Traffic forecasts take their toll on bank

June 20, 2007

Danny John and Jordan Baker, The Sydney Morning Herald

WESTPAC, the bank that helped raise $570 million to help build the failed Cross City Tunnel, yesterday said it would be sceptical of future traffic forecasts.

The comments came as the state budget flagged the next step in the state's latest toll road project, an extension of the M4, which is expected to cost at least $1 billion and be funded with private money.

New figures also show traffic numbers in the latest project, the Lane Cove Tunnel, were worse than first thought, with just 43,445 vehicles using the $1.1 billion tunnel each day last month.

Yesterday Westpac, which led the international banking syndicate for the Cross City Tunnel, now in receivership, said it would be more "sceptical and critical" of traffic forecasts.

The admission by Phil Chronican, the head of Westpac's institutional banking division, reignited the controversy about the traffic modelling used as the basis of the $800 million tunnel. He told a meeting of banking analysts yesterday that "everybody got their assumptions wrong".

A syndicate of 16 banks lent money to the Cross City consortium on the back of estimates compiled by Hyder Consulting, which suggested about 85,000 vehicles a day would use the link within six months.

The latest figures show just 34,000 cars a day are using it.

Figures on the website of the Lane Cove tunnel's operator, Connector Motorways, show last month's average daily traffic in the tunnel was just 43,445 vehicles. Last week the company announced an average of about 50,000 cars used the tunnel on weekdays, but did not reveal weekend figures or the overall average, a benchmark for toll roads.

The more detailed figures, posted later as part of the air quality bulletin, show there were 47,957 cars a day on weekdays, and just 30,474 a day on weekends and public holidays. During the toll-free period in April the daily average was 75,000.

In the original financial modelling, the company said it expected 110,600 cars a day on average, and 121,300 on weekdays, after an introductory period expected to last six months. It later modified the period to 18 months.

Increased congestion on a narrowed Epping Road had been expected to encourage motorists to use the tunnel. But the Government's decision to delay changes above the tunnel, which would have reduced Epping Road to mostly one general traffic lane each way, has further limited traffic growth.

The number of cars using the Falcon Street ramps - which, at $1.27 for 190 metres, are among the most expensive toll roads in the world - is about 8600 a day, about 3000 less than during the toll-free period.

The operator of the tunnel and ramps, Connector Motorways, has said it is unconcerned about the low figures. It says the growth in traffic will not start to match original forecasts until Epping Road is narrowed.

Yesterday's budget allocated $1 million to begin planning the extension of the M4 towards the city or Port Botany. No decision has been announced on how much of the road will be tunnelled. Given the cost of the project, it is expected to be another public-private partnership.