East-west tunnel plan looms as a road to ruin says academic study

Map of Sydney's Cross City Tunnel - actual usage turned
 out to be  less than half projected 

FROM THE AGE: If inflated traffic figures and tolls are used to justify the project, only vested interests will benefit, say Sophie Sturup and Nicholas Low

This east-west road tunnel, with a benefit-to-cost ratio of 0.5, will not make a return for the community and it cannot make an economic return for private investors.

At a projected construction cost of just under three times the cost of CityLink, the tolls for the tunnel will need to be at least three times the cost of an average trip on CityLink if investors are to make a similar return. If an average trip on CityLink costs $3.50 (half the trip cap cost), then assuming similar traffic volumes for the new tunnel, tolls will need to start at $10.50 for a car trip of a couple of kilometres.

But the project will make lots of money - $294 million in the next two years - for the private consultants who are working to put together reasons why the tunnel should be built.

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In this there is ''moral hazard'', because those who will make money from the road are not those who will invest in it or use it. Knowing that their employer and cash cow has committed itself to the construction, there is a strong incentive for consultants to invent reasons for the project from which they can walk away when the financial architecture they have created collapses like a house of cards.

Private investors are surprisingly gullible when it comes to investing in road schemes. The Sydney Cross City Tunnel, coincidentally another east-west link, is a case in point.

Read more at The Age