ACT News

Canberra Liberals' opposition to light rail risks ACT and the nation's infrastructure future

No one's interest would be served if each new government spends its time undoing the infrastructure projects begun by the last, writes Brendan Lyon.

Love or hate the Barr government's Capital Metro project – with the winner selected, public funding in place, a binding contract and a local workforce about to be engaged – it's time for the Canberra Liberals to accept that the Capital Metro is a reality; and they should move on quickly from their current promotion of sovereign risk. 

Of course, some will agree with the sentiment that the opposition are hoping to harness. 

From left, ACT Deputy Chief Minister Simon Corbell, Chief Minister Andrew Barr and Canberra Metro Consortium chairman ...
From left, ACT Deputy Chief Minister Simon Corbell, Chief Minister Andrew Barr and Canberra Metro Consortium chairman Mark Lynch shake hands as the winning tender is announced on February 1.  Photo: Jeffrey Chan

Infrastructure projects like the Capital Metro are large, disruptive and expensive. Large transport systems also need to be developed over time, meaning that many suburbs across Canberra may not see their own light rail connection for some decades. 

It is also absolutely appropriate for political leaders to hold the government of the day accountable for their infrastructure and other expenditure decisions. The opposition should oppose priorities and policies that it disagrees with. 

But the Canberra Liberals have allowed their opposition to this project to morph into a deeply unhealthy and irresponsible sovereign risk fetish. 

Australia has no heritage of political governments walking away from the decisions of their predecessor; and it's a reputation that Australia can ill afford. 

Australia and Canberra's AAA credit ratings, foreign and Australian investment, as well as community and business sentiment each rely fundamentally on contracts being enforceable and governments honouring their word.

The Canberra Liberals now argue the contract shouldn't be signed until after the election at the end of the year. This sounds good, but is dishonest, given that the light rail was the centrepiece of the Government's 2012 election campaign.

Complex projects take time to design, bid and build. No one's interest would be served if each new government spends its time undoing the infrastructure projects begun by the last. 

The Canberra Liberals are effectively saying you need two electoral mandates for one project. Most people think that we need more infrastructure, more quickly – and less politicisation of infrastructure generally. 

The opposition is also talking about including a cheap "terminate for convenience" option in the contract. These don't exist. Termination for convenience means you pay for the project, but it does not get built. 

One area where the Canberra Liberals have been very honest has been in their citation of Victorian Labor's East West motorway cancellation as their sovereign risk precedent. 

This saw Victorian taxpayers end up shelling out $1.1 billion to build nothing, while damaging Australia's reputation with infrastructure investors. They are only now starting to recover their standing. 

One sovereign risk event in Australia was careless; but two begins to look like a pattern of behaviour that will mean we pay more for future projects, because people will need to factor in higher costs, to offset the risk that governments don't end up paying for what they build. 

Love or hate the Capital Metro, it is now a reality. The project has been committed, competitively bid and will soon start construction. And Canberra badly needs the economic activity this project will create in the lean few years ahead. 

Canberra enjoys the distinction of being Australia's capital city; it hardly needs a new distinction as a global hot-spot for sovereign risk. It's time for the Canberra Liberals to end their unhealthy obsession with sovereign risk and instead, turn to outlining their own positive agenda for the national capital. 

Brendan Lyon is the chief executive of Infrastructure Partnerships Australia, the nation's peak infrastructure forum.