Home > Economics - General > One last say on the canal

One last say on the canal

February 24th, 2005

Fellow ag economist David Pannell has a go at the economics of the WA Liberal’s canal project, with quite a few cites to my piece in the Fin a couple of weeks ago. For any WA readers this proposal alone is a good enough reason to put the Liberals last.

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  1. Bill O’Slatter
    February 24th, 2005 at 15:08 | #1

    Quoth D.Pannell (Point 1)1.” It is an affront to responsible decision making. Committing to such a huge project without anywhere near all the facts is absolutely reckless. All sorts of uncertainties and concerns have been raised in the ensuing debate, including economic, technical, social and environmental issues.”

    In particular Col seems to assume that Tenix has a trademark on the canal project . The way that Tenix sold this idea to Col would be an interesting story .Is Peter Reith involved ? I wouldn’t be surprised that that slimy character Is involved .

  2. harry clarke
    February 24th, 2005 at 15:54 | #2

    It is difficult to disagree with John’s assessment. Cost-benefit analysis if done badly may only rationalise optimistic or pessimistic priors but that does not mean you can avoid an attempt at such an exercise for a project of this scale. Put some estimates on the table at least. The comparative costs of alternative methods of supplying water to Perth should obviously also be evaluated and John’s comparative estimates of desalination costs need to be refuted for the canal project to be viable. On the face of it the proposal is a total turkey. Demand management measures need also to be considered that value water at its opportunity value and then proceed with new projects only provided they make money.

    I think the public should not vote for politicians who display this degree of intellectual sloppiness with public money. And I agree with Pannell — it is discouraging that so many members of the public accept this sloppy thinking. And that an economist would propound such nonsense is troubling.

    The Victorian Liberal Party is behaving in a similarly irresponsible way by advocating the elimination of tolls on the Mitcham-Frankston Rd. What economics calls for are user charges that are set at time-of-day marginal cost not at a uniform rate that ensures cost recovery plus a margin to ConnectEast. Buying the ConnectEast operators out of this project could cost the Victorian tax payer up to $7 billion and leave a road that is still inefficiently unpriced and hence with unnecessarily crippling traffic congestion in Melbourne’s expanding south-east.

  3. Youie
    February 24th, 2005 at 20:39 | #3

    Headline news in WA this afternoon/evening: After Barnett leaves the release of his election-promise costings til the last minute (well, 42 hours, 40 mins before election booths open) journos at his press conference find that the costings are out by $200 million. There was an “arithmetic error” in the compilation of the figures, and corrected documents were provided an hour or two later, but gee whiz, if the Libs can’t get their own costings right when they finally hand them out…

  4. February 24th, 2005 at 22:31 | #4

    This JUST made it into my election article, thanks for linking to it.

  5. Andrew Reynolds
    February 24th, 2005 at 23:18 | #5

    What is $2b for a permanent solution to the water problem compared to at least $1.5b for a rail line that hardly anyone will use?

  6. February 25th, 2005 at 02:18 | #6

    Yeah, right. “Hardly anyone.” That’s what they said about the northern line, Andrew, and it’s now driving demand for public transport in Perth.

  7. harry clarke
    February 25th, 2005 at 07:07 | #7

    The AFR editorial this morning reports that the WA Chamber of Commerce has abandoned the coalition declaring that neither side deserves to win. Its a depressing scenario with wasted opportunities everywhere.

    Gallop should give the go ahead to mining uranium and Barnett should allow people to shop when they like (and perhaps revise his grade 6 arithmetic).

  8. Andrew Reynolds
    February 25th, 2005 at 11:26 | #8

    Robert,
    You are up too late. The northern corridor cannot be compared to the south. Yes, it may be there in 10 to 20 years, but why not build it then if it makes sense then? Alannah wanted to play trains.
    The system would have worked and been a lot cheaper by putting it through Kenwick anyway. Why disrupt everything in central Perth for a good couple of years for a project that could be done a lot cheaper and just as well another way or even delayed until it is actully needed?

  9. February 25th, 2005 at 12:41 | #9

    First of all I travel ever day on the Northern Line and it the train is standing room only after the second station after my stop Clarkson.

    Second read this quote:
    “A West Australian Treasury analysis of a proposal to build a 3700 kilometre canal from the Kimberley to Perth has shown the cost of water would be 6.5 times more expensive than estimated by its backers, according to The Australian Financial Review (5/2/2005, p. 5).

    Water prices compared:

    • The treasury analysis said that water from the canal would cost about $6.50 a kilolitre;

    • the project’s main backer, Tenix, has estimated the cost at around $1 a kilolitre;

    • the cost of the current ground water supply is 60c to 80c a kilolitre; and

    • the projected cost of water from desalination is 85c a kilolitre.

    GHD backs Treasury figures: Treasury’s analysis has been backed by consulting firm GHD and follows an announcement by Opposition Leader Colin Barnett to build the canal – which is more than half the length of the Nile – if elected.

    They don’t know what they’re talking about: Such was the lack of detail in the original Tenix proposal that when it was first taken to the West Australian government last year, the company was unaware that the Dampier to Bunbury gas pipeline – which was supposed to supply the project – did not run to Broome, about 900 kin north of Dampier.

    Heritage problems: Heritage delays have also been forecast. The canal would cross 25 registered native title claims and two areas where native title has been found to exist.

    200GL & 4 new power plants: Under the Tenix plan:

    • 200 gigalitres of water a year would be drawn from the Fitzroy River;

    • four new power stations would be constructed to power the project and the entire project would be fenced to protect it from animals.

    Govt to pay for water it doesn’t need: Barnett said the West Australian and federal governments would pay only $400 million, but under the Tenix proposal the government would “take or pay” 60 per cent of the water supplied. As a result, the government would pay for the water regardless of whether it needed it and regardless of whether there was a change in Perth’s drought-stricken condition.

    The Australian Financial Review, 5/2/2005, p. 5″

    4 NEW Power plants!!!!! These will be diesel I suppose. I don’t think anything more needs to be said

  10. February 25th, 2005 at 15:17 | #10

    Andrew

    Why can’t they be compared? Mandurah and Rockingham are well established communities and more established than Joodalup was. The southern corridor is filling is as we speak and by getting ahead of the need, there is the opportunity for communities to develop around the railway line. This is why they’re put in areas while they are still being developed rather than after.

    The Kenwick option was studied and found to be a stop gap solution that would have been marginally adavantageous at best in the short term. The disruption won’t get any less over time and it’s curently giving the opportunity for some much needed redevelopment such as the old Myers site.

    The point of the matter is the Liberal party has been whinging about the train line when it’s been well assessed. Were they to have the same level of scrutiny about the canal, I doubt we’d be discussing it now and we certainly wouldn’t be throwing discredited figures around like $2billion.

  11. Bill O’Slatter
    February 25th, 2005 at 17:29 | #11

    The argument by symmetry doesn’t fly Anthony. If as you say the city will be symmetrical within say 10 or 20 years why not build the railway then ?The Perth to Mandurah train line is further encouragement for the city to become a low density 200 km non stop stretch of suburbia along the beach . At the time the northern line was built there were a fairly solid collection of suburbs up to just south of Joondalup. I think a railway which follows Roe Highway for instance could be justified .Disclaimer : I have not nor will ever vote Liberal .

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