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Victoria’s top transport bureaucrat was left out of planning the state’s signature infrastructure project – the $125 billion Suburban Rail Loop – with work outsourced to private consultants at PwC who were asked to “prove up” the project.
The findings are contained in a damning ombudsman investigation that charts the development of Australia’s biggest and most expensive infrastructure project – a 90km orbital rail loop from Cheltenham to Werribee.
A scathing report found consultant from PwC were engaged to “prove up” the merits of the Suburban Rail Loop.Credit: Jason South
The report, released on Wednesday, confirms previous reports in The Age that ministers, transport bureaucrats and relevant department secretaries were kept in the dark about the project, which was cooked up in secret by people perceived as having strong ties to the Labor Party.
Ombudsman Deborah Glass found that the project was taken to an election without input from key stakeholders and described the initial development of the Suburban Rail Loop (SRL) as “at odds with core aspects of the Westminster tradition”.
In response, Treasurer Tim Pallas said the public had plenty of time to absorb the proposal over the past five years and said it had been “overwhelmingly endorsed” by voters.
While the ombudsman’s investigation didn’t substantiate allegations that the early development of the project “resulted from compromised objectivity driven by the appointment of a former ministerial staffer”, Glass concluded that excluding public service can result in a situation where bureaucrats are fearful of properly scrutinising the elected government’s preferred policy agenda to avoid further marginalisation.
Investigators found that the handful of public servants working on the project were required to sign confidentiality deeds, meaning some senior bureaucrats were forced to conceal their work from their boss – the secretary of the Department of Economic Development, Jobs, Transport and Resources.
The former secretary, who left shortly after Labor’s 2018 election victory, told investigators that the secrecy applied to the project was not only a breach of convention and public trust, but created a high risk that other government projects were crowded out by the SRL.
“It is not possible to run such thorough tests without collaboration and information exchange across portfolios and with experts outside government,” the former secretary said.
“To be clear, I would have had no interest in being informed simply to be in the tent. Indeed, I was grateful not to have known given the way the proposal was developed, and said so when advised of it.”
The ombudsman found the rail loop was the brainchild of one senior executive employed at the newly formed agency Development Victoria, who had formerly worked for former premier Daniel Andrews and Treasurer Tim Pallas and remained a member of the Labor Party.
According to the report, the executive was headhunted to take up the newly created $300,000-a-year corporate strategy role in the public service, despite never being formally interviewed by a selection panel.
After attending a conference on value capture, sponsored by consultancy firm PwC, the executive began working on the concept of an orbital rail loop. They briefed consultants at PwC who were later engaged to do a preliminary assessment of the SRL.
A draft letter on engagement between the government and PwC initially requested that the consultancy firm “prove up” the concept “to obtain approval to proceed to the next step in the process”. The executive later requested that PwC remove the phrase “prove up” but couldn’t recall why.
Private consultants then spent more than a year working on the project while senior public servants considered experts in transport planning and infrastructure were only notified of the project as a courtesy ahead of the public announcement in August 2018.
The report also found Infrastructure Victoria – the independent infrastructure advisory agency established to remove short-term thinking from infrastructure planning – was also left blindsided by the project.
“At no point in time have I had any inkling of this being prepared or undertaken, until it was publicly announced,” one senior Infrastructure Victoria official said.
“To say that it was a shock is an understatement – yeah, I’ll be candid about that – to the extent that we really went through a phase of, ‘what are we here for?’”
Senior department executives also told investigators there was a sense of betrayal among department staff who reportedly felt “gutted” by the announcement after they had spent months preparing budget submissions for other initiatives that were unlikely to receive funding after the rail loop was announced.
Opposition Leader John Pesutto said the Suburban Rail Loop was concocted to serve the interests of the Labor Party. He said Premier Jacinta Allan should pause the project and not sign any major contracts to allow a proper evaluation.
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