The financial collapse of the Cross City Tunnel, likely resulting in it entering into receivership for the second time since it was opened in 2005, has started a debate over the role of private public partnerships (PPP) in delivering transport infrastructure. The Greens have used the collapse to call on the state government to scrap its plans for the WestConnex freeway, which will be delivered and operated as a PPP.
This is rather ironic, as the financial collapse of the Cross City Tunnel actually represents a benefit, not a disadvantage of the PPP model. Despite the financial collapse, for the driving public the tunnel will continue to operate as though nothing had changed. Meanwhile, the cost of the financial collapse will be felt by the private owners, just as any financial benefit would be received by the owners had traffic on the tunnel boomed. The government and driving public benefit from improved transport infrastructure regardless of the financial success or failure of the company that owns the tunnel. That the private sector ended up paying for it, and not the taxpayer, puts the taxpayer ahead.
.@MayneReport nails it on Airport Link tunnel: "Brisbane gets a world class infrastructure while private sector wood ducks lose their shirt"—
Mark Ludlow (@M_Ludlow) February 19, 2013
In fact, the government should use this opportunity to consider whether they could buy back the Cross City Tunnel, at a fraction of its construction cost. If it can do so, it should seriously think about doing so. This would make it much easier at some point in the future to introduce a congestion charge on the CBD surface streets by making the tunnel free and giving drivers an alternative route if not travelling into the CBD itself.