Eight industry lobby groups yesterday lent their names and credibility to the proposed East-West Link freeway in Melbourne's inner north

No doubt much to the relief of the Victorian Government, eight of the state’s largest industry groups yesterday threw their support behind stage one of the proposed East-West Link freeway. They all insist its construction is essential to Victoria’s long term economic and social development (East-West Link critical for Victoria’s economy and liveability).

The organisations are the Property Council of Australia, RACV, Victorian Automobile Chamber of Commerce, Victorian Employers’ Chamber of Commerce and Industry, Australian Logistics Council, Australian Industry Group, Infrastructure Partnerships Australia, and the Master Builders Association of Victoria.

It’s disheartening to see they’re collectively supporting stage one of the project notwithstanding they haven’t assessed the detailed business case. They’re supporting stage one even though they know stage 2 (the western section) should be built first because that’s where the primary economic benefits for the economy most likely lie, especially in relation to freight.

The real surprise though is the Property Council. Only a couple of months ago, the Council released a wide-ranging report, Supercharging the Victorian economy, which proposed a suite of radical reforms for the state but made only a couple of (very) perfunctory mentions of the East-West Link (see pages 9 and 33).

The report has a number of city-specific proposals, headlined by a call for the introduction of congestion pricing. Others include scrapping the planned rail line to Avalon Airport; tolling all existing freeways; replacing stamp duty on the sale of homes with a land tax on all homes; reforming public transport pricing; and looking at building the next container port in Melbourne’s west rather than at Hastings in the south-east. (1)

In its invitation to the launch on 21 May, the Council clearly stated the ambitions of its report :

Victoria’s economic growth has largely been thanks to past economic reforms which lifted the State out of stagnation. But our economic growth is slowing and a new wave of reforms is necessary to supercharge the Victorian economy. The Property Council has identified this next wave of reforms and developed a number of bold ideas to stimulate debate and renew interest in economic reform

Tim Colebatch described it in The Age as a “wide-ranging” report suggesting “dozens of reforms to reinvigorate Victoria’s economy in the style of free-market reforms of the Kennett-Stockdale era in the 1990s.”

The commitment to congestion charging is relevant in the context of stage one of the East-West Link because it is a key way that excess traffic demand could be ameliorated. Congestion charging could delay, or eliminate entirely, the need to construct this section of road. According to the report:

Until the 1980s, governments typically saw road building as the solution to congestion. Some has been in the form of toll roads, but they will be harder to finance following the challenges of toll roads in Brisbane and Sydney…

Congestion charging has been successfully introduced in Singapore, London and Stockholm… All three cities now have remarkably fluid traffic for their size.

Yet notwithstanding this enthusiasm for congestion charging in the report (it scores an entire chapter) and a conspicuous absence of advocacy of the East-West Link, the Property Council is now an ardent supporter of the road. Indeed, it’s enthusiastic enough to publicly lend its name, credibility and prestige to the project and, given the Opposition has come out against stage one, to the Government.

These organisations are lobby groups. I suppose from their point of view, even an apparent boondoggle like the East-West Link is good for the executive team and appears to provide some benefit for many of their members, even if it’s only short-term. After all, it still represents $8 billion of capital expenditure that will surely lead to many business opportunities.

But it’s short-term thinking. If the East-West Link didn’t go ahead, it’s almost certain the $8 billion would be spent on other project that would deliver many of the same benefits to their members. More importantly, on the evidence available, $8 billion could be spent in other ways that would give members a much bigger pay-off.

For example, the western section of the East-West Link and the North-East Link are two prime possibilities, as is the Melbourne Metro rail tunnel and many smaller opportunities for investment in upgrading the public transport system. There’s around $17 billion of level crossing eliminations that could be done in Melbourne.

The key problem remains that the Government simply hasn’t made the case for the East-West Link in economic and social terms. Large organisations like these should be holding the Government to a higher standard. At the least, they should be doing a better job of looking out for their members long-term interest.

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  1. The report’s purview goes well beyond urban policy. Chapter titles relating to specific areas identified for reform: Innovation, Protectionism, Asset recycling, Transport, Congestion charging, Tax reform, Labour force participation, Size of the public sector, Construction costs