Red Rag

The cracks are starting to appear in the Coalition over Colin Barnett’s unfunded, unconditional commitment to Tenix’s back-of-the-envelope canal proposal. Barnett says he doesn’t care how much the canal costs:

LB: So, what happens if somebody comes in and says, well it’s really 3.6 or hang on a minute, it’s actually 4.5 billion? … At what point would you bail out?

CB: Well I’m not going to bail out, Liam.

As I mentioned before, Barnett has effectively guaranteed cost blowouts. You don’t tell someone you’re prepared to pay double or triple their initial estimate and expect them to keep costs to a minimum. Tenix are in this to turn a profit, and Barnett’s naive commitment to a grand vision is music to their ears.

Nationals leader Max Trenorden is not quite so stupid. Although he says a feasibility study is “just a waste of time” — tell that to Peter Costello — he still wants to put a lid on the costs. He told the Sunday Times that water price would be the deciding factor, and the project wouldn’t go ahead if it cost more than $1.20/kl. Barnett wouldn’t comment on that limit, except to say, “I’m not putting any price parameter on it.”

John Quiggin suggests a more realistic price estimate would be at least $2/kl. He points out that Treasury says the job will cost two or four times the $2 billion Tenix claims, leading to a water price of $6.50/kl. Peter Cullen, who heads up the Prime Minister’s team of water experts, says a price of $5/kl would not be unrealistic.

By setting a limit of $1.20/kl, is Max Trenorden trying to kill Colin’s Canal?