'Insufficient attention' paid to light rail stage 2A analysis: Auditor-General

Michael Harris said a complete economic analysis of the light rail route between the city and Woden would better capture the project's true costs and benefits, rather than assessing isolated sections.

He said he was concerned components in the project could be counted in multiple places and in different ways, leading to uncertainty over the true value of the work.

"For transparency purposes and for clarity purposes, a piece of economic analysis that actually incorporated all of those components in one place ... would be a timely exercise to undertake," Mr Harris said.

Meanwhile, the ACT government said it would ask a federal Labor government for more funding for light rail, after the party walked back its 2019 pledge to chip in $200 million if it had been elected.

"If a Labor government is elected, the ACT government will work collaboratively with the Commonwealth on the delivery of light rail, and we will look forward to conversations about additional financial support for the project in the future," an ACT government spokesman said.

The ACT's Labor senator, Katy Gallagher, said a Labor government could continue discussions with the ACT once it was clear what a $132.5 million light rail commitment made under the Coalition would cover.

"This is a project obviously we're incredibly committed to, considering I started it in when I was in ACT government, but I think we also have to be responsible with commitments that are being made," Senator Gallagher said.

Senator Gallagher said an incoming Labor government would need to understand whether the Coalition commitment would be spent on the Commonwealth requirements for light rail's second stage.

ACT Liberal senator Zed Seselja said Senator Gallagher had already failed to secure any real promises for Canberra.

"It has been through my work as part of this Liberal government Canberra has received well over $2.1 billion in infrastructure investment - the largest investment from a Commonwealth government in Canberra in a generation," Senator Seselja said.

The Auditor-General, Mr Harris, on Thursday said the government had appeared to consider analysis for stage 2A, which is planned to link the city with Commonwealth Park, as a small piece of the puzzle.

"There's a case to be made that there ought to be one piece of economic analysis that covers all of those projects because in one way or another, each of those components is being included in an economic analysis of some sort in some places," Mr Harris said.

"A concern that I would have is whether or not components are being counted in multiple places or indeed different parameters are being used for components in different pieces of economic analysis."

An earlier audit of the stage 2A analysis found the assessment failed to show how the light rail line would be a catalyst for urban development, a key expected upside to the project.

The audit, released in September, found the case relied too heavily on so-called "transformational projects" around the transport corridor.

The audit also found Major Projects Canberra, the agency which prepared the business case, did not request supporting information from its consultants that showed what assumptions and calculations had been made to assess the costs and benefits of the project.

The ACT government has defended the project and the analysis, saying it was one piece of a larger planned transport network and its full benefits were tied up in the full route to Woden.

Mr Harris on Thursday told the Legislative Assembly's public accounts committee said there was a lack of attention paid to the economic analysis of stage 2A.

The Auditor-General said he was not suggesting the analysis was a wilful attempt to boost the economic arguments for the light-rail project.

"In my view, it was a lack of professionalism on the part of the people who put together the economic analysis," he said.

A separate business case and economic analysis was commissioned for the project to raise London Circuit, which the committee heard was a separate project and not critical for the next stage of light rail despite being closely incorporated.

Mr Harris' audit recommended a fresh business case for stage 2A of light rail, which the ACT government rejected.

"The ACT government does not propose to re-acquit the 2019 business case or associated economic analysis as the project has moved past this formative stage," the government said in its response to the audit.

"This analysis was only one of a number of inputs that informed the ACT government's decisions regarding light rail stage 2A."

The government said it would continue to provide open and transparent information about the corridor developments, including their costs and benefits.

Major Projects Canberra head Duncan Edghill on Thursday rejected any assertion the government had wilfully underestimated the costs of the light rail project.

Mr Edghill said the team which had completed the economic analysis had a strong track record, having worked on the stage 1 business case which was "on the conservative side".

"I think when you look at the business case for stage 1 and stage 2A and whatever else that we do, we tried to present to government our best estimate at that point in time," he said.

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Meanwhile, two experts offered opposing views of the light rail economic analysis at the public accounts committee's first public hearing for its audit inquiry.

Dr John Hawkins, a senior lecturer in economics and behavioural science at the University of Canberra, told the committee the benefits of stage 2A were likely understated as a result of relying on a high discount rate in the economic analysis.

The discount rate is used to calculate the value in real terms of benefits that will occur in the future.

In a submission to the committee, Dr Hawkins noted the infrastructure for the London Underground was built in the 19^th century and still in use, and the infrastructure for Canberra's light rail would similarly be in use far longer than the 30 year period considered by the cost-benefit analysis.

"Behavioural science studies have shown that many people overly discount future returns. In the jargon this is called 'hyperbolic discounting'; in everyday language it is 'impatience'," Dr Hawkins' submission said.

"Governments, who should be taking into account the interests of future generations, should be taking a much longer term view on issues than do individuals and companies."

Dr Leo Dobes, an honorary associate professor at the Australian National University Crawford school of public policy, said the stage 2A analysis was "very poor" and failed to put forward alternatives.

An analysis should have considered alternatives - such as an O-Bahn system, which used concrete guides along designated routes for specially updated buses - as part of its assessment of light rail's benefits, he said.

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