Vic Treasurer and his top bureaucrat not happy with latest audit report

By Shannon Jenkins

Thursday November 28, 2019

Tim Pallas
Tim Pallas. (AAP/Eric Anderson)

The Victorian Treasurer and his secretary have hit back at a recent audit report which criticised the department’s approach to the West Gate Tunnel project.

In his report tabled on Wednesday, Victorian auditor-general Andrew Greaves found the Department of Treasury and Finance had not adequately assessed the value for money of accepting Transurban’s proposal to build the tunnel.

The audit looked at the process surrounding market-led proposals — unsolicited support from private sector bodies to government to deliver infrastructure or services via negotiation rather than a competitive procurement process. It examined the tunnel project along with the Victoria Police Centre.

In order to be accepted, proposals must be in the public interest, be a “genuinely unique idea or proposition”, deliver on government objectives, benefit the community, and achieve value for money. The Department of Treasury and Finance plays a major role in the process.

Greaves found the department had decided Transurban’s proposal was unique, “primarily based on Transurban’s capacity to access, escalate and extend toll revenues on its existing CityLink concession”. Transurban was the only body able to access and increase tolls on CityLink before 2035. 

However, the auditor-general noted that not much thought had been put into the possibility of granting another private operator access to the toll extension, or whether the state could take on the role of CityLink tolling itself.

Back in March, it was revealed the state government had granted Transurban a 10-year extension of tolls on CityLink to 2044-45, in return for $4 billion to build the West Gate Tunnel. The project would cost $6.7 billion all up.

The audit found that during the Treasury’s assessment of value for money for the project, it had failed to explain why certain assessment approaches were taken and how they impacted the results, and did not conduct enough checking and sensitivity analysis.

The department also did not fulfill its commitment to comprehensively assess whether an alternate funding and contracting approach would deliver better value for money.

The former Department of Economic Development, Jobs, Transport and Resources (DEDJTR) was tasked with coming up with a business case for the project, to be independently peer reviewed. Greaves noted reviewers had argued the business case “lacked a reasonable justification for including the Monash Freeway widening works” in the tunnel project.

“It did not examine a range of alternative project solution options in sufficient depth and therefore did not provide the government with sufficient information to select the right investment option,” the report reads.

The Treasury rejected the audit findings and recommendations, with the Treasurer Tim Pallas criticising the audit.

“With the greatest respect, the auditor-general is wrong,” he told parliament.

“The professionalism of the Department of Transport, the Department of Treasury and Finance, and might I say, Victoria Police, has been nothing short of outstanding.

“Any suggestion that they have acted other than professionally in the performance of their responsibilities is just not acceptable to this government.”

Treasury secretary David Martine also scolded Greaves in a six-page response.

“As you are aware, the department has consistently raised concerns about successive drafts of the report and the lack of substantiation of its key findings,” he wrote. “A number of the findings are based on analysis undertaken by external consultants … that misunderstand and misrepresent key elements of the assessments for the West Gate Tunnel and Victoria Police Centre proposals.”

He stated the department had completed a “thorough and comprehensive” value for money assessment, had considered whether another operator could access the CityLink extension, and refuted claims about the business case for the project.

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