victorian government and Transurban had as their proposal as to how effective it was going to be at solving the transport problems. Mr Davies: We are assessing the strategic merit of the project and also the economic business case against the problem which it is defining. Senator RICE: Do you think you could do a better job of assessing the strategic merit if you had the full Transurban and Victorian government business case? Mr Davies: How the project is delivered is a matter for the Victorian government. Senator RICE: Surely the business case, particularly the transport modelling and the economic modelling, in terms of its effectiveness as a solution to transport problems, there is obviously more detail available than is being made available to you. Mr Davies: The reference case is providing us with all the detail we need to do our assessment, including transport modelling and so on. Senator RICE: How are you able to interrogate the transport modelling? Are you doing your own assessment and modelling of the transport of the area? Mr Davies: We take a standard approach to these assessments. We do not undertake our own benefit-cost analysis. We do not undertake our own modelling. What we are doing is reviewing the work that has been done by the proponent—in this case the Victorian government. We are looking at their work, and that is why, as I mentioned at the start, there is to-ing and fro-ing: we seek clarifications, and on occasion we ask them to run additional model runs and those kinds of things so that we can fully understand what it is we are looking at.
Senator RICE: Have you asked them to do that in this case?
Mr Davies: As I mentioned, that is an ongoing process.
Senator RICE: One of the problems is that the transport modelling and economic modelling has not been released to the public; there has been the business case released, but the transport modelling and the economic modelling have been redacted from that business case. So you have not got that full detail either, is what you are telling me?
Mr Davies: No; as the secretary mentioned earlier with regard to the department, we have the full reference case
Senator RICE: Is there further modelling that is done? You have the reference case, but there is a more detailed business case, or a more accurate or more—what is the difference between the reference case and the other business case that you have not got?
Mr Davies: I think you are referring to the business case or the submission that has been made by Transurban to the Victorian government. We are not party to that. It is a commercial decision for the Victorian government. What we do have is the reference case that has taken that on board, and that is presented to us as part of our assessment.
Senator RICE: So you have all of the details of all of the transport modelling and the economic modelling that have been done for the project as part of your reference case? Or is there other more detailed transport modelling and more detailed economic modelling that you are not privy to? Mr Davies: We have all of the material that is integral to that reference case. Senator RICE: Yes, but is there more modelling in terms of transport modelling or economic modelling that you do not have? Mr Davies: That is a matter for the Victorian government. We are not aware of what else they have done in terms of their own work or in terms of other options. Senator RICE: Would you be able to confirm for me whether you know if there is other information that the Victorian government has that you have not been given access to? Mr Davies: We are not aware of that. We are not aware of what other work they have been doing. Senator RICE: Okay, and you do not feel that you need to ask to have all of the information in order to be able to do an accurate assessment of the effectiveness of the project? Mr Davies: What we do seek is consistent with other assessments. If we would like other information that would help us do the assessment, then we will ask for that information. Senator RICE: Do you know of the existence of independent peer reviews that have been done of the transport modelling and the economic modelling? Mr Davies: I am not aware of that. I will refer to my colleagues to— Senator RICE: I asked Mr Mrdak the same question earlier, but I mean within Infrastructure Australia. Mr Davies: Perhaps Ms Chau can comment on that. Ms Chau: We understand there has been some peer review of traffic models, but we have not seen the results of those. Senator RICE: Do you think that it would be valuable to you to see the results of those peer reviews? Ms Chau: It would be in terms of the actual recommendations. Senator RICE: So are you going to be requesting those independent peer reviews? Ms Chau: We have asked for other information as part of our review.
Senator RICE: Have you requested the independent peer reviews?
Ms Chau: We will take that on notice.
Senator RICE: You say you have requested other information, but you must know whether—given you know that the independent peer reviews exist—you have requested them or not—yes or no?
Senator EDWARDS: She has answered the question.
Senator Rice interjecting—
Senator EDWARDS: Don't verbal the witness!
CHAIR: Five minutes is now nearly 10, so get on with it!
Senator RICE: I am waiting for an answer.
CHAIR: You have got your answer.
Senator RICE: No—
Senator EDWARDS: She has given you an answer.
Senator STERLE: No, Chair—
Senator RICE: No, this is a very important point.
Senator STERLE: Senator Rice has not got an answer.
Senator EDWARDS: No worries; ask your question again. CHAIR: Come on, quick. Senator RICE: We have got independent peer reviews that have been done that I would expect would be critical for your assessment of the project, to have copies of those independent peer reviews. Mr Davies: If I may, it is normal for peer reviews to be done on all projects. We are not party to—as to your earlier question—all of the work that Victoria has done in relation to this opportunity or what peer reviews they have done. What we focus on is the business case that is presented to us. Where we feel we need more information, then we go and seek that information through our questioning, requests for more information and so on. Senator RICE: My understanding is that there are independent peer reviews that may indeed be critical of the business case that you have been presented with. Don't you think that it would be valuable for you to know of any potential criticisms of the economic modelling and the transport modelling that have been done? Mr Davies: That work would be confidential to the Victorian government. If they wish to share that with us, that is a matter for the Victorian government. Part of our role is to do our own assessment. That is the process we are doing at the moment. Senator RICE: Are you going to be doing your own independent transport modelling of the western distributor, or are you taking their transport modelling on trust as you do not even know what are the results of the independent peer review of their transport modelling that has been done? You seem to be not very interested in acquiring it. Mr Davies: As an independent body our review is independent. As we do with other assessments, we continue to seek additional information. If we feel any component of the business case is lacking information, then we will go back and seek that. We will commonly ask for a sensitivity analysis to be run, particularly on transport modelling, so that we can fully understand how sensitive those models are and what the underlying assumptions are and the sensitivity of those assumptions. That is very much part of the work that we do as an independent body.
Senator RICE: Are you doing that for the western distributor transport modelling?
Mr Davies: We are, yes.
Senator RICE: Will those results be made public?
Mr Davies: As with all of our assessments, we make those assessment public once they are complete and presented to our board