Editors: David Gration, Bruce Kingston and Scott Prasser
Publisher: Connor Court Publishing
Reviewer: David Topp
White Elephant Stampede[1] {“WES”} is an edited compendium of case studies of policy and project management failures. A total of 10 are featured and extensively analysed, though, given Australia’s long and sorry history of such examples, sufficient content for an encyclopedia exists.
We barristers learn early in our careers that, when opening cases before judges and magistrates, a prudent counsel does so in a sober and restrained way. The risk inherent in a theatrical attention-grabbing opening is that witnesses never come up to the hyped proof once exposed to the sterile and intimidatory surrounds of a courtroom. This has the effect that the presiding officer, tasked with listening to and construing evidence feels underwhelmed by the evidence actually given. Whereas the exact same evidence, foreshadowed instead in an anodyne manner during an opening, will be more likely to be received on its merits. We know to under promise and over deliver, not the other way around.
The world of politics however is another world entirely. When a project is announced, great fanfare attends, with not just the responsible minister/s present but also the Mayor/Premier/Prime Minister, as the case may be, gleefully smiling for the cameras, sod turning shovel in hand and resplendent in government liveried high-vis vests and hard hats. Need or demand for the project is as vastly over-estimated as the costs involved are under-estimated.
How else can a project get off the proverbial ground, lest the tax-paying public and ever scrutinising news media object?
Which is why we are left with the sorry examples studied in WES: the mothballed Tugun desalination plant, an integrated tree processing biomass project in Narrogin, WA, the infamous Qld Health payroll system, the 2020’s CovidSafe smartphone app and the now terminated, in infamous international circumstances, the Attack Class conversion of French made nuclear to conventional submarine program.
Ominously, WES also devotes a chapter to Olympic Games, past and future. Ominously so, because our very city is due to host the 2032 version. Brisbane bid documents estimated total revenue of A$4,941,772,000 and also estimated expenditure at, what a coincidence, A$4,941,772,000. ‘This means the net financial result will be A$0, an amazing achievement or wishful thinking, only time will tell’[2].
Barely one year after the joyfulness of the bid victory, it is clear that the wishful thinking forecast outcome has won the first gold medal of Brisbane 2032: a $1 billion rebuild of and net 8000 patron capacity increase to the Gabba, as estimated at the time of bid in mid-2021, is now a whopping $2.5 billion.[3] To say nothing of the non-financial costs also inherent in demolishing and reconstructing a stadium hemmed in by notoriously busy trunk routes, Stanley and Vulture Streets, plus the permanent loss of the East Brisbane Primary School. Montreal, Barcelona, Nagano, Athens, London and Rio de Janeiro were all cited in WES as past Games which vastly exceeded their costs estimates: a whopping 352% in Rio’s case[4]. Tokyo 2020/21 was also a financial disaster, though, in fairness, its enforced 1 year coronavirus induced postponement was always going to cause profoundly negative financial results. Little wonder then that Brisbane’s ‘victory’ in being awarded the 2032 Games was unopposed, dare we say, the Olympian version of a Magistrates Court default judgment? Hopefully, the final result will be worth more than the mere piece of paper that most lower quantum default judgments, notoriously, are. However, given the current Gabba project costing debacle, one ought not hold one’s breath.
George Washington is universally known as the first ever president of the Republic of the United States of America. Less well known is the story of his action as a boy in cutting down his father’s favourite tree. This vignette is cited in WES not for what readers may infer was a ferocious remonstration with attendant physical injury inducing corporal punishment, as was de rigeur during the far less enlightened yesteryear of George’s childhood. Rather, it was cited for the polar opposite in reactions: upon George’s confession, the father’s remarks were: ‘Run to my arms you dearest boy … glad am I, George, that you killed my tree; for you have paid me for it a thousand fold’[5]. The moral of the story was not about the child, George’s honesty. Rather the polar opposite to expectations reaction of his father was because ‘… harsh reactions to mistakes encourage dishonesty. Oppositional politics is usually rather less kind than was George’s father, and so a basic accountability mechanism in politics encourages less than frank disclosure of mistakes, and therefore inhibits policy learning’[6].
The only aspect of the above quote this reviewer disagrees with is the ‘usually’ epithet. The oppositional nature of our polity means that oppositions are always, not usually, less kind than George’s father. Scathing in fact, not merely less kind.
Moreover, policy learning is not the only victim of adversarial politics, with its concomitant need, obligation even, for mistakes by our political leaders to be exponentially magnified and scolded. The other loser is efficient usage of public revenue. Unlike many a discussion that emanates amongst the bar, the solicitors’ branch and clientele about the need to stop throwing good money after bad and, thereby, look to settle litigation commercially during interlocutory stages rather than running all the way to trial, settling is not the political way. Because to do so is tantamount to admissions of failure and incompetence. This is why well north of 90% of litigated cases settle and, moreover, settle wholly out of the public eye. For the few that are reported, non-disclosure clauses allow both parties to save the face that our politicians cannot.
This phenomenon is described in WES as ‘sunk-costs syndrome’: ‘…. too many projects suffer from the classic ‘sunk-costs’ syndrome, whereby “poor choices will be persisted with, rather than abandoned” because of the level of resources and political reputations invested in a particular project [, and as]… a matter of saving face and political reputation’[7].
Hence the broad thesis of WES: the saving of face and political reputation – both of which are admittedly of extremely high value in the bear pit that is politics – is the reason why so many white elephant projects exist. Because, once the expenditure of public money is embarked upon, it is more politically palatable to compound the spending many times over by at least finishing a project than staunching the haemorrhage by discontinuing.
Though not quoted in WES, the former pet prime-ministerial project of Malcolm Turnbull, Snowy 2.0, is the perfect exemplar. The basic premise of Snowy 2.0 is to pump water uphill when solar generation is at its peak during the middle of the day for storage until times of high demand when that same water can roll downhill, spin the turbines and inject consequently high remunerative power into the grid during peaks. Not therefore a generator per se: rather a battery. Costed upon announcement at a mere $2 billion and scheduled for completion by 2021,[8] 2021 has come and gone with the project anything but complete. An October 2019 estimate for completion at the end of 2027[9] was pushed back by a further 2 years to the end of the decade due to setbacks, costs overruns and difficulties with tunnelling equipment and materials sourcing[10]. These announcements of May 2023 follow an earlier admission by the project owner, Snowy Hydro, of a costs blowout of ‘approximately $5.9 billion’, with potential for another $2.2 billion over and above that from additional claims being made by its contractors[11].
It is of course an existential dilemma for policy makers: where is the ‘sweet spot’ where the never forgiving taxpaying public will accept that cutting losses and wholly terminating a costs blown out incomplete project is better than continuing to throw more money at a ‘seemed like a good idea at the time’ concept?
We do not know. What seems more certain is that there is really no such value. Because the political costs of discontinuing seem too high. Even for a new government not tainted by a white elephant project. The May 2022 ascension of Anthony Albanese and the ALP to government, federally, with consequential ability to blame the predecessor government for spawning Snowy 2.0 and terminate the entirety of the project, accordingly, was another opportunity forfeited. Rather, Snowy 2.0 was doubled down upon. The subsequent stalling, literally, of the construction process – Florence, one of three tunnel boring machines, has only excavated a tiny 150 metres of a 17 kilometre headrace tunnel before being ‘paused’[12] – proving to be a stark metaphor.
WES is a highly thought-provoking work, filled with numerous analyses by dedicated chapter writers who bring genuine and specific experience to bear upon the examples essayed in their chapters. Writing styles necessarily differ, with the intricacies and at times esoteric project details making some chapters easier reading than others. However, the editors’ aptly titled ‘Lessons from the Stampede’ final chapter, clearly and succinctly, wraps up the work. WES is a compendium which frankly ought to be required reading for each and every member of the nation’s parliaments at local, state and federal levels and also for those of us in the profession as a salutary lesson not to cause cases we are tasked with to lurch, similarly, into white elephant territory.
Disclosure: The reviewer is presently in discussions with WES’s publisher, Conner Court, for publication of a book of his own.
[1] White Elephant Stampede [Eds: David Gration, Bruce Kingston and Scott Prasser], Connor Court Publishing 2022
[2] WES, at page 203
[3] Zach Hope ‘Massive Gabba rebuild bill could now fall squarely on Queensland taxpayers’ The Brisbane Times, January 18 2023, 8.49pm
[4] WES, at page 195
[5] WES, at page 5
[6] WES, at page 11
[7] WES, at page 215
[8] Bruce Mountain ‘Snowy 2.0 will not produce nearly as much electricity as claimed. We must hit the pause button’ The Conversation, October 15 2019 6.10am
[9] Stephen Rice ‘New government’s priority to keep lights on in NSW’ The Australian, 24 April 2023
[10] Olivia Caisley, Sky News Australia telecast, 3 May 2023
[11] Sophie Vorrath ‘Snowy finally confirms pumped hydro project over budget and behind schedule’ RenewEconomy.com.au 7 November 2022
[12] Ted Woodley ‘Time to cut our losses and forget Snowy shambles’ The Australian, 5 May 2023, at page 5
