Doubts raised as Dubbo's River Street Bridge gets green light despite poor cost benefit ratio

NSW Government Statute Law states any proposed NSW taxpayer-funded project has to have a "Benefit Cost Ratio" (BCR) score of at least 1.0 to be approved by NSW Transport and NSW Treasury.

The River Street Bridge originally had a BCR of 0.5 but after a more detailed assessment the BCR was dropped to 0.3.

The benefit cost ratio calculates the relationship between the relative costs and benefits of a proposed project, expressed in monetary or qualitative terms.

If a project has a BCR greater than 1.0, the project is expected to deliver a positive net present value to a firm and its investors.

If the project's BCR is less than 1.0, the project's costs outweigh the benefits.

According to a NSW Treasury spokesperson, a business case and a cost benefit analysis are tools used to provide evidence to inform government investment decision-making.

"Governments consider a range of factors when determining the allocation of public resources to achieve their objectives such as equity or regional development," they said.

"The benefit cost ratio is one of many factors that informs government decision-making."

When the River Street Bridge cost $140 million the BCR stood at 0.5 but when the price blew out to $220 million the BCR dropped to 0.3.

The assessment raises questions for concerned resident and president of the Country Chapter Australian Taxpayers' Alliance, Mick Etheridge.

"The River Street Bridge is 0.3," Mr Etheridge said. "Why is the River Street Bridge going ahead at 0.3 BCR? Where's the transparency?"

A previous Dubbo Regional Council survey of residents showed 67 per cent of respondents didn't want the bridge.

"Why are the local rate- and tax-payers not being listened to?" Mr Etheridge asked.

Member for the Dubbo electorate Dugald Saunders said benefit cost ratios were used to compare the potential benefits of each project, including but not limited to safety benefits, travel time savings, vehicle operating costs and the estimated costs required to build and operate the project.

"However, BCRs are not the only thing that guides an infrastructure decision like this because they don't necessarily capture all of the possible benefits, like population growth," he said.

"A strategic business case and a final business case were progressed for the River Street bridge option, because it was the best option in terms of improving local traffic flow in times of flood and importantly during normal times as well, creating better access for freight and heavy vehicle traffic across the Macquarie River."

Both the business cases included details of the other options considered, and were provided to the Federal Government in its considerations to majority fund the project.

Mr Saunders said the River Street Bridge project was not the silver bullet to Dubbo's traffic problems.

"But it was one of a range of projects that were identified as priorities in council's traffic management strategy, the same guiding document which states that Dubbo doesn't need a ring road, and which Dubbo City Council approached the NSW Government to fund and deliver," he said.

"The other projects include the upgrades from roundabouts to traffic lights at the intersections of Victoria and Whylandra streets, and Cobra and Fitzroy streets, which are currently under way. Dubbo City Council determined that these projects were a priority and asked the NSW Government to help, and that's exactly what we are doing."

On March 18, 2021, the legislative assembly met to discuss the new Dubbo bridge crossing.

Parliamentary records show that Cessnock member Clayton Barr said that, as the former shadow minister for finance, services and property, he spent a fair bit of time with his head stuck in books about infrastructure, infrastructure construction, benefit cost ratios, getting things passed through the Treasury, building a business case and justifying a business case as to why different projects should be funded because taxpayer dollars were scarce and precious.

"The dollars do not belong to the government of the day, in this case the Liberals and The Nationals; they belong to the people of NSW," he said.

"We have a core responsibility to make sure that those taxpayer dollars are spent extremely carefully, and in the most correct and beneficial way so that the best possible outcome is achieved."

He said there were good reasons for the requirement for projects to have the benefit-cost ratio assessed and for funding to be released from if a project exceeded the 1.0 figure.

"They are the rules," he said. "They are the Government's rules; the Government owns them. I read what appears under the heading "expert advice" on the Infrastructure NSW website."

Infrastructure NSW is an advisor to the NSW Government on the state's infrastructure needs and priorities.

"We provide rigorous and independent advice to prioritise infrastructure investment and ensure infrastructure investment decisions are informed by robust assessment, independent assurance, and long-term planning," Mr Barr said.

He said the State Infrastructure Strategy 2018-2038 outlined decisions that were short term, in a five-year window, as well as out to 10 years and up to 20 years.

"I applaud them for that because part of the contention around whether or not a bypass is required is probably a longer-term project," he said.

"The fear here is that if you spend $220 million on the project right now - that is the current cost, and blowing out - the chances of getting a second bite of that cherry in the next five or 10 years seems pretty limited given the financial constraints on the state."

Mr Barr said the project's benefit cost ratio of 0.3 did not meet any of the targets or policies.

"It does not meet any of the thresholds that are required at both the NSW Government standard and the Australian infrastructure standard," he said.

"That is why this project needs to be questioned and rethought. A project at $140 million is different from a project at $220 million and is different from a project at whatever the cost ends up being. The benefit-cost ratio needs to underpin the decisions being made."

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: