Value of my advice ignored: AU$1.3 bn
(1) 28/4/2006 email to Queensland Minister for Transport warning him NOT to build the tunnel because of peak oil
(2) 3/5/2006 BCC acknowledged receipt of a similar email
(3) reply letter from BCC about a 70 year long transport revolution
(4) 10/6/2010 “Brisbane Motorists bypass the Bypass Tunnel”
(5) 21/4/2010 Clem7 tunnel may end toll projects, admits Campbell Newman
(6) 30/9/2010 Clem7 firm warns of wind up
(7) 23/11/2010 Brisbane’s financial hole in the ground
(8) Reasons given to unitholders for the Clem7’s low patronage
(9) 21/12/2010 Clem7 uncertainty extended
(10) 4/2/2011 Clem 7 tunnel would never have been built based on actual traffic numbers
(11) 25/2/2011 Clem7 operator placed in receivership
(12) 8/3/2011 Clem7 price tipped as “bite-sized” $650m
(13) 15/4/2011 Investors sue RiverCity firm
Clem Jones Tunnel (North South Bypass Tunnel)
(1) On 28/4/2006 I warned the Queensland Minister for Transport and Roads in an email:
Global oil supplies have reached a bumpy production plateau (graphs attached) and Australian oil production will drop like a stone after 2007 (Geoscience Australia graph attached)
Geoscience Australia, submission #127 to the Senate Inquiry on oil supplies
This is clearly not a good time to build a road tunnel. You should rather focus on the job to replace car traffic by developing public transport.
Peak oil is the beginning of the end of using planes, trucks and cars the way we know it.
I also referred to the NSW Inquiry into the Cross City Tunnel in Sydney so that lessons can be learnt
8/1/2006 How Cross City Tunnel Planners ignored peak oil
The receipt of this email was acknowledged 2/5/2006 saying the matter is receiving attention
(2) A similar email was sent to the Brisbane City Council, received and acknowledged 3/5/2006 under OR20907912. I sent a reminder email on 14/5/2006 with following summary content:
Sep 2001: Prefeasibility Study
You might want to check whether under “traffic modelling” the availability of motor fuels over the period of 25 years was investigated
2002: 2 Committees researching the financial suitability
Please look in the minutes of these committee meetings or in their respective reports which oil price was assumed to calculate a financial viability and compare them with today’s oil prices
If this EIS did not contain a fuel availability analysis over 25 years, it was of little value. If the relevant State Government procedures did not require such an analysis, then this was a failure of the relevant authority and/or the legislator. The consultant who prepared the EIS should have warned the Government that – in view of the approaching oil crisis the first signs of which were clearly visible in 2005 even for the non-expert – such an analysis was necessary.
I also refrerred to my submission to the Senate Inquiry on future oil supplies
24/2/2006 Submission #69 to the Senate Inquiry on Oil Supplies
(3) In response, I received a letter from the Brisbane City Council saying they expect a “70 year long transport revolution” and that tunnel infrastructure will remain of considerable benefit
(4) The full story how warnings have been ignored is here (including link to a download PDF file)
10/6/2010 Brisbane Motorists bypass the Bypass Tunnel
(5) Belatedly it danws on the Brisbane Mayor
Clem7 tunnel may end toll projects, admits Campbell Newman
“While Clem7 operators Rivercity Motorway last week said traffic was running at 20,000 vehicles a day, the council was projecting 38,000 vehicles a day.”
(6) Clem7 firm warns of wind up
RiverCity Motorway, releasing its audited final financial report for last financial year, today warned the stockmarket its cash reserves would only support its operations for about the next 12 months.
(7) Brisbane’s financial hole in the ground
RCM is one step from calling in receivers, announcing yesterday it had asked its syndicate of 24 banks to give it two year’s breathing space until Airport Link opens in mid-2012. That decision will be made in late December.
The motoring public’s reluctance to use the tunnel is costing RiverCity Motorway about $7.1 million each month, with about $8 million a month being consumed from the company’s $86 million in cash reserves.
“Given the current traffic shortfall, it is apparent that Clem7 traffic volumes would need to more than double for there to be any reasonable prospect of recapitalisation to preserve equity in the project,” he said.
In other words, the 30,000 vehicles a day now using Clem7 would have to double to 60,000 by late 2012.
(8) Reasons given to unitholders for the Clem7’s low patronage
- Lower than expected traffic growth on Brisbane’s inner-city roads. For example, traffic on the Captain Cook Bridge (Riverside Expressway) has increased just 0.4 per cent;
- Significant construction work on the roads leading into Clem7, in particular Lutwyche Road where Airport Link is under construction, the Inner City Bypass, Shafston Avenue, Pacific Motorway and Ipswich Road.
Mr Morris said: “The opening of Airport Link will mark the first occasion when the approach roads for Clem7 should be free of traffic congestion caused by construction.”
- Brisbane motorists are different to Sydney and Melbourne motorists.
Mr Morris said: “Clem7 motorists also appear to have a different perception of value compared to motorists in Sydney and Melbourne.
“In those more established toll road markets, motorists don’t only place a value on the time saved, but they place additional value on benefits such as reliability, connectivity and the driving experience.
“That doesn’t appear to be the case on the Clem7.”
- Different road development predicted in the original planning. RCM assumed the Gateway Motorway duplication would be finished in 2011, well after Clem7 opened in March, but it has already been open for much of 2010.
The improvements to the Gateway Motorway make it easier for motorists to use Kingsford Smith Drive.
RCM also thought the Go Between Bridge would open in 2016, however it opened in June 2010.
Main Street and the Story Bridge were supposed to have bus lanes. That has not yet happened.
- The tolls are seen as too high. In the first three weeks after the tunnel opened in March, before tolls were introduced, an average of 59,109 vehicles used the tunnel each day.
When tolling started in April – even at $2.95 – the number of vehicles dropped to an average of 21,178 per day.
Tolls were dropped to $2 on July 1, and this kicked the number of daily users to 27, 595 per day.
Since then it has grown to an average of 31,975 on work days and 27,876 per day averaged over an entire week.
Last week, the fare was increased from $2 to $3 and it will reviewed again early in 2011. The jump to $3 from $2 has not made a big difference to the traffic numbers.
Mr Cleary said he thought this was about the right price.
“While it is only one week since these new tolls were introduced, the result has been a small reduction in daily traffic, but increased revenue,” he said.
“It appears that the $2 toll has achieved its aim and the traffic that was encouraged to try the Clem7 is mostly staying.”
Not a single word on peak oil which – together with accumulated debt – triggered the GFC and the subsequent economic problems.
(9) Clem7 uncertainty extended
“The troubled company behind the Clem7 tunnel won’t know whether a consortium of 24 banks will agree to a survival deal for at least another six weeks.
RiverCity Motorway is relying on a “pay if you can” agreement with the banks to avoid bringing in receivers after declaring it could not meet its interest payments beyond September next year.”
(10) Clem 7 tunnel would never have been built based on actual traffic numbers
RIVERCITY Motorway has made a drastic adjustment to its forecast traffic flows after a new assessment suggested it would be lucky to see half the number of vehicles using its Clem7 tunnel by 2020 that it once hoped would be using it now.
Had RiverCity’s original stock exchange float been attempted with these new figures, the tunnel would never have been built, at least with private equity involvement.
RiverCity floated on the Australian Securities Exchange in 2006, raising nearly $690 million at $1 a unit, with 50c of that payment deferred for 12 months.
Its units were trading yesterday at 0.8c each – effectively wiping out the $690 million put in by people and institutions, who now look like mug punters.
(11) Clem7 operator placed in receivership
The company behind Brisbane’s Clem 7 toll tunnel has been placed in receivership.
RiverCity Motorway collapsed owing $1.3 billion to a syndicate of 24 banks.
It is not even a year since the seven-kilometre tunnel was opened. Many blame the company behind the traffic forecasts, Aecom, because patronage on the road is less than a quarter of its original predictions.
Some of the predictions were as high as 94,000 vehicles a day, but despite the toll being slashed only 22,000 motorists are using the tunnel daily.
People who bought shares for $1 before the road was built saw their investments fall almost 100 per cent in value before trading was suspended on the stock exchange.
Brisbane Lord Mayor Campbell Newman is a big advocate of the tunnel.
“My reaction is of course that I’m very sad for small investors who’ve lost money, but having said that, the fact remains that this project, this tunnel will be open for 100 years,” he said.
“It’ll deliver congestion-busting benefits for many generations of Brisbane motorists. It can’t be taken away, it can’t be shut down or closed, so it will be here delivering what it’s meant to deliver in the future.”
100 years? When looking at the unrest across the Middle East, and this in year#6 of peak oil, how long will it take until that impacts on oil supplies and leads to an oil import crisis ? Where are the millions of EVs to replace petrol cars? And if the rest of the world were as coal addicted as Queensland, we would have a 5 m sea level rise, flooding large areas of the Clem7 catchment.
KERRY O’BRIEN: What are your particular fears with regard to the melting of the polar ice caps?
JAMES HANSEN: Well, the problem is that the climate system in general has a lot of inertia and that means that it takes time for the changes to begin to occur but then, once they do get under way, it becomes very difficult to stop them and that is true in spades for the ice sheets. If we once begin to disintegrate it will become very difficult, if not impossible, to stop them and we are beginning to see now on both Greenland and west Antarctica disintegration of those ice sheets. They’re both losing ice at a rate of about 150 cubic kilometres per year and that’s still not a huge sea level rise. Sea level rise is now going up about 3.5 centimetres per decade. So that’s more than double what it was 50 years ago. But it’s still not disastrous; it’s a problem, but it’s not disastrous. But the potential is for a much larger sea level rise. If we get warming of two or three degrees Celsius, then I would expect that both West Antarctica and parts of Greenland would end up in the ocean, and the last time we had an ice sheet disintegrate, sea level went up at a rate of 5 metres in a century, or one metre every 20 years. That is a real disaster, and that’s what we have to avoid.
Clearly, Lord Mayor Newman has understood nothing, absolutely nothing.
(12) Clem7 price tipped as “bite-sized” $650m
(13) Investors sue RiverCity firm