Hansard debates

                            MELBOURNE CITY LINK BILL
                                 Second reading

  Mr STOCKDALE (Treasurer) -- I move:
  That this bill be now read a second time.
OUTLINE OF THE PROJECT
The Melbourne City Link project is  the  next key element in Melbourne's overall
transport  system. Alone  neither  public transport  nor  roads can provide  for
Melbourne's needs.  There must be  an integrated, balanced  transport system and
that is what the government is now moving to provide.

The Melbourne City Link will  perform the  simple, but vital, task of joining up
three of Melbourne's  most important freeways. The South Eastern, West  Gate and
Tullamarine  will  become  an  integrated  freeway  system.  This  is  a logical
much-needed  project that has  long  had bipartisan  support.  This will  enable
traffic to move freely along these roads to their destinations, whether it is in
the  central  activities  district or  around  the CAD. Contrast  that  with the
present situation, where cars, trucks and other vehicles run into traffic lights
at the  end  of  the freeways and  have  to  find their way,  in  inner suburban
traffic, to the next freeway or to their destinations.
In simple  terms,  the  link  will mean  that you  can drive  from Dandenong  to
Tullamarine or Geelong without a traffic light.
Travel  times  on  the link will be reduced markedly compared with  present  day
travel times, especially during peak periods.

The long  Burnley Tunnel  will carry traffic east from the West Gate Freeway  to
the South Eastern  Arterial.  The shorter  Domain  Tunnel will  take  west-bound
traffic from the South Eastern Arterial near Punt Road to the West Gate Freeway.
Construction will be completed and the new roads will be  opened in  stages. The
whole project is scheduled for completion by the year 2000.
One of the  major beneficiaries of the new link road system will  be the freight
industry. The link will open the way for freight vehicles to move freely between
the main manufacturing and industrial centres to the north, south, east and west
of the  city and to the key  export points -- namely,  the port, the rail-heads,
the airport and major highways. The link will take this heavy traffic out of the
inner city streets, where it does not belong.
Typical travel savings for freight transport are expected to be up to 30 minutes
between Dandenong and the main sea terminal.

For  cars, the time savings are  estimated at up to  15 minutes between the city
and Melbourne Airport, and up to 20 minutes between Dandenong and the city.
PRIVATE INFRASTRUCTURE INVESTMENT
This  is  the first major  roads project under  the  government's infrastructure
investment policy for Victoria.  The  project  will be a build, own, operate and
transfer  (BOOT)  arrangement. This  means  that  the  road  will  ultimately be
surrendered back to the state, at no cost to the state.
The general philosophy  for risk allocation is  that Transurban, the  successful
bidder for the project, bears the risk of  all events except for those which the
state alone  is able  to manage and for which  the state  has accepted  specific
responsibility. Other risks which are outside the control of both the state  and
Transurban are shared between the users of the link and Transurban.

Proceeding  on a BOOT  basis means Transurban  bears  the risk of  construction,
financing, operation and maintenance, and traffic usage. This is consistent with
the infrastructure investment policy. The state's  contribution  to  the project
will be in  the following areas. The state is to provide the  necessary land for
the  purposes  of  the  project.  The  state  is to coordinate the  granting  of
necessary approvals from state authorities for the construction and operation of
the link.  The passing  of the  bill before the  house will  fulfil the  state's
obligation  to  provide  the  necessary  legislative  framework for  the  link's
construction and operation.
The  state  has  requested   Transurban  to  carry  out  some  additional  works
complementary  to  the  project to  meet  the  state's  requirements  for  urban
planning, landscaping and  design. The cost to the state for these works and the
cost  of providing the land for  the link is estimated  at  $247 million in June
1995

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dollars. Under the agreement, the state's costs may be recoverable.
The  state will also share in revenue higher than projected revenue.  The  state
may also benefit through the removal of tolls and the surrender of the link back
to the  state earlier than the expected concession period if the project exceeds
expectations.
ENVIRONMENTAL AND PLANNING MATTERS
The environmental impacts  of  the  project  will  be  kept to a minimum through
design  work  and  other measures. A maximum noise level  of  63dB(A)  has  been
adopted as the standard for the whole project. Air quality will  be monitored in
the vicinity of the link to ensure the highest standards are met.

Even  with the  expected increase in the number of vehicles using the  link when
completed, air  quality is expected  to  meet all required  standards because of
freer flowing traffic  and the reduction of  traffic on alternative  routes. The
route  of  the link will be  enhanced  by  both  exciting  design  features  and
extensive local improvement works. And the city will gain two new landmarks.
A striking contemporary sculpture forming an international gateway to  Melbourne
will  be constructed  near  the  intersection  of  the  Tullamarine Freeway  and
Flemington Road. And the design of the new Yarra bridge, incorporating 120 metre
high twin towers, will add a graceful new feature to the city's western skyline.
Other features of Melbourne City Link include two tunnels under the Kings Domain
and the Yarra River. On the western section of the link, an integral part of the
project will be the rehabilitation of the Moonee Ponds Creek.

In addition, a wildlife  corridor  will  be established and a new pedestrian and
bicycle  path  built  alongside the  creek,  with  a crossover  to  Royal  Park.
Substantial  landscape   improvements  and  opportunities  for  pedestrians  and
cyclists are also  planned on the southern section of the route, including a new
shared pathway along the north bank of the Yarra east of Punt Road.
OVERVIEW OF THE BILL
The project is  large and complex and this  is reflected in the size  and highly
technical nature of the  agreement  and  the  bill.  The  bill  has  three  main
purposes.
Firstly, it ratifies the agreement for the Melbourne City Link between the state
and Transurban, which  took effect from 20 October. That agreement is set out in
schedule 1 of the bill.

Under the  terms  of  this  agreement,  Transurban  will  bear  the risks of the
project's  commercial success or  failure. The interests of  taxpayers have been
protected  and  there will be no additional debt burden on future generations of
Victorians.
Secondly, the bill facilitates the link's  construction.  Construction  will  be
carried out under authorisations issued by the Melbourne City Link Authority and
under the oversight of an independent  reviewer. Fair compensation will  be paid
for all land acquisitions.
Thirdly,  the bill  sets  up  the management  framework  for  the link's  future
operation.  Transurban will have  obligations and powers  similar to Vicroads in
constructing and operating the link.
THE AGREEMENT

The principal  agreement between the  government  and Transurban  is  called the
concession deed. Transurban signed through principals of its three major project
vehicles  -- Transurban City Link  Ltd, Perpetual Trustee Company Ltd as trustee
of the Transurban  City Link  Unit Trust and City Link Management Ltd as manager
of that trust.
The body of the concession  deed, schedules and an  appendix are all set out  in
schedule 1 of the  bill. Because  of their  size and complexity, the exhibits to
the  concession  deed  are  not  included  in  the  bill but are  available  for
inspection in the Parliamentary Library.
The agreement,  as  it  is described in  the  bill,  provides for a  grant  of a
concession to  Transurban.  The  concession relates to the design, construction,
financing, commissioning, operation, tolling, management  and repair of the link
for the concession period.

The period will run for 34 years, as defined in the agreement. The period may be
shorter or longer depending on certain contingencies set out in the agreement.
Transurban  will  pay the state annual concession fees for  the  period  of  the
concession. These payments  will  provide  the  state  with a full return on its
financial  assistance  for  the project,  such  as  the  provision  of  land  to
Transurban  for  the  concession  period  and  certain  state  works  needed  in
association   with   the   project.   The  concession  deed  also  outlines  the
circumstances in which a share  of any revenue higher than the projected revenue
may be payable to
the state. The agreement also deals  with  the  relationship  of  the  link with
Melbourne's transport network -- both road and public -- and government policies
on these matters.

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Overall, the project  has set new boundaries for project financing in Australia.
The outcome reflects a strong adherence to  the principles of the infrastructure
investment policy  for Victoria. Investors  have  confidence in  the  process of
negotiation  and  finalisation  of documentation with the state government under
this policy, and the allocation of risk between the government  and  the private
sector reflects newly established benchmarks of risk allocation.
The  general principle guiding  the allocation of  risks  between the state  and
Transurban  is that each risk  is best borne by the  party best able to  control
that  risk. Thus,  for  its part, Transurban  bears,  for example,  the  design,
construction, financing, operation and maintenance, and tolling risks.

The state  will bear, for example, the risks of acts of  prevention by the state
or its  authorities which would materially  adversely affect the  project; state
law which could  fundamentally prevent  Transurban from constructing,  operating
and maintaining  or  collecting tolls;  and  changes  to state  law  which could
materially adversely affect the project.
The concession deed sets  out those circumstances where redress is required  for
certain  events. The  redress may  not necessarily  be in  the form  of a direct
financial  contribution. In certain limited circumstances, both parties have the
right to  terminate  the agreement.  These  circumstances  are outlined  in  the
concession deed.
In a  transaction of this  size,  complexity and importance,  achievement of the
level of risk assumption by the private sector was always going to be difficult.

Overall, the agreed basis  for  the  Melbourne  City Link project has achieved a
favourable outcome for investors, for the state and for Victorian taxpayers.
This augurs well for future infrastructure projects in  Victoria  as  it  sets a
very high standard against which all other projects will be compared.
I also  draw the attention of  members  to the provisions of  schedule  3 to the
agreement which sets out the process for toll setting. The toll prices announced
for the City Link compare favourably with  interstate toll prices. The  decision
to levy tolls on the  City Link is the preferable course of action. Direct users
benefit  and pay for  infrastructure.  The alternatives of  higher petrol taxes,
vehicle  registration  charges or government debt  funding,  among  others,  are
unacceptable.
The deed outlines how tolls are calculated and how they may change over time.

The deed also ensures a limit on the tolls that can be charged. There is a range
of other provisions common to infrastructure project contracts.
PROVISIONS RELATING TO LAND
The  project area for the link is  defined  by  a series of maps lodged  in  the
Central Plan Office of the Department of Treasury and Finance. The project  area
covers  the land  affected  by the  construction of  the link.  The area  can be
extended or reduced by the Governor in Council,  subject  to disallowance by the
Parliament. A set of  the  maps of the project  area  has been provided for  the
parliamentary library.
The  agreement  requires the  state  to  make the  necessary  land available  to
Transurban  with  a minimum of delay, and part 3  of the bill enables that to be
done.

It facilitates  the necessary planning  scheme  amendments, enables  land  to be
acquired and made available to Transurban and authorises the construction of the
link.
Both Crown land and private land will be required, but the number of residential
properties affected has been kept to a  minimum.  Land  required for the project
will become Crown land and freed from all encumbrances. It will then be reserved
for the purposes of the project and made available to  Transurban under licences
to  be  issued  by the Melbourne City Link Authority. These licences  will  also
provide the authority for Transurban to construct the link.
Existing Crown land reservations  within  the project area may be revoked by the
Governor in Council. In the case  of  private  land,  the  Melbourne  City  Link
Authority will acquire  land under the  Land  Acquisition and  Compensation  Act
1986.

Acquisition  processes under the  Land Acquisition and Compensation Act are fair
and efficient, but delays can occur if there are interests in land which are not
disclosed by the usual title searches. The sums of money involved in the project
mean that any undue delay in land acquisitions would be very costly. To minimise
that risk to the state the bill authorises  the  Melbourne  City  Link Authority
either to use existing processes or to opt to acquire land in
accordance with an alternative process provided by the bill.
The  main  difference  from  the  usual  process is that notice of intention  to
acquire the land will be published in  the  Government  Gazette  in  addition to
being  served personally on  land-holders. The time  lines  for the  acquisition
process will run from the  date of  gazettal. The time lines for the alternative
acquisition process are  based on those in the Land Acquisition and Compensation
Act.

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At the end of the gazetted notice period the authority can acquire all interests
in the land, including those which had not been revealed by title searches. That
does not affect compensation entitlements for such interests.
Public authorities and privatised utilities also  exercise controls over land in
the  project area under various acts. They include broad  powers  to  manage  or
develop particular  areas,  such as  Docklands,  and ownership  and  control  of
pipelines and cables running through the area. The construction of the link will
require  the acquisition of  some  interests and the  relocation or diversion of
some of those facilities.  So far  as possible, those matters will be dealt with
by agreement between  the  Melbourne City  Link  Authority, Transurban  and  the
relevant  authority  or utility. If  agreement cannot be  reached,  the relevant
ministers can determine the issues or appoint an arbitrator.

To enable  the  Domain  and Burnley tunnels to be constructed under reserved and
privately owned land, the bill resumes all interests in the land below specified
depths. In the case of private land, that depth is 50 feet, or 15.24 metres. For
many years, that has been the standard depth for private land  titles issued  in
Victoria,  but  the  bill's  provisions  are  technically   necessary  to  allow
tunnelling under some old titles which are not limited as to depth.
Compensation  will  be  payable in  accordance  with the  Land  Acquisition  and
Compensation  Act for private  land acquired for  the project. Compensation will
also be available for  private interests in Crown land, provided they are formal
interests such as Crown leases  and  statutory licences in the nature of leases.
Local councils will not be paid the value of the public land they administer but
can claim for expenses.
CONSTRUCTION OF THE LINK

Construction of the link will proceed in stages. As each stage  is completed  to
the standard required by the agreement, a lease will be granted to Transurban or
its  nominee  on  the terms specified in the agreement.  Surplus  land  will  be
returned to public use  or sold, as appropriate. Design and construction will be
overseen by an independent reviewer appointed  under the agreement.  The primary
role of the independent reviewer will be to ensure that the link is built to the
technical standards specified under the agreement. However,  the  reviewer  will
also  have emergency powers  under the legislation to issue rectification orders
or evacuate construction sites.
Security of major works and construction sites is important in the interests  of
public safety. The bill allows the authority  to declare restricted access areas
and makes it an offence to interfere with project works.
OPERATION OF THE LINK

Except for the allocation  of road management functions,  the usual traffic  and
road-management laws will apply to the link. Transurban has contracted to manage
and  maintain  the   existing  freeways  within  the  project  area  during  the
construction phase as well  as  managing and operating the new link roads. State
authorities will retain  their  normal responsibilities in relation to emergency
management.
The bill provides  for  the appointment  of  a  company to  exercise  management
functions over the  link roads. This company is  referred to in the bill  as the
link corporation. Under the bill, the  link  corporation  will  have a number of
statutory powers relating  to road management  normally performed by Vicroads or
local councils.
The bill also allows for regulations under the Transport  Act to  be modified to
confer powers on the link corporation.

It is  intended  that  before the link road is leased to Transurban, regulations
will be made which reflect road management arrangements under the agreement. The
bill also provides for the  appointment  of  another company as link operator to
carry out certain operational functions delegated to it by the link corporation.
New companies can be appointed as  the link  corporation or the link operator in
accordance with the agreement.
Provided Transurban performs its  functions  in  accordance with its obligations
under  the  agreement and the legislation, it will have the same protections and
immunities as  Vicroads. That is intended  to ensure that  both  legislation and
common law relating to the construction and operation of
highways will apply to the link road in the same way they apply  to other public
highways in the state.

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Part 4 of the bill authorises the link  corporation to  charge and collect tolls
in accordance with the  agreement. Toll levels must  be formally gazetted before
taking effect and advisory signs will be posted on approaches to toll zones.
The link  will be one of the first fully automated tolling systems in the world.
The  system  will  allow users to travel uninterrupted over the 22 kilometres of
the link road. Transurban  has  undertaken  to  provide  the  state  of  the art
technology required  for the automated  tolling.  There will be  no toll booths.
Instead, customers will have accounts with Transurban. For most users  they will
be prepaid accounts and users  will  be  issued  with transponder tags for their
vehicles. Infrequent customers will have the option to purchase day passes which
will allow unlimited travel on the day of purchase.  Special arrangements can be
made for large-scale users, such as freight companies.
It will be an offence to evade payment of tolls.

The  commercial viability of the  project depends upon there  being an effective
deterrent  to  toll  evasion. Toll evasion is analogous to the evasion of public
transport fares and similar penalties are proposed. The bill provides for a fine
of $100 for  toll evasion,  plus toll  and costs.  As with  fare evasion, higher
penalties  can  be imposed  if the  matter goes  to court  or for  more  serious
offences, such as fraud and tampering with tolling devices.
There will be a number of safeguards protecting the interests of link users. The
government has been concerned to  ensure  that  in  cases  of genuine mistake or
emergency drivers will not necessarily be prosecuted for toll  evasion. A number
of safeguards will exist for this purpose.
Firstly,  inadvertent  failure  to pay a toll will normally result in  a  letter
requesting payment.

Under the arrangements  negotiated with Transurban,  infringement notices  would
normally be issued only if the person  still  refused to pay the toll or if  the
driver has  a  record of toll  evasion. Secondly, Transurban  will  establish an
independent  and  speedy  dispute  resolution  process. This process will enable
Transurban's customers to query tolling accounts.  An infringement notice cannot
be issued while a dispute is pending. Thirdly, the bill appoints Vicroads as  an
independent  enforcement agency. The link corporation may report  apparent  toll
evasions. But the enforcement agency will make the final decision on  whether an
infringement notice should be issued, having regard  to the usual principles  of
prosecutorial discretion. Finally, as with  all  infringement  notices, there is
the option of defending the matter before a magistrate in open court.
There will be strict measures  to protect the privacy of link users. It will  be
an offence  for the link corporation or its employees  to misuse  or to  divulge
without authority personal tolling information or motor registration records.

Severe  penalties  are prescribed  by  the  bill  for  such  offences. The  link
corporation will be  required to maintain  proper records. But link  corporation
records of non-payment of  tolls which identify individuals or vehicles must  be
destroyed within two years or the period fixed by regulations.
Vicroads  is subject to privacy  safeguards under the  Road Safety Act. Although
the regulations  can  specify another body  to be the  enforcement  agency, this
would not occur unless equivalent privacy safeguards were created for that body.
STATEMENT FOR THE PURPOSES OF SECTION 85 OF THE CONSTITUTION ACT
I wish to make a  statement under section 85(5) of the Constitution Act 1975  of
the reasons why clause  117 alters or varies section  85 of that act in relation
to the jurisdiction of the Supreme Court.

  Honourable members interjecting.