Panel Co-ordinator
Planning Panels Victoria
Department of Sustainability & Environment
PO Box 500
EAST MELBOURNE  VIC  3002


Dear Madam/Sir

CHANNEL DEEPENING PROJECT

I am writing once again to raise my objection to the proposed Channel Deepening Project (CDP) by the Port of Melbourne Corporation (PoMC).

For several years now the PoMC has been trying to prove that the CDP is environmentally safe and financially sound.  In that period PoMC has produced the flawed Environment Effects Statement (EES), carried out a Trial Dredging Program (TDP) which in the opinion of many was unsuccessful, and now produced a Supplementary Environment Effects Statement (S-EES) for a total expenditure of $114 million.

With reference to the S-EES first let me challenge the claim by PoMC that the S-EES is a stand-alone document which incorporates expert information from the original EES together with new information from further investigations.

Like the EES before it the S-EES in some areas generates more questions than answers and doesn’t address many concerns raised in the EES Panel Report dated 11 February 2005.  I will briefly in this submission enumerate some of these issues in relation to the economics of the project.

Firstly, it doesn’t detail and itemise costs:

Dredging.  Probably the major cost in this project and it is not discussed or specified in detail and it is effectively deleted from analysis by a commercial in confidence ‘alliance’ between PoMC and the dredging contractor Boskalis Australia Pty Ltd.  This despite the alliance containing clauses such as:

• Risk and risk sharing
• Cost and profit
• Producing outstanding innovative results.  This is especially the case when it comes to meeting environmental approvals.
• Financial incentives which are paid for achieving performance indicators related to environmental compliance
  (Reference: Part H Submission by Freehills Melbourne on behalf of PoMC to the EES Panel Hearing on 17 December 2004) 

What do the above phrases mean in relation to the cost of the dredging?  The dredging was originally estimated to cost $240 million, including $40 million for environmental management issues.  What is the cost now?
 
Services.  The services under the Yarra River were to be protected and/or relocated under the EES.  However, the proposed resolution of these issues now appears to be covered by agreements which are also ‘commercial in confidence’.  These include Melbourne Water, W.A.G. Pipeline Pty Ltd, Gas Net Australia (Operations) Pty Ltd and the Newport Power Station (Ecogen Energy Pty Ltd).  The current costs of these works are unknown and undoubtedly include a contingency cost for financial loss to the relevant operators for any damage that subsequently occurs and/or loss of revenue.  It should be noted that a total cost of $160 million was included in the EES for some of the then proposed relocation of services.

Infrastructure Costs.  Again, the work carried out is not detailed in full and does not have a costing.  The work under the EES was estimated at $110 million.  Although the proposed work includes extensions to shipping berths I suspect the work in these areas is minimal and does not include any of the big ticket items which will be necessary to provide adequate berths necessary for the larger ships that PoMC claims that will be coming to Melbourne and will not be able to be accommodated by the existing infrastructure.  (Refer PoMC Port Development Plan 2006-35)

Benefits.  Benefits have increased considerably since the EES based on modelling over a 27-year period.  The words of one PoMC’s expert witness still rings in my ears in relation to modelling.  ‘We do modelling when we don’t know the answers ... the only way that we find out whether the modelling is correct is to do the project ... I wouldn’t hang my hat on modelling.’  I think that these statements tell it all – how can anyone hope to realistically substantiate benefits over a 27-year period, which in this case is being used to sell the project.

Cost Benefit Analysis.  Based on the fact that the costs are still substantially unknown to anyone but the PoMC we are being asked by PoMC to JUST TRUST IT.  With the benefits being based entirely on assumptions the stated net cost benefit ratio of 3.3 as put forward by PoMC should not be accepted, particularly as it also does not take into consideration compensation to those individuals and businesses which may be financially disadvantaged by the CDP, maintenance dredging and the funding costs of the CDP.  These latter items are specifically outside the scope of the S-EES either by design or default.

Ironically, the PoMC has promoted the economic case as the driver for the CDP, but a more robust and realistic analysis may prove that the project in economic terms may actually be under water.

There are many other issues which I do not believe have been adequately addressed in the S-EES and require further investigation and/or explanation.  These include variance in dredging quantities, nitrogen levels, turbidity and others.

I look forward to discussing my concerns with the relevant PoMC consultants at the Panel Hearing.  Would you please acknowledge receipt of this abridged submission.


Yours faithfully

Barry Robinson
Mc.Crae

---