Page 1860 - Week 06 - Wednesday, 8 June 2016
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Mr Coe says that the signing of the contract to construct light rail is the most arrogant act in the history of the ACT government. I believe that that is a ludicrous suggestion. Light rail was a prominent issue before the last election. The government has done an excellent job to actually get on with it and to start building the infrastructure that this city needs for the future. The hyperbole from the opposition simply speaks to the fact that they oppose progress, they have a myopic view focused on the next election and they have no interest in solving issues for the future. Real arrogance is actually tearing up a contract, as the Liberal Party wants to do, introducing sovereign risk, throwing away millions of dollars of taxpayers’ money in order to get nothing. What a reckless and arrogant thing to do.
Mr Coe says the government has ignored the will of Canberrans to have their say. Again, I believe this is nonsense. The issues were raised before the election, and the government has to govern. It has to make decisions about the future of our city, and it is making the right decision in getting on with the action we need. Contrast this with the Liberals, who I do not believe have a plan for the future of this city.
Mr Coe says the payments for the light rail contract will be approximately 1.65. It said “million”, but that was obviously a typo. It caused a bit of a chuckle in our office. I did wonder if at $1.65 million we might have got the Liberals on board for this project. I cannot be sure, but I reckon we might have. The total cost over 20 years will be $1.65 billion, as has been suggested. But it is worth noting that the $1.65 billion figure is not in today’s dollars. By 2038 the government will have paid this amount. That figure is expressed in future dollars, and we should remember that by 2038 the size of the ACT budget will also have increased considerably. In today’s dollars, the cost of the entire project is $939 million. Either way you look at it, it is less than one per cent of the ACT budget. Of course, it sounds much grander if you say “$1.65 billion”. People do not think, “Oh, yeah; just as if you compare prices 20 years ago, they are much lower than they seem now.” That is a nominal effect driven by the passage of time. It is the same effect here.
It does evoke the sorts of images of Dr Evil with the little finger in the mouth talking about the billions of billions of dollars that he wants to get out. That is the sort of tone that we hear about this; we hear this terrible, large figure. There is never any explanation about the fact that that is not only a future figure in 20 years time but a nominal figure as opposed to a present-value figure. It never includes the explanation that this also includes 20 years of operation, maintenance and all these other things.
It goes to the point that we made in an earlier discussion today: you never hear that discussion about a road. You never hear, “Majura Parkway is around $300 million plus 20 years of maintenance costs.” No-one that I know of has done that work, but I suspect it would go well up above the $300 million. The opposition seeks to use the $1.65 billion figure as if it were in today’s dollars, because that sounds like a whole lot more. It does not acknowledge the full package of services that goes with that over 20 years.
Another important point to remember is that the repayments include the entire cost of building the light rail route, buying the vehicles and building the depot, as well as
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