Using the concept of ‘mega projects’, JON STANHOPE & KHALID AHMED wonder aloud why millions of taxpayers dollars are being promised to uncosted light rail and who, ultimately, stands to benefit. 

Cui bono – who stands to benefit? – is a legal principle attributed to the Roman lawmaker and judge Lucius Cassius.

It is designed to cut through distracting information and get to the truth of a matter. 

It is often the case that reasons for decisions taken by individuals, organisations and governments are either not clear, or that the claimed justification or alleged benefits are illusory. 

We have previously highlighted the rather odd but very public support by the federal Labor government for light rail stage 2a, from Civic to Commonwealth Park. 

Not only has the Commonwealth committed $344 million to stage 2a without bothering with a cost benefit analysis, but has also provided a blanket commitment to fund stage 2b from Commonwealth Park to Woden without any idea of the costs. 

Stage 1 of the project, from Gungahlin to Civic had a similarly early lock-in to the procurement and financing method, in fact years in advance of the scope being defined or the costs determined. So, cui bono: who benefits?

Support for a public project can be perceived quite differently, depending upon individual preferences, potential benefits (imaginary or real) or a vested interest, which may be individual or organisational. Broadly, it could relate to normal earnings or benefits, or windfall gains.

Normal earnings would include the prospect of a job, a supply contract or a consultancy for services. Among the range of advocates or supporters of a project likely to present financial benefits would be workers in construction and transportation, consultants, bankers, investors, landowners, lawyers and developers.

However, such benefits, while lawful, could in no way be presented as a justification for public expenditure. 

Take the figuratively common example of someone being employed to dig a hole only for it to be refilled. 

While there is clearly no public benefit nor cogent case for public expenditure on such a project, a potential contractor would nevertheless be fully entitled to argue for such a “project” on the grounds that it would “support jobs” or “boost economic activity”.

Then there’s windfall gains

Before turning to the question around how governments guard against such self-serving pressures, a word about windfall gains, or “economic rents”, which are a different category of benefit. 

They arise from grants of privilege, for example, a lease to exploit natural resources or a licence to conduct a certain restricted business, or rezoning of land for higher use, or public investment in infrastructure, say a light rail network, that may increase the value of privately held assets, or a special deal for unions with exclusive access and conditions. They are unearned gains. 

Mere existence of economic rents should not, in principle, rule out the grant of privilege or the investment if it delivers public benefits that outweigh the costs. 

Our point is that there is in place in Canberra, and indeed almost certainly in every major city in Australia, an industry that provides gainful employment for analysts, consultants, lobbyists and media operators, to package private interests as a public benefit, and to thus safeguard economic rents. 

Attempts at seeking even a meagre return from mineral wealth for public benefit, for example, can quite ironically lead to billionaires in hi-viz vests turning up at a picket line in a confected fight for the protection of workers’ jobs.

Good, modern democratic governments rely on objective tools and transparent rules to allocate resources to projects that demonstrably maximise public benefit. 

Open competitive processes for procurement of labour and materials are part of this rules-based system designed to maintain public confidence in the functioning of government for the benefit of its citizenry. 

Mega projects and things get complicated

For most part, the system works reasonably well in allocating high levels of funding – until it is set aside for a particular class of projects, technically referred to as “mega projects”. 

Such projects have been studied extensively, for their common characteristics and outcomes, by several researchers with one group analysing more than 900 projects worldwide over several decades. 

Mega projects are not just scaled up versions of small projects, rather they are marked by a convergence of political, economic, technological and aesthetic interests with multiple public and private stakeholders, inherent complexity, conflicting interests that ironically coalesce, and most significantly, rent-seeking behaviour. 

Typically, they have long planning horizons, complex interfaces and non-standard technologies that purportedly justify direct procurements with contractors and exclusive deals for materials and labour. Project objectives are not clear and changes in scope and alignments are prone to appear for inexplicable reasons. 

As a rule, costs are invariably underestimated and the benefits routinely overstated. Words such as “city building”, “transformational” and “game changing” buzz around project descriptions and narratives.

The ACT’s Light Rail project comprehensively reflects the characteristics of a mega project, which we have regularly highlighted. While the stage 2a business case has not been released (assuming one exists) a direct contract for $577 million has nevertheless been entered into without an open tender.

The stage 2b alignment is unknown, with various unconfirmed rumours, including one to route it along National Circuit, which would both further erode the claimed transport benefits at a considerable increase in costs. The costs are, of course, unknown as are any purported benefits.

Despite this the federal Transport Minister Catherine King has made a commitment to fund the project.

If you, like us, are wondering why the ACT and Commonwealth Labor governments are hellbent on spending billions of taxpayers’ dollars, without the benefit of a business case, on a light rail network from Civic to Woden, a meaningful answer may be forthcoming in any reasonable answer to the question: cui bono?

Jon Stanhope is a former chief minister of the ACT and Dr Khalid Ahmed a former senior ACT Treasury official.