The processes used to assess NorthConnex adequately considered value for money for taxpayers.This report also found that the impact of tolling concessions on road users and the motorway network was consistent with policy objectives described in the 2012 NSW Long Term Transport Master Plan.
1. Executive Summary
4. Key findings
4.1 How did the assessment of the NorthConnex funding model ensure value for money for NSW taxpayers?
The steering committee assessed the proposal against the value for money criteria in the Unsolicited Proposals Guide and NSW PPP guidelines. The use of competitive tendering for the design and construction of NorthConnex provided an additional driver for value for money. The Unsolicited Proposals Guide is not clear on the timing of key assurance stages. While the project complied with the Guide, our view is that a business case gateway review would be more effective at providing risk assurance if it were completed during stage 2 and before commencement of the procurement phase in stage 3. We also found that record keeping for NorthConnex did not comply with legislation or the governance plans.
The processes used to estimate the initial project scope and budget were independently verified, consistent with Roads and Maritime Services policy, and sufficiently robust for an infrastructure project of this scope. As part of their initial proposal, the proponents accepted traffic risk for NorthConnex. This meant that should the predicted traffic volumes not eventuate, the NSW Government would not have to provide any financial reimbursement or subsidy to make up for lower than expected toll revenue.
The use of traffic modelling represented the best available assessment given the complexity of the network and the available traffic data. Where there were differences in traffic modelling estimates, the NSW Government used the figures which provided the better outcome for NSW taxpayers, regardless of source.
The NSW Government's contribution for NorthConnex was considered with regard to NSW PPP Guidelines and subject to an expert review panel business case review.
By their nature, unsolicited proposals lack transparency and the benefit of competition in the procurement process. This makes it more critical for NSW Government participants involved in the assessment of unsolicited proposals to keep complete and accurate records of their activities and decisions. We found that record keeping for the NorthConnex proposal did not fully meet the requirements of the State Records Act 1998, the NSW Government Standard on Records Management and the proposal specific governance plans.
By December 2017, the Department of Premier and Cabinet should:
1. publish an updated ‘Unsolicited Proposals – Guide for Submission and Assessment’ which clarifies obligations with requirements in other NSW Government policies such as the NSW PPP guideline and Infrastructure Investor Assurance Framework. The update should require:
a) a business case to be prepared, and a business case gateway review completed, as part of the assessment of the detailed proposal (currently stage 2)
b) probity reports must be completed and considered before the decision to proceed to the next stage.
The Department of Premier and Cabinet and NSW Treasury should immediately:
2. improve record keeping to ensure compliance with the State Records Act 1998 and the NSW Government Standard on Records Management.