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| Economics of the Tunnel |
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Transfield-Kumagai and their consultants and the Department of Main Roads argued that the benefits of the Tunnel would exceed the costs of constructing and operating it. The Department of Main Roads estimated in 1986 that the Tunnel would cost $401 million to construct and $10.6 million per year to operate and maintain. The benefits included reduced travel times for vehicles crossing the Harbour during times of congestion, energy savings because of reduced stop-starting when the Bridge is congested, reduced accidents and reduced vehicle operating costs. (The final cost was $738 million according to the Roads and Traffic Authority). Some people have disputed the cost-benefit analysis and argued that the benefits do not really exceed the costs because the travel time and energy savings were overestimated. They have also argued that costs have been underestimated because indirect costs, like the loss of public transport patronage and the loss of parkland, were not included. Others do not dispute that the benefits do slightly exceed the costs but argue that there are roads projects elsewhere in Sydney and in the rest of the State which have a much higher benefit to cost ratio and which should have been given priority. It is also argued that the distribution of costs and benefits is not fair. The people bearing the costs will be all people paying the toll and perhaps the New South Wales taxpayer if the toll fails to cover costs. The people getting most of the benefits will be only those travelling across the Harbour at peak times. It has also been argued that property owners in North Sydney and the City will benefit from enhanced property prices. One of the major beneficiaries however is likely to be the Joint Venture itself, Transfield-Kumagai who are certain to make profits from the project since their revenue is guaranteed by the government. It was claimed that since the Tunnel was to be privately funded by Transfield-Kumagai that it would not delay other vital roadworks. But opponents argue that the money is actually coming from road users because the revenue is coming from the Bridge and Tunnel toll. They also point out that the government will be providing interest free loans to Transfield-Kumagai and has guaranteed to pay Transfield -Kumagai a certain amount of money each year (adjusted to take account of inflation) whether or not the Tunnel is constructed and operates successfully.
Additional Resources Ross Mewton, The hidden cost of the Sydney Harbour Tunnel, Hell on Wheels, No. 5, January 1997.
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© 2003 Sharon Beder