2016-05-09
Senator RICE: I have more questions on WestConnex and whether the department has received an updated business case for WestConnex.
Mr Mrdak: Yes, there was an updated strategic business case provided in November last year to the department and to Infrastructure Australia that reflected the expansions of scope of the project that were announced by the New South Wales government late last year.
Senator RICE: What are the department's requirements for the business cases in terms of its detail and all of the information that is required? I understand that there are a range of different certainties in business cases.
Mr Mrdak: Certainly at Infrastructure Australia we do set out a range of things that we are looking for in the business case. It covers the project proposal, the details of the scope and the construction envisaged and also the financial position vis-a-vis the benefit. We look for a benefit-cost analysis, for instance, or other evaluative techniques, we look at the project scope and we look at the costs involved. So there is a whole range of things in the frame which we look for in the business case, including the needs analysis, options analysis and the like that take place as part of any business case.
Senator RICE: So you signed off on the updated business case that you received in November as being sufficient for the final business case that you need in order to be able to hand over the money?
Mr Mrdak: Yes, we believe it is a robust business case, as does Infrastructure Australia.
Senator RICE: There is a WestConnex Interdepartmental Steering Committee, I understand.
Mr Mrdak: There is a senior steering committee for the project.
Senator RICE: And it has a federal government representative on it. Who is that federal government representative?
Mr Mrdak: It is myself and Mr Foulds.
Senator RICE: Thank you.
Senator DODSON: I would like to ask a couple of questions in relation to roads in the north. Have you had any expressions of interest in the following roads: the Dampier Peninsula road, the Tanami Road and the Gibb River Road? Have you had any expressions of interest in those matters or have there been any tenders let in relation to those? Mr Mrdak: Certainly, as part of the Northern Australia Roads package, we have had proposals brought forward by the Northern Territory government in relation to the upgrade of the Tanami Road. I can confirm that Tanami is one of the major proposals from the Northern Territory government. I would have to take the others on notice, if you would not mind, Senator, and I can give you that detail.
Senator DODSON: Yes, that would be great.
ACTING CHAIR: Has the Northern Territory government expression of interest been about the bottom end of the Tanami? I am just thinking that $600 million is a lot of money, but it is not a lot of money in what—
Mr Mrdak: The Northern Territory government is looking for the upgrade of the whole Tanami Road.
ACTING CHAIR: And nothing about the Dampier Peninsula or Gibb River?
Mr Mrdak: I am not familiar with the Dampier Peninsula.
Mr Pittar: I cannot answer that question accurately, I am afraid.
Mr Mrdak: I am not familiar. From recollection, I do not think it is one of the projects that has been submitted, but we will check and come back to you.
ACTING CHAIR: I am backing Senator Dodson 100 per cent. We just want to make sure that our state is up there on the starting block too. Take it on notice and let us know.
Mr Mrdak: We certainly will check which projects Western Australia has put in.
ACTING CHAIR: Senator Rice, are you still on infrastructure investment?
Senator RICE: Yes. It is something I overlooked on WestConnex. Apparently—and I do not know the terminology, but again I go back to the business case—the department asked for a P90 business case two years ago. Is that the terminology?
Mr Mrdak: It is. That is essentially the level of assurance, which means that the project is likely to be within 90 per cent of the estimated cost.
Senator RICE: Is the updated business case you have now a P90 business case?
Mr Foulds: New South Wales consider it to be a P90 business case and Infrastructure Australia is of that view to.
Senator RICE: Is the department currently looking at or assessing the Western Distributor at all? I note there is a business case in at Infrastructure Australia, but is there—
Mr Mrdak: Yes, we are. As I indicated earlier to Senator Sterle, the Victorian government reference business case is not the final Transurban-Victorian government business case; it is their reference business case— essentially, their public sector comparator business case. We have undertaken an assessment of that for the Australian government.
Senator RICE: Do you expect to get the Transurban-Victorian government final business case?
Mr Mrdak: We do not. The indications thus far are that Victoria is proceeding with its own assessment of the process and has indicated its intention to negotiate an agreement with Transurban for that project.
Senator RICE: But you have got some funding in it, in as far as you are funding the $200 million as part of the Western Distributor overall case?
Mr Mrdak: We have asked for the Monash to be taken out of the Western Distributor case and be dealt with as a separate project. The Australian government has made no other commitment to the Western Distributor.
Senator RICE: But you have that engagement at the moment, because the business case for the Western Distributor includes them Monash as part of it, doesn't it?
Mr Mrdak: It does.
Senator RICE: So currently, in terms of that $200 million, you have that engagement in the overall Western Distributor, plus Monash—
Mr Mrdak: We are treating the Monash discussions as separate now. We would like to proceed with the Monash as separate to the Western Distributor delivery case model.
Senator RICE: We have been told there have been some independent peer reviews done of the economic modelling and the transport modelling for the Western Distributor, including the Monash part. Has the department received copies of those independent peer reviews?
Mr Foulds: Not to my knowledge.
Mr Mrdak: Not to my knowledge. I think they were undertaken for the Victorian government.
Senator RICE: Have you been made aware of the existence of those peer reviews?
Mr Mrdak: We are aware of their existence. I am aware of some of the people who have been involved in those peer reviews, but to my knowledge we have not been provided with that material.
Senator RICE: Would you expect to be provided with that material? Would that have an impact on whether you should hand over the $200 million for the Monash part of the combined Western Distributor-Monash project?
Mr Mrdak: My understanding is that those peer reviews are looking much more at the other elements of the Western Distributor project, in particular the revenue stream that is available from the future of the concession on CityLink and also the way in which that is then used to fund the Western Distributor project. I would not expect so, unless Victoria was of the view to include the Commonwealth in that Transurban negotiation. My understanding is that at this stage Victoria has not and so it is unlikely we would be provided with that material.
Senator RICE: My understanding is that there is also an independent peer review of the transport modelling, which I would expect would also include transport modelling for the Monash section of it.
Mr Mrdak: I would have to check that, but I am not aware that we have been provided with that, unless it has been referenced in the comparative business case, which we have been provided with. I do not think it was.
ACTING CHAIR: Where is the Stronger Communities?
Mr Mrdak: That is in Infrastructure Investment.
ACTING CHAIR: Can you tell us how many full applications the department has received for the Stronger Communities Programme?
Mr Mrdak: Certainly, I will ask Ms Wall to give you those numbers.
ACTING CHAIR: While you are doing that, in all the excitement, I forgot to ask whether there has been an application for $3.5 billion worth of work for beef roads. Is that right?
Mr Mrdak: It is a large number for beef roads. I think it was around $3 billion for northern Australian roads. We do not know the final amount for beef roads yet, but I anticipate it will be significantly oversubscribed.
ACTING CHAIR: It just means the Dampier Peninsula and Senator Dodson gets it all.
Mr Foulds: Senator Rice, it is a P50 business case. That means there is a 50 per cent probability that the number will come in at or below.
Senator RICE: Only P50?
Mr Foulds: not only—P50 is a legitimate business case; P50 is a standard in a business case. A P90 is about the level of assurance, and they are both robust and strong measures.
Senator RICE: Is a P90 more robust and stronger than a P50?
Mr Foulds: It is a standard deviation, effectively. If you have a bigger number, then your project is more likely to fit within that bigger number.
Senator RICE: I am told that the department requested a P90 business case when it was first considering whether it was going to fund WestConnex two years ago. Can you confirm that that was the case?
Mr Foulds: The only thing that I would have to check—and I will have to take this on notice—is whether the original business case that was assessed by IA and rated as threshold was P90 or P50.
Senator RICE: I have been told that the department requested a P90 business case two years ago and that in fact you have not received a P90 business case.
Mr Foulds: I will have to take that on notice. I cannot recall two years ago.