Building a downsized 54,000 ML Rookwood Weir in Central Queensland, as the state government is now proposing following an estimated cost blowout, doesn’t appear sensible to me, as agricultural use of the water is critical to the project’s viability, and the project will now offer little water for agriculture (see the ABC News article Weir reduction plan condemned by central Qld farmers worried about water loss). This is not to say that the full-sized 76,000 ML dam should be built instead. Building Queensland’s Rookwood Weir Business Case suggested the full-sized project probably wouldn’t stack up anyway.
In Building Queensland’s central case ‘best estimate’ scenario, Rookwood Weir’s benefit-cost ratio was estimated at 0.6-0.8 (see Figure 1-2 on p. 16 of the Business Case). That is, the benefits from the weir were estimated to be only 60-80% of its costs. It doesn’t stack up. The project does stack up in the most optimistic “full demand” scenario, but it wouldn’t be wise to spend $352 million on a project you expect will only be worthwhile in the most optimistic scenario.
The business case for the Rookwood Weir should be re-worked, using the latest cost estimates, and the state government should give itself the option of not going ahead with the project, which doesn’t stack up in the central scenario of Building Queensland’s business case anyway. According to the Courier-Mail, the state government has already spent $66 million on the project, but the preliminary construction works start next month. These should be deferred until the government re-works the business case and is confident the project actually stacks up.
Totally agree with you. The $66M spent so far is a sunk cost is irrelevant to continuing. And the BCR will be even worse now it is known the costs will blow out, so why continue even if the project is ‘shovel ready’. To continue would make a mockery of the State’s Project Assessment Framework and the Building Queensland process.
There are a lot of really useful projects that could be done with a lazy $300M+ that would stimulate regional economies even more than a big civil infrastructure project. As I understand it, there is a 20,000+ waiting list for public housing in Queensland and much of that is in regional Queensland. If you wanted to spend $300M stimulating regional Queensland economies, I’m sure building about 800 houses for the public housing portfolio would employ a lot more tradies.
Thanks for the comment, Jim. Great points.
I would much rather see the govt spend $352 million on this dam than the $400 million they are wasting on the Ross River dam pipeline in Townsville, at least the dam project has some chance of providing a benefit to agriculture and industry, the Townsville pipeline will provide absolutely none.
Good point about the Ross River dam pipeline. Thanks for the comment Glen
Perhaps the Queensland Government should just pay off a small part of the debt instead of throwing more funds at projects with a poor business case. Getting rid of the excessive public servants payroll would also help.
Competing with the other states gave us the impetus to grow, back in the “good old days” but that seems to have been forgotten. Reducing the costs of energy would be a good start to getting the place out of the doldrums as well.
There are two sure fire steps to growing the state economy – deregulation and reducing taxes. It’s working in the US, but Australia will refuse to go down this path because there are too many criminals with their hands out in the system.