Billions spent but infrastructure outsourced to foreign companies

The bureaucracy is a slow moving beast.

If you want to know why nothing gets built in this country then listen to this as painful as it is.

$500 million allocated to high speed rail, and the Infrastructure Department can’t really explain how the money spent is actually value for money.

Rural and Regional Affairs and Transport Legislation Committee
High Speed Rail Authority

Senator RENNICK: The budget papers just released show that $500 million has been promised by the Albanese government for high-speed rail, of which only $92 million has been allocated to you in your funding until 2026-27. Is that correct?

Mr Parker : That’s correct.

Senator RENNICK: So what’s the other $408 million? Who gets that?

Mr Parker : The $408 million has been allocated for corridor protection for the Sydney to Newcastle section.

Senator RENNICK: By ‘corridor protection’, do you mean they’re going to actually buy land?

Mr Parker : Corridor protection could be by means of statutory provisions, such as a SEPP, or it could be actually acquiring some of the land—

Senator RENNICK: What was the first one?

Mr Parker : Statutory planning consent. In other words, you put the plan and make it into a statutory alignment so that, when people come to develop in the future, they can see where the alignment is going to go, and you actually have planning refusal, if you like, for people trying to put buildings or developments along the alignment.

Senator RENNICK: Of that $408 million, how much is actually for the physical land?

Mr Parker : It has just been allocated as a general allocation. It covers corridor preservation, early works and early investigation. It hasn’t been divided up into any particular category. It’s just an allowance at the moment.

Senator RENNICK: So it’s just been put aside.

Mr Parker : That’s correct, yes.

Senator RENNICK: Is any money being put aside, or is that the expected cost?

Mr Parker : No, it’s just an allowance that’s been put there. What will happen is that, once we’ve done the business case, we’ll be in a position to understand the cost of the whole project, including things like corridor preservation, staging of the works and that type of thing.

Senator RENNICK: Okay, thank you. Let’s focus on the $92 million that’s been allocated to your department. How many people are in your department?

Mr Parker : At the moment, we have 19 employees. Of those, 16 currently work for us, and three join us in the next three weeks.

Senator RENNICK: Let’s round it up to 20. At, say, a quarter of a million bucks each, $250,000, which is quite a lot, that’s $5 million out of $92 million. What’s the other $87 million for?

Mr Parker : The other is obviously covering startup costs. There was an allocation for the business case, and that’s the business case we’re working on at the moment. It was $70 million for the business case. We’re in the process of doing the business case now.

Senator RENNICK: Let’s just round it up to 20. You’ve got 20 people working for you, and then you’ve got another $78 million for the business case.

Mr Parker : That’s right.

Senator RENNICK: That goes to external contractors, does it?

Mr Parker : Yes. The way we’ve done it at the moment is that we’ve got a series of external contractors, and we also have an arrangement where we’ve actually engaged Transport for New South Wales from New South Wales to assist in the preparation of the business case.

Senator RENNICK: So they’re going to get some of that $78 million.

Mr Parker : They are indeed, yes.

Senator RENNICK: I note that there have been eight work packages released to the market. Of those packages, you’ve got First Nations people cultural and heritage advisory services; First Nations people participation and engagement services; commercial, delivery and industry engagement services; transport, land use and property advisory services; HSR—high speed rail—network rail operations; project controls; economics, funding and financing; and technical advising. I’ll just go through a couple of these packages. Let’s take the economics, funding and financing. Why would you have to outsource that role, given that we have thousands of people at Treasury on very high salaries? Why is that being outsourced? Why couldn’t your staff do that?

Mr Parker : We don’t have that type of staff in HSRA at the moment. We’re a relatively new organisation. The sort of expertise that we need is specialist, and that’s why we’ve outsourced it. These are people that actually understand transport economics and also understand the funding and financing available around—

Senator RENNICK: Minister, I’ll come back to you, then. Why are we paying external consultants money for something as—I won’t say ‘as simple’. I’ll take that for granted, being in finance myself. But surely economics, funding and financing and demand modelling services is something that Treasury could do in house, isn’t it? I note that the Prime Minister himself has said that the existing government is going to bring all the work back in house, rather than use external contractors. I would have thought we could do that in Treasury. Will you remark on that?

Senator Carol Brown: Treasury staff are not available for this sort of work. Mr Parker has outlined the sorts of people that they need to get this very important project started. Planning is important, and we’re doing this right. Mr Parker has already outlined how important transport economics is, and it’s a specialist skill set.

Senator RENNICK: I’ll take your word on that, but this isn’t going to happen overnight—the high-speed rail between Melbourne and Brisbane. If you’re going to take these guys on as consultants, they’re going to charge a big premium. It’s not that specialist. I come from this area. It’s not rocket science doing modelling. The technical stuff is—the engineers and all the land valuation and the actual soil content and stuff like that—but, for the actual modelling, I just struggle to understand why we wouldn’t have the skill set in house in Treasury.

Mr Parker : If you look at the demand modelling, we actually have to go back to first principles for demand modelling because we don’t actually have a high-speed rail that we can say, ‘This is what it does.’ So we’re going to have look at not just the normal demand modelling. We’re also going to have to start considering the cost of time for high speed versus conventional railway. So it’s a different type of—

Senator RENNICK: Yes—time-and-motion studies. I get that.

Mr Parker : So there is some speciality in it, and that’s why we think it’s better to go to a specialist. The companies we’ve gone to are not necessarily just coming from an Australian experience; they’re bringing some international expertise with them as well. That’s why we’re actually trying to get the best that we can to—

Senator RENNICK: I guess this is my problem. We spend billions of dollars on infrastructure every year. We have federal highways. I know the railways are generally managed by the state governments, but it’s a sad indication of our skill set, given that we have such a large percentage of school leavers now going onto university, that we don’t have a skill set. You’re saying that you’ve got to rely on foreign skill sets to actually be able to price the cost of a railway line.

Senator Carol Brown: The authority has been charged with putting together an incredibly skilled set of specialists to get this job done, and that is what they’re doing.

Senator RENNICK: I guess my question is to you, Minister. Why aren’t we doing this in house? But we’ll leave that. We haven’t really got an answer on that, but that’s okay.





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