Low returns from channel deepening not worth the risk to the Bay
Date: 18-Feb-2008
The return on investment from channel deepening is so poor that the Port of Melbourne Corporation could do just as well in a term deposit, an economic critique by ACF and consultants Economists at Large has shown.
The analysis shows this commercial project’s estimated average 8 per cent return on investment over the first 14 years is less than half the 17 per cent return expected from most private sector projects.
Chris Smyth, ACF’s marine campaign coordinator, said it was one more reason why the channel deepening project should not proceed.
“The project is a serious risk to the health and future of Port Phillip Bay. Low returns, cost blowouts and declining net economic benefits make it simply not worth the risk,” Mr Smyth said.
The analysis was limited to an assessment of the Port’s published economic benefits and costs. It was unable to assess the increased social costs of traffic congestion, air pollution and the loss of social amenity associated with port growth, or include the loss to marine-based businesses and other users of the bay from a decline in bay health. If such data has been collected by the Port of Melbourne Corporation or the Victorian Government it has not been released.
The blowout of costs from $379 million to $969 million, the low rate of return, the erosion of benefits and the need for significant government subsidies – $150 million at last count – make the project economically unviable and place the burden of financial risk firmly on Victorian taxpayers. ACF believes the project should be urgently reassessed, preferably by a parliamentary inquiry.
ACF has already exposed serious weaknesses in the project’s Environmental Management Plan and monitoring program and raised concerns about the limited role and powers of the Environmental Monitor. Along with rising social costs and vanishing economic benefits, the channel deepening project is bad news for Victoria’s triple bottom line.