On Transparency

I recently came across a story in the Sydney Morning Herald (SMH)

Internal documents show makeover of Sydney's Central Station to top $3 billion by Matt O'Sullivan

The first paragraph reads ...

"The cost of transforming Sydney's Central Station into a gateway that includes a five-star hotel, high-rise towers and a new route for the inner west light rail line is estimated in leaked documents at just over $3 billion."

[Emphasis added]

I am not entirely clear what is the newsworthy element of the story aside from the fact they were leaked (By whom? Was this intentional policy or disgruntled staffer?), but, perhaps the shocker is that the transformation is $3B, which used to be a lot of money (about $US 2.4B at current exchange rates). Seriously though, who knows what that includes, and what is really for the benefit of travelers as opposed to real estate interests.

The details of the transformation are interesting, but nothing someone who has been paying attention wouldn't know was already going on. There are plans for the already announced new metro train line into the station, and a Central Walk, and redevelopment of the Central to Eveleigh corridor. Some more details in the leaked document, including a hotel in the station and a possible linkage to a vaporous high-speed rail.

But the more appalling thing to my American sensibilities is that this is a "leaked document". (According to the SMH, it was also leaked to ABC, a credible news source in Australia, but I can't find reference to it on their website). And as the recipients of the document, shouldn't the SMH show us, their subscribers, the document. One more thing which makes me suspicious.

Assuming the leak was intentional, it is a way of getting public input before owning the project ('oh, it was just a staff draft, that thing everyone hated, we never agreed to that'), but is it really necessary to filter this through the media. Can't they just announce a study, announce findings periodically, hold real workshops, have real hearings, and then make a decision.

Shouldn't all of this be public? Isn't transparency good. If the government is watching us, shouldn't we watch the government?

One important value of transparency in the process is that it establishes public sense and consensus before projects are made official. Proposals are discussed BEFORE they are adopted. Information becomes available, there is feedback, the project may be modified or adapted, and then the government "of the people" makes a decision to go forward OR NOT. Elected officials are not required to take an opinion until the details have been worked through in an open process. Often they don't, so outcomes are unknown until the actual vote.

In contrast, in Australia, it seems as if a project is discussed internally and secretly within government, and then adopted, and then justified rhetorically after the fact if the Business Case supports it. (And the business case will be iterated until it complies.) Public feedback occurs only at elections. (Which is better than dictatorship, but that is not the bar we want to compare to.)

Now, many of these projects were on earlier plans, so it is not a complete surprise that the new regime is proposing a new motorway or rail line, but often they were only vaguely specified, and the Business Case comes after the Political Decision, and also is kept secret.

The downside of course is that it is harder to do things that are controversial if the public has input before hand.

Maybe it should be. It would however undermine the official New South Wales slogan: Making **It Happen.

And to their credit, the present state government is building things everywhere, satisfying a pent-up demand that previous state administrations were unable to achieve. This is not cheap, and the government public works all taking place simultaneously are driving up costs, as they compete with each other for labor and materials.

The most famous example is the controversial WestConnex tunneled motorway. This is an $18B dollar expense, so one might think ensuring the Business Case is accurate and justifies the project before proceeding would have been important.

The Updated Strategic Business Case  document (November 2015) says:

WestConnex was a recommendation of Infrastructure NSW in October 2012, with Government adopting the concept in the 2012 State Infrastructure Strategy and the NSW Long Term Transport Master Plan.

This was followed by the development of a business case, which was approved by Government in August 2013. An Executive Summary of that business case was publicly released.

This Updated Strategic Business Case consolidates the work undertaken in the original business case, with the significant modelling, analysis and scope enhancements completed in the past 24 months.

Look at the timeline. If I read this correctly, the business case was approved after the government adopted the concept. An executive summary was released afterwards (September 2013), but not the details until November 2015. The 2013 Business Case Executive Summary is basically a PowerPoint (landscape layout and all), and even then, the budget had already been approved before that was released.

Later the document notes that "In May 2014, the Australian Government entered into a Memorandum of Understanding with NSW to provide $1.5 billion in funding for WestConnex."

The business case was released after pre-construction and some construction had already begun.* Which means the publicly available Business Case did not affect the decision to proceed (assuming no time travel). Which raises the question of why it exists at all and how decisions are actually made.

As to why it exists:

This business case has been developed with three specific sets of guidance in mind. It is intended to meet:

• NSW Treasury requirements for Capital Business Cases, as outlined in NSW Treasury Policy Paper 08-5

• Infrastructure NSW content expectations set out in the Infrastructure Investor Assurance Framework

• The requirements and expectations set out in Infrastructure Australia’s ‘Better Infrastructure Decision Making’ guidelines.

In short, someone made us do it.

Now, like I said, I am not commenting on the substance of the decision, which also assumes we should take the Business Case on face value, but indicates a benefit/cost ratio well above 1. And props to Australia for actually using Benefit/Cost ratios (in principle) which is more than I can say for the United States.

However we can observe the project is controversial, particularly in the affected areas. This is largely because all transport projects create winners and losers . This is in part however because the project was perceived as being done to people, rather than done with people.

Two reasons are often given explaining why transparency lacks here.

The first is the commercial nature of the case. Many public endeavors here have a large private component. WestConnex, e.g., is 'owned' by the  Sydney Motorway Corporation, which is supposed to be sold off. So apparently business is sensitive to the terms of the profits being discussed publicly. It might be possible that lack of transparency maximizes resale value of the asset, and so benefits the public. This is hard to establish, however, since each asset is unique.

I am sure however the many bondholders of the many toll projects that have wound up bankrupt would have preferred more oversight along the way. Peer review (and public review) processes work better in an open environment. Many eyes make all bugs shallow. These infrastructure projects are not a minor contribution to science, where an individual scientist's or journal's reputation might be protected if wrong science is not made public, and it is in the public interest that facts be established before they are embossed with a journal's mark . In contrast the object of review here is a very expensive public works project that needs oversight before the decision to accept/reject/modify. Oversight only achieves its aim if review happens before the decision is made. Many eyes are even more important.

The second cause for lack of transparency is Parliament, aligning the Executive and Legislature, which reduces the checks and balances I am familiar with in  American government. So the Parliamentary government can act without heeding opposition. And the unity of the party, and its majority status, help fast-track decision processes in-house.

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* A feature concomitant with doing the business case after the decision was made in Australia is the design/build process. First a project is built, then it is designed. Ok, I exaggerate. First a sketch is drawn, then building starts, then the design is modified, and the building costs rise, and the design is modified again. Major project features are adopted midstream.