Page 1739 - Week 06 - Wednesday, 13 May 2015
Announcements about how these funds will be applied to the capital metro project will be made by the government in due course. However, a capital contribution made once construction is complete and the service is in operation would be an opportunity to ensure the best return on investment. Much like paying a bigger deposit on a house or a car, making a capital contribution to the project is beneficial as it reduces the ongoing payments the government will make for the light rail system once it is fully operational.
To provide meaningful value-for-money benefits for the territory, a contribution would need to be significant but at the same time moderate enough to leave sufficient private finance in the transaction to ensure it attracts competitive financing while ensuring our project delivery partner is continually incentivised to operate the system at a very high standard for our community. Making a contribution at the conclusion of the construction phase ensures the private sector continues to take the construction phase risks, and this is a very important feature of a PPP project.
Importantly, it is worth noting that any capital contribution the government makes will be fully funded, noting the commonwealth’s contribution to the project of $60 million under the asset recycling initiative.
Mr Coe has called, in his motion, for the government to provide details on the cost of the availability payments to be made for the project. The government will not disclose the details of project costs, including any possible level of availability payment, while we are going through a competitive, market-driven procurement process. We will not precondition the bidding process that we are currently engaged in.
The government is committed to being open and transparent. To further demonstrate this commitment, once the light rail contract is signed and details are able to be released, the government will reveal a contract summary, including project costs. Of course, that is in addition to the full release of the business case for this project, something which is rarely done by governments around the country.
The ACT has made unprecedented releases, as I mentioned, such as the capital metro business case, which includes the estimated capital cost of the project, as well as other information on the benefit-cost ratio, operating cost estimates, the public sector comparator for the project, the PPP proxy for the project, and economic analysis. It is highly unusual for any government across Australia to release this level of information in relation to a major infrastructure project.
The business case provides an in-depth analysis of the costs and benefits associated with the project, as well as the procurement and funding options. It also demonstrates that investing in light rail generates a positive economic return for the territory.
As outlined in the business case, the capital metro project delivers nearly $1 billion worth of benefits to our community. The benefit-cost ratio of 1.2 demonstrates that the project will deliver a net benefit to our community. For every dollar spent, the community receives $1.20 back in benefits. These include transport, land use, environment, infrastructure and wider economic benefits.