Star-Crossed Lucre

When Tony Abbott’s Liberal-National Coalition won government in 2013, Australia’s long mining boom had already peaked. Unemployment was growing, and excess capacity in the nonmining sector had led to a kind of capital strike. The prospects for economic growth were looking grim.

So, Tony Abbott — flanked by Liberal Party premiers Barry O’Farrell and Denis Napthine — decided to hitch his economic recovery wagon to two signature toll road projects: WestConnex in Sydney, and the East West Link in Melbourne, Victoria. At projected costs of $17 billion and $13 billion respectively, each ranked among the biggest infrastructure projects in the world.

Both projects were profoundly flawed from the outset. Abbott aimed to use public funds to subsidize construction of what were to be privately owned and operated toll roads. Both roads required the demolition of housing and parklands, both came at the expense of vitally needed public transport infrastructure, and both were sure to cause environmental destruction. And given the huge public expenditure, the financial case for both projects was dodgy, to say the least. Liberal Party state and federal governments addressed this weakness by keeping the business plans secret.

In both NSW and Victoria, local communities launched campaigns against the proposed toll roads. However, the outcome was markedly different in each state. In Victoria, socialists grouped around local councilor Stephen Jolly led the campaign. It involved daily pickets against drill sites as well as mass protests aimed at pressuring both the major parties. In the end, the campaign against the East West Link won when Labor’s Daniel Andrews came to power and scrapped the initiative.

In NSW, however, the campaign mostly employed softer tactics. As a consequence, it failed to cajole the opposition Labor Party — historically well to the right of its interstate counterpart — into withdrawing support from WestConnex. Despite vehement community opposition, construction proceeded as planned.

Now, some ten years later, WestConnex is nearing completion, albeit with new extensions in the works. Already, the almost-finished product is vindicating predictions made by activists at the outset. In short, the road is a black hole for public funds that has worsened pollution while increasing congestion. What was touted as a gridlock-busting gift to the suburbs has proven to be an environmentally disastrous money pit.

“Big and Ugly Enough”

Both WestConnex and the East West Link were twenty-first-century incarnations of the 1950s dream of building Los Angeles–style freeway systems in Australia’s major cities. But while the idea was old, its twenty-first-century execution was neoliberal from top to bottom.

State and federal governments conceived of both projects as public-private partnerships (PPPs), a catchall term referring to infrastructure projects where governments offer tax concessions, lavish indemnities, and risk guarantees to attract private investment.

The PPP financing model kicked off in Australia in the early 1990s, when mania for deregulation swept the country under then Labor prime minister Paul Keating. The craze for marketization saw governments award generous contracts to transport companies like Mayne Nickless, essentially handing them public money to build, own, and operate core infrastructure like hospitals. To paraphrase the NSW auditor general at the time, under the PPP model, the public paid for infrastructure twice before giving it away.

The results have been predictably disastrous. Almost half of the hospitals built in the 1990s under NSW’s PPP model reverted to government ownership decades before the contracts were due to end.

These scandals were enough of an embarrassment that, by the early 2000s, governments began offering slightly less freewheeling PPP contracts. This, however, had a downside: it made PPPs less profitable for private investors.

Take the 2003 Sydney Lane Cove Tunnel contract. The group behind Lane Cove Tunnel Connector Motorways included Leighton Holdings (now CIMIC), Mirvac, and CK Infrastructure Holdings, some of the world’s biggest road and construction giants, as well as Transfield, which was to manage the tunnel’s day-to-day maintenance. These private companies sold the Lane Cove Tunnel project to the government and public using questionable traffic predictions. Unsurprisingly, it failed to make money and did not alleviate congestion. Then, in 2010, the consortium behind the Lane Cove Tunnel went into receivership with $1.14 billion in debt.

At the time, Transfield executive Tony Shepherd — who went on to become WestConnex delivery authority chairman — responded to the scandal by declaring that “the private sector is big and ugly enough to look after itself.” This might suggest that infrastructure giants would wean themselves off PPP money or simply absorb future losses, as free-market ideology would have it. Instead, the industry looked after itself — and used its weight to force governments to simply guarantee profitability, again, at public expense.

Privatized Profit, Socialized Risk

By 2010, the economic terrain had changed. Thanks to the 2008 global financial crisis, capital investment had slowed significantly, adding to industry pressure on governments to publicly subsidize profitability on major projects. So, despite increased public skepticism around PPPs, the Victorian and NSW governments moved to decrease risks to private investors in infrastructure projects by making state governments their financial guarantors.

At times, the resulting PPP infrastructure development paradigm has seen governments bankroll private profits to a farcical extent. The scrapped East West Link, for example, would have returned only 45 cents for every dollar invested. Despite this, it guaranteed private investors taxpayer-funded subsidies of $335 million per year for twenty-five years.

Governments have even turned to bribery to entice investors. Just weeks before the 2014 Victorian election, when public opposition to the East West Link was at a high point, most consortia had withdrawn their tenders. Although the project looked increasingly in doubt, the beleaguered Liberal state government lured developer Lendlease into bidding by promising as much as $1 billion dollars in compensation if the project did not go ahead. In part, it was a political maneuver aimed at forcing the incoming Labor government to go ahead with the project.

After coming to power, Labor premier Daniel Andrews made good on his campaign promise to cancel the East West Link. But he also partly honored his predecessor’s promise, “compensating” Lendlease hundreds of millions of dollars for absolutely nothing.

The situation in NSW is similar. In 2018, when construction of WestConnex was well underway, a NSW parliamentary inquiry found that the business case for the tunnel made no sense. Despite this, the inquiry recommended that the project should proceed — but only because the government had guaranteed inordinate taxpayer compensation, should the project halt.

WestConnex went ahead — and the tolls are so punitive that former Liberal premier Dominic Perrottet brought in subsidies compensating road users for costs surpassing $60 per week. In practice, the NSW government is paying the private sector for failing at business.

The new PPP paradigm encourages developers to gamble irresponsibly and win big regardless of how the cards fall. There are now seemingly no lengths to which governments won’t go to guarantee profits.

State-Sponsored Greenwash

Compounding the economic pain inflicted on the public by WestConnex is the environmental devastation. And unfortunately, asbestos contamination is just one part of a bigger picture.

To begin with, there is growing evidence that the project may be responsible for an increase in deadly air pollution in the state. Exhaust fumes are vented out of WestConnex through many huge, unfiltered exhaust stacks. As two recent reports suggest, the environmental, human, and economic cost of traffic pollution like this could be worse than previously thought.

The first report, published in February 2023 by University of Melbourne researchers, found that traffic pollution in Australia is causing around eleven thousand premature deaths each year. The second study, produced by the NSW state government in March 2023, found that across the state, premature deaths directly attributable to air pollution are costing the around US$3.4 billion a year. Thanks to campaigning by environmental groups in Sydney, the NSW minister for roads has now asked the NSW chief scientist to review his recent report on traffic-related air pollution that, somewhat dubiously, did not reflect any of these new findings.

But whether the environmental impacts of the WestConnex tunnel stacks were knowingly or unknowingly underestimated, there is little the current environmental authorities can or will do about it. To begin with, there is no national environmental protection agency in Australia. And beyond this, a cursory glance at recent developments shows that existing state agencies are largely ineffective, underfunded, or captured by business interests. As a result, the agencies tasked with protecting the environment often perform the opposite role.

For example, the former head of the West Australian (WA) Environmental Protection Authority, Tom Hatton, recently claimed that former WA premier Mark McGowan directly pressured the agency to withdraw policy proposals that the fossil fuel industry objected to. Or, on the other side of the continent, after conducting a three year review, Victoria’s EPA decided to not to impose any limits on greenhouse gas emissions under new coal power station licenses.

This reality is perhaps most glaring in NSW, where the EPA has found that 94 percent of industry players are not complying with environmental regulations. As the extent of asbestos contamination was revealed, it emerged that a staggering 43 percent of waste management companies have been ordering laboratories to repeatedly retest toxic waste samples until they meet acceptable contamination thresholds.

There were also clear warning signs. In a 2019 review, the NSW EPA also found that 57 percent of facilities producing “recovered fines” — a soil substitute used in landscaping — were contaminated with asbestos. Despite this, the agency refused to tighten regulations, citing industry claims that it would cost too much. In this context, the NSW EPA’s leniency toward the big developers behind the current asbestos outbreak looks borderline complicit.

And although there is no nationwide agency tasked with protecting the environment, the federal government also shares responsibility. A 2020 inquiry into the Environment Protection and Biodiversity Conservation Act 1999 found the act “is not fit to address current or future environmental challenges.” Since the act came into force, governments have approved 740 fossil fuel projects — and a staggering 75 percent of these did not require any environmental impact assessment.

As the Australia Institute’s 2022 State-Sponsored Greenwash report put it, “the fossil fuel industry and major emitters have set Australia’s policy agenda on climate.”

New Tactics Needed

The slow-motion WestConnex trainwreck has vindicated the concerns that campaigners raised way back in 2013 against Tony Abbott’s toll road projects. But given that the Victorian campaign won, while the NSW campaign failed to prevent the disaster it predicted, it’s worth considering the strengths of the former.

Firstly, when it comes to public relations, the fossil fuel lobby basically relies on a divide-and-rule strategy that smears environmental groups as representing spoiled inner-city elites. When protesters interrupted a speech by WestConnex Delivery Authority executive Dennis Cliche, he retorted that

it is a very, I would say, inequitable debate that’s being had. The people who are making the most noise . . . don’t have kids who are to some extent excluded socially from the opportunities that some people have. It’s not right for the people in an inner-city community to come in and enjoy their lifestyle and try and apply that to everybody else.

Cliche’s argument was obviously disingenuous. But it can’t be dismissed out of hand. The reality is that only a campaign that draws in broad, working-class support has any hope of being successful. The anti–East West Link campaign spent months drumming up opposition to the project in the outer suburbs and regional Victoria, signing up thousands of new people to the campaign. It predicted the developers and Liberal Party’s PR strategy and preempted it, denying them the chance to drive a wedge between inner-city and suburban residents.

Secondly, the failure of the WestConnex campaign shows that moderate tactics and well-researched appeals to authority are not enough. Both major parties receive copious amounts of money from the oil and roads lobby, and there is a revolving door between federal and state governments and the big polluting companies.

By contrast, the East West Link campaign employed a dual strategy. Activists built the campaign outward by engaging large numbers of residents, including in the suburbs, while simultaneously engaging in direct, tactical, collective confrontation with the government and big developers. As a result, it dominated the news cycle, won the battle of public opinion, applied tangible pressure — and it ultimately won.