GENERAL PURPOSE STANDING COMMITTEE No. 1 - Friday 26 October 2007
Examination of proposed expenditure for the portfolio areas: ROADS, COMMERCE
M4 East
Dr JOHN KAYE: Let us talk about the M4 East—the on-again-off-again M4 East. The Richmond review tells us that inner urban motorways are very unlikely to pay for themselves, as I understand it. That means that if we go ahead with one or other option on the M4 East, we are likely to see some form of subsidy from the public purse, that is, State Government subsidy, to the operation of the M4 East. Does your department have any estimates on how much it would cost the public purse?
The Hon. ERIC ROOZENDAAL: Mr Chair, as I have indicated previously to the Committee there is a discussion paper being prepared by the Coordinator General in relation to the M4 East and once that discussion paper is completed and in the public arena I think issues such as costing will be dealt with as part of that. It would be appropriate to wait for that discussion paper to be in the public arena.
Dr JOHN KAYE: Minister, will you commit to a full and publicly disclosed cost benefit analysis on the M4 East? A cost benefit analysis that includes all the costs, including the induced traffic costs, the congestion costs, the air quality costs, air pollution costs? Will that cost benefit analysis also consider all the public transport alternatives that could provide a similar transport
capacity?
The Hon. ERIC ROOZENDAAL: I think the honourable member is getting a little bit ahead of himself here. Let us allow the discussion paper to go into the public arena. I imagine all of the issues you have raised, and others, will be well and truly canvassed during the public debate. That is why it is important that we have a discussion paper go out to the public arena so that you and other interested people can participate in a debate about that. But I can assure the Committee that the recommendation of the Richmond Inquiry into motorways will be adhered to as part of the process to deal with this project once the discussion paper is in the public arena.
Dr JOHN KAYE: Minister, is an unreasonable proposition that any investment, which I think you described as being larger than the—
The Hon. ERIC ROOZENDAAL: Potentially larger than the Sydney Harbour Bridge.
Dr JOHN KAYE: Potentially larger than the Sydney Harbour Bridge. Is it an unreasonable proposition to say that should be subjected to the most rigorous form of cost benefit analysis available to the Government?
The Hon. ERIC ROOZENDAAL: I absolutely agree that it should have a rigorous cost benefit analysis to it, however, the voodoo cost benefit analysis suggested by the Greens is not the appropriate way.
Dr JOHN KAYE: I am sorry, Minister, could you expand on what cost benefit analysis we have suggested?
The Hon. ERIC ROOZENDAAL: Look—
Dr JOHN KAYE: Sorry, a basic assumption—
The Hon. ERIC ROOZENDAAL: No, it does not work like that. You do not get to jump in again and interrupt me. The basic assumption of the Greens is that the roads are bad.
The Hon. DUNCAN GAY: The pre-requisite is to tell the truth.
The Hon. LYNDA VOLTZ: Point of order: They have been talking and will not let the Minister answer.
The Hon. ERIC ROOZENDAAL: Gee you would have trouble recognising that Duncan.
The basic assumption of the Greens is that all roads are bad. I am not aware of the Greens supporting
any road infrastructure projects in my two years as Roads Minister. Let me assure you that the discussion paper, and it is a discussion paper, will allow members of the public, including the Greens, the opportunity to publicly canvass issues around any potential project. I think that is an appropriate way to go. The Richmond Inquiry into motorways outlines a number of pre-requisites for any future projects to go ahead, including no closures of public roads, to ensure there is a real benefit to the community, that the toll is reasonable and those other sorts of things will be incorporated and canvassed through the discussion paper.
CHAIR (Nile): Minister, I have some general questions. One relating to the M4-M5 cash back rebates. I notice you have given a forecast of cashback claims to be paid. You expect that to be a fairly large increase. I am wondering how you have estimated the $830,000 compared to $725,000 in 2006-07? Was that based on the estimated increase in traffic using those roads?
The Hon. ERIC ROOZENDAAL: To the end of August 2007 in excess of 365,000 motorists have claimed cashback rebates. Since the commencement of the scheme on 1 January 1997over $533 million has been paid out to motorists—that is at 30 June 2007. During the current financialyear to 31 August rebates worth $15.5 million have been paid. Rebates commenced on 1 January 1997and the number of participants in this scheme has increased steadily since then. All eligible claims are paid. In light of the refunds made to date, $97 million is allocated in the 2007-08 budget for cashback.
Does that satisfy you? Are you happy with that?
CHAIR: Yes. Is there any change to eligible people claiming the cashback?
The Hon. ERIC ROOZENDAAL: No, there is no change the cashback.
CHAIR: How long do you plan to keep that operating? Is it indefinite, is it?
The Hon. ERIC ROOZENDAAL: We are committed to the ongoing of cashback.
CHAIR: So there is not a five-year term or something?
The Hon. ERIC ROOZENDAAL: Obviously when the toll comes off the M4 there will no longer be a cashback on the M4 and that is due to come off on 15 February 2010.
Dr JOHN KAYE: Minister, are you personally aware the IEA, that is the International Energy Agency, in its July 2007 medium-term oil market report said:
Despite four years of high oil prices, this report sees increasing market tightness beyond 2010 with OPEC spare capacity declining to minimum levels by 2012. I do not know whether you are familiar with the IEA. Are you aware of the IEA?
The Hon. ERIC ROOZENDAAL: No.
Dr JOHN KAYE: You are not aware of the IEA?
The Hon. ERIC ROOZENDAAL: No.
CHAIR: Could you give the full name?
Dr JOHN KAYE: The International Energy Agency.
The Hon. ERIC ROOZENDAAL: Oh, yes, I am aware of the International Energy Agency.
Dr JOHN KAYE: Good. So you are aware that it does predictions of long-term energy prices and long-term availability of energy stocks, primary energy stocks?
The Hon. ERIC ROOZENDAAL: Is there a point to this question?
Dr JOHN KAYE: No, it is a question. Are you aware that that is one of the functions of the IEA?
The Hon. ERIC ROOZENDAAL: I will accept your advice on that.
Dr JOHN KAYE: But you were not aware that what it is now saying is that we are about to head into a period of extremely high oil prices?
The Hon. ERIC ROOZENDAAL: And?
Dr JOHN KAYE: Well, are you aware or not aware of that? It is a yes or no answer, Minister, it would not be that hard.
The Hon. ERIC ROOZENDAAL: No, I was not aware of that.
Dr JOHN KAYE: So, what we take from that is that there is no planning within the Roads and Traffic Authority associated with the now commonly accepted scenario that oil prices are going to significantly rise and there will be a significant shortage of oil over the next 10 years. There is no sense of planning for that at all?
The Hon. ERIC ROOZENDAAL: I am the Minister for Roads. One of my agencies is the Roads and Traffic Authority, and we have a responsibility to maintain the road network and deal with the challenges of maintaining the road network. If there is a change in petrol prices, that increase in the cost of petrol will be reflected in traffic flows, I imagine. But I do not see it as a core responsibility of either my ministry or the Roads and Traffic Authority to monitor the-what was it, the IAE?
Dr JOHN KAYE: The IEA, Minister.
The Hon. ERIC ROOZENDAAL: I do not see that as a core responsibility of my agency.
Dr JOHN KAYE: So, am I correct in saying your agency is making planning decisions about motorways?
The Hon. ERIC ROOZENDAAL: No, planning decisions are made by the Ministry of Planning. My agency delivers road infrastructure, the maintenance of road infrastructure, road safety and public transport corridors.
Dr JOHN KAYE: In respect of the M4 East corridor, if the M4 East is developed your department will be a proponent-that is, you will be putting forward to the people of New SouthWales and the planning Minister the idea that we should build a road project that is larger and more expensive than the Sydney Harbour Bridge?
The Hon. ERIC ROOZENDAAL: Potentially.
Dr JOHN KAYE: So, you will do that without having looked at the likely demands for the use of the road?
The Hon. ERIC ROOZENDAAL: No, quite the contrary.
Dr JOHN KAYE: So, you are saying to me that when you develop such a project you do make forward traffic demand projections?
The Hon. ERIC ROOZENDAAL: Absolutely.
Dr JOHN KAYE: Across what period do you make that forward traffic demand projection, roughly?
Mr WIELINGA: We usually do 10- and 20-year projections on our traffic modelling.
Dr JOHN KAYE: So you are telling me that you are doing 10- and 20-year projections of traffic modelling with no forecasting of oil prices? Is that correct?
Mr WIELINGA: What we are doing is traffic projections. The transport data centre does projections of land use changes and residential growth, and so forth. It predicts movements, it predicts the share of people of using different particular modes. A number of good research articles show what happens when fuel prices increase. Alternative vehicles come along. A lot of research shows people's strong preference for their commuting modes and there is an expectation in these different scenarios that there will still be a high demand for all transport modes.
Dr JOHN KAYE: I must say, I am quite shocked. You are telling me that your presumption is that traffic demand, demand for use of Road Traffic Authority facilities, will not be substantially affected by a significant increase in oil prices?
Mr WIELINGA: I am not saying there will not be a significant impact on traffic movement. What I am saying is it will affect a number of things. It may affect the type of vehicles on the road- they may become smaller with small engines. There may be more hybrid vehicles, they might move to electric vehicles. A lot of different alternatives become viable at that time, depending on the price of oil.
Dr JOHN KAYE: Minister, help me here, maybe I have missed something. On the one hand you said to me earlier that you do not look at oil price predictions, yet we are doing 10- and 20-year traffic projections and the best we can say is, assuming the price of oil rises, that there is a significant rise in the price of oil, it does not matter because there will be other technologies or other vehicles that will compensate, and the demands somehow or other will not be affected significantly by a major rise in the price of oil? Is that the thinking of the Roads and Traffic Authority and the Minister?
The Hon. ERIC ROOZENDAAL: I think you need to take a step back, because you are getting a bit carried away here. The reality is it is the responsibility of my agency and of all governments to anticipate demands and needs of a growing population. It is the responsibility of the Roads and Traffic Authority to manage the road network and plan for the growth of that network and to deal with the challenge of increasing vehicles. A number of issues in relation to the number of vehicles travelling on our roads impact on that. There has been a huge growth in the availability of motor vehicles to families. Whereas 10 or 15 years ago most families had one to two vehicles, it is now quite common for families to have three to four vehicles. People are travelling further and more diversely around Sydney, so there is a growing demand. What impacts on traffic is obviously geographical location-people are commuting further to work using private vehicles-cost of petrol, cost of vehicles, the elasticity of incomes-if people have more to spend and it costs relatively less to use their vehicles, they use their vehicles. There are a number of issues. Of course, we are planning for the traffic challenges of New South Wales. For you to suggest that the only-
Dr JOHN KAYE: It is a bit like planning with your eyes closed?
The Hon. ERIC ROOZENDAAL: No. What are you suggesting?
Dr JOHN KAYE: I am suggesting this is quite scandalous; that the Roads and Traffic Authority is planning roads worth hundreds of millions of dollars and is proposing that the people of New South Wales invest hundreds and hundreds of millions of dollars in roads, with no estimate or even scenarios of where it thinks the price of oil is going, without being aware of the IEA-with the Minister thinking it was the IAE-and you are asking us to commit to massive amounts of public money. No comment? We will change topic was obviously we are not getting anywhere further with that.