21/08/2015 - 06:07

Spotlight on Pilbara power failure

21/08/2015 - 06:07

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Not only did state funding for housing in the Pilbara come too late, when it did flow it was poorly targeted.

Auditor General Colin Murphy.

Sucessive state governments’ failure to improve living conditions in the Pilbara before the introduction of the Royalties for Regions scheme was shameful. The region that generated huge wealth for the nation deserved better.

However equally appalling has been the way taxpayers’ money has been spent subsequently.

One example has been the building of modern air-conditioned units in Karratha designed to house industry executives and senior public servants, and their families. It was part of the Liberal-National government’s visionary Pilbara Cities project.

The units were built at the height of the boom. As demand eased, so did their value. The vacancy rate was high. Bad luck for taxpayers.

But there’s more. The recent report of the auditor general, Colin Murphy, into the program to ‘underground’ power lines in Port Hedland and Karratha makes damning reading indeed.

The case for such a project was sound, as Mr Murphy noted.

“The risks of power outages and economic disruption resulting from cyclones and extreme weather events in the Pilbara are well noted,” he said in his report.

The Pilbara Underground Power Project was announced in 2009 to replace overhead power lines servicing 5,600 customers in Karratha, South Hedland, Roebourne and Onslow. It was to  cost $132 million, and be completed by December 2012.

Work started in 2010 at the height of the construction boom in the Pilbara, but the story goes off the rails from there. The initial contractor dropped out and work has still not started in Roebourne and Onslow.

The cost has almost doubled, to $254 million, and the completion date extended to 2018 – six years late.

Mr Murphy’s assessment as to what went wrong makes chilling reading for those who question the degree of rigour linked with the letting of public sector contracts.

“The original budget of $130 million and completion date of December 2012 were unrealistic and did not reflect local conditions,” he said.

“The funding decision did not include a robust assessment of the feasibility of delivering the project as planned.

“External oversight was not effective in providing visibility of project progress and risks. Horizon (the government trading enterprise) underestimated the scope of the works, and in the early stages of the project did not monitor progress closely enough and did not adapt its management to the project risks.”

Major cost blowouts seem to affect all governments, despite their pious statements on fiscal responsibility when in opposition. Probably the best recent example is Perth Arena in Wellington Street. It was to cost $160 million when announced by Alan Carpenter’s Labor government in 2005.

The final cost when opened several years late, in 2012, $550 million.

Mr Murphy makes several recommendations regarding the Pilbara project, placing the onus on Horizon and the Department of Regional Development to, effectively, lift their game. And he says the relevant ministers, Terry Redman (regional development) and Mike Nahan (energy) should get “all relevant updates on progress and project risk”.

Better late than never.

Marriage equality split

The same-sex marriage debate in Canberra has produced plenty of heat but not much light. The supporters of change have been extremely successful in the publicity stakes, however.

There are three key political messages running through the issue. The first, being pursued vigorously by the Greens, with support from sections of the Labor and Liberal parties, says change the law now.

The line is that other countries have done it and Australia should not be trailing the pack. Many major national employers have also jumped on board, presumably to enhance their business interests.

The second message comes from the opponents of change. This view is reflected by many MPs representing outer suburbs and regional Australia where millions of voters live.

The third is that adopted by Prime Minister Tony Abbott and his supporters, who also oppose change and want to buy time by promising a plebiscite should the coalition win a second term. Despite opinion polls showing support for gay marriage, the issue could be divisive at election time.

Mr Abbott would be hoping that would boost his re-election prospects by splitting Labor’s vote. Sure it’s a gamble, but isn’t politics the art of the possible?

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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