Transportation Planning Casebook/Brisbane Airportlink (M7) toll road

Summary
Airport link (M7) is a toll road north of Brisbane designed to accelerate traffic between Brisbane Airport and the Brisbane CBD. It is 6.7 kilometres in length, the vast majority of which is tunneled. It connects Clem7 and Legacy Way Tunnel at the end near the Brisbane CBD, and East-West Arterial Road at the end near the airport, with a branch to Stafford Road in the middle.

Airport link is equipped with world-class safety features include variable speed and message signs, advanced fire safety systems and cameras automatically detecting variations in traffic flow. When drivers choose to pass through Airport link (M7), they will avoid up to 14 sets of traffic lights and reduce their travel time by up to 88%.

Therefore, Airport link (M7) is expected to greatly accelerate the movement of people and goods between Brisbane CBD and the airport, boosting the development of various local industries. However, the project faced significant challenges during construction and operation due to a series of financing issues with the general contractor, BrisConnections.

Funding and Financing
BrisConnections was an Australian infrastructure company that was established to build and operate the Airport Link toll road in Brisbane, Queensland. The company went bankrupt in 2013 due to several financing and funding issues. This includes relying heavily on debt financing to fund the construction of the Airport Link. The company raised AUD 3 billion in funds through the issuance of stapled securities (a combination of shares and units in a trust). Most of the funds raised were in the form of debt, which meant that the company had a significant debt burden that BrisConnections struggled to manage.

Moreover, the construction costs for the Airport Link were higher than initially estimated, which put further strain on BrisConnections' finances. The project was initially estimated to cost AUD 4.8 billion but ended up costing AUD 5.6 billion, of which 70% was accounted for the construction cost while 30% was for the interest during construction. The risks associated with the construction stage were largely allocated to BrisConnections. The construction of the toll road involved significant risks, including cost overruns and delays. The issues encountered during the construction of the toll road had delayed the project completion that resulted in cost overruns.

BrisConnections was listed on the Australian Securities Exchange (ASX) from 2008 to 2013. The company's performance on the ASX was affected by a range of factors, including the global financial crisis, lower-than-expected traffic volumes, and high construction costs. BrisConnections initially performed well, with its share price rising to a peak of around AUD 1.00 in mid-2009. However, the company's share price began to decline as it became clear that the toll road was not generating the expected revenue. By late 2010, BrisConnections' share price had fallen below 10 cents. In February 2013, BrisConnections entered voluntary administration, and its shares were suspended from trading on the ASX. The company's assets were subsequently sold, and its debt was restructured. BrisConnections' failure was one of the most high-profile corporate collapses in Australia in recent years. The company's failure highlights the challenges associated with large infrastructure projects and the importance of effective risk management and financial planning.

Given the foregoing failure of the BrisConnections, there have been not much of financiers and contractors that invest on PPP toll road projects in Australia. There were policy interventions that the Department of Treasury and Finance Victoria had introduced in 2012 and 2013 to improve the viability of investing on PPP projects. This includes ensuring that the risk associated with the project in terms of the design, demand, construction, financing, among others, are allocated such that the party, who can best control the risk and/or its associated consequences, is appropriately identified. However, these policy interventions varied greatly between states. Thus, there is a need to adopt a uniform PPP guideline to lessen policy fragmentation at regional level. The comparison of risk allocation of toll roads in Queensland can be seen in the image.

Toll Fees and Structure
The toll road was also subject to a range of policy issues related to toll fees and tolling structure. One of the key policy issues related to the tolling of the Brisbane Airport Link Toll Road was the level of toll fees charged. The toll fees were set by the Queensland Government, and there were concerns that the fees may be too high, which could discourage use of the toll road. Another policy issue related to the tolling of the Brisbane Airport Link Toll Road was the tolling structure used. The tolling structure for the toll road was an electronic tolling system, which required users to have an electronic tag installed in their vehicle. There were concerns that this system could be complex and confusing for users, particularly those who were unfamiliar with electronic tolling systems. In connection with the tolling structure issues, there were also concerns about the equity of the tolling system used on the Brisbane Airport Link Toll Road. Some stakeholders argued that the tolls would disproportionately impact low-income users who could not afford to pay the toll fees or purchase an electronic tag. The current toll fees and charges in the Airport Link Toll Road is summarized in the thumbnail.

Traffic Demand Forecast
One of the weaknesses of toll roads implemented under public-private partnership (PPP) is the risk of traffic demand forecasting error during the planning stage of the project. Toll roads that experienced errors in their traffic demand forecasts resulted in financial failure and worst, bankruptcy and the eventual turn-over of the infrastructure to the government to salvage its operation .In the case of the Brisbane Airport link (M7) toll road, the toll road project failed to meet the forecasted traffic in year 4 of its operation that started operation in 2012. As can be seen in the image below, the forecasted traffic by Arup (i.e., the global engineering and design group that built the Sydney Opera House and the consultant for the Airport link toll road) at year 1 of operation was estimated at around 190,000 vehicles. However, the actual traffic recorded at year 1 was around 50,000 vehicles, which was only 26% of the forecasted traffic. The huge gap between the forecasted traffic count and the actual traffic count occurred commencing from the start of operation in 2012 until 2016, as illustrated in the image. Given the wide margins of traffic forecast error, the revenue gained from the airport link toll road was insufficient to service debts incurred for the construction of the project.

This instance of forecasting error in airport link toll road would require a thorough re-evaluation of the financial feasibility of the project. This also pushed the government to make necessary policy changes that would mitigate the demand risk of undertaking PPP toll road projects. Moreover, the government acknowledged that the demand risk associated with implementing toll road projects through PPP should be shared among the government, the private bidders, and other relevant project entities. This is considering that indiscriminately allocating full demand risk to the private bidders is found to be unsustainable.

As a result of the financial failure of the airport link toll road, Arup settled a AUD 2.2 billion lawsuit due to the allegation that the company made an error on the airport link toll road’s traffic forecast. The money will be distributed to the lenders of the project.

Economic Benefits
The policy issues related to the economic benefits of the Brisbane Airport Link Toll Road include the overly optimistic and overstated in the cost-benefit analysis that led to poor investment decisions. In connection with the traffic forecasting error that was made by the Arup Consultant, the toll road project failed to reach the forecasted traffic that led to overestimation of toll revenue and overestimated economic benefits. The economic benefits considered in the toll road project were travel time savings, vehicle operating costs, accident savings, environment and externalities. These benefits used the overestimated traffic demand forecast, specifically as one of the parameters in the computation as input to the cost-benefit analysis.

Cultural Heritage
The construction of the Brisbane airport link generated significant attention and opposition from local communities; regarding the possible disruption to cultural sites through which the project covers. The corridor of the airport link intended to consist of both road and tunnel infrastructure which would require cut and cover construction techniques. The construction activities would likely impact regions including:


 * Southern Connection: Bordered by Campbell Street in Bowen Hills and the corner of Federation Street and Lutwyche Road, Windsor.
 * North-western Connection: Area between the corner of Lutwyche Road and Isedale Street.
 * North-eastern Connection: Area between bored tunnel in Kalinga and the East-west connecting corridor around Sandgate Road.

These areas contain sites of local heritage for the community, including but not limited to  local centres, religious sites, and indigenous grounds.

The Queensland Government were required to abide by both national and state legislation dictating their construction activities. At a national level abiding by the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 and the Australian Heritage Council Act 2003. At a state level, Queensland established strong cultural heritage compliances which encompass a provision of the ACH Act, an approved CHMP, native title agreement or another agreement with an Aboriginal party and Duty of Care Guidelines to the Aboriginal Cultural Heritage Act 2003.

The nature of the impacts presented from the construction of the airport link to cultural heritage were found to be from the vibration and settlement causing ground integrity problems, visual impacts to the cultural aesthetic and the direct impact of any cultural sites’ removal and/or destruction. These impacts would be managed to as much of a degree through governmental cultural heritage management plans and investigations.

From assessments produced by ARCHAEO Cultural Heritage Services, their goal to preserve cultural heritage wasn’t absolute. The airport link’ partial impact is seen on the portion of Lutwyche Road between Norman Avenue and Kedron Brook. To accommodate the corridors into the confined space, loss of built environment including the PCYC Building on the western side of Lutwyche Road between Norman Avenue and Kedron Brook would be deemed “unavoidable”.

Excessive Noise
At the time, the project size was garnered as one of the largest construction projects in Australia. Concerns regarding the noise generated were associated with the construction activities below:


 * Daytime construction near a receptor property near major or minor roads influencing traffic flow.
 * Night-time noise near a receptor property classified as residential as per NIAPSP (Noise Impact Assessment Planning Scheme Policy)

This contributed to necessary measures to meet established noise goals for noise management. The primary concerns for the KWRA (Kalinga Wooloowin Residents Association Inc.) were with the ancillary to and necessarily associated with the Project’s construction work.

Furthermore, specific complaints were submitted by areas of Bowen Hills put emphasis on the operational noise, Galway Street Windsor regarding noise barriers for construction, and Kedron State High School regarding the construction noises’ impact on the student learning environment. The location of ventilation station near the end of alma Road at Kalinga Park with the subsequent traffic generated raised concerns of the operational noise.

The term excessive noise lacked a clear definition from CG (Coordinator-General) accepted prior to the commencement of the project, contributing to difficulty in regulating noise from the construction activities. Therefore, construction activities during night-time surface works may have required longer construction times and greater costs to achieve.

To address and identify noise complaints, reactive monitoring was chosen by DERM (Department of Environment and Resource Management). However, complaints were received that DERM were unable to perform effective reactive monitoring in compliance to the noise goals established. A likely cause could be the procedures in place requiring several parties if the complaint wasn’t made correctly; as detailed by Officer B from DERM in The Airport Link Project Report.

“when a complaint came to DERM that had not been raised with TJH before, he would contact TJH and ask the environmental manager to investigate the matter and report back to him.”

Narrative
This section covers the history, design, construction process, operation, and impact on the surrounding community of Brisbane Airport link toll road.

Project Background
The project was initiated by the Queensland Government in order to relieve traffic pressure around the Brisbane city and airport. Thiess and John Holland Group were responsible for the design and construction collaboration of the project. The main reason for siting the project was to provide a fast, smooth link to the Brisbane CBD and Brisbane Airport, while connecting to other major roads.

Design & Build
AirportlinkM7 is a 6.7km tunnel in Brisbane that connects Clem7 and the Legacy Way tunnel to the Airport. Brisbane's city centre and northern suburbs are characterised by a densely populated environment. The design and construction of this transport solution represents one of Queensland's great projects.

During construction, contractors face challenges with geological, hydrological, and urban infrastructure constraints. Creative engineering techniques and tunnel boring machines from Germany were used to successfully complete the tunnel. Specific construction processes, including but not limited to:

·       November 2008-The Premier participated and announced the start of construction of the project.

·       December 2008-Drilling and blasting excavation work begins in Bowen Hills.

·       March 2009-Roadheader start tunnelling at the Truro Street site which is the midpoint of the tunnel.

·       June 2009-Roadheader starts tunnelling at Kedron.

·       Mid 2010-First TBM (Tunnel Boring Machine) starts tunnelling from Toombul.

·       Mid 2010-Second TBM starts tunnelling from Toombul heading west toward Lutwyche

·       Early 2011-TBMs removed from tunnel shaft at Lutwyche.

·       Late 2011-Airport roundabout upgrade programme completed.

·       Mid 2012-Airport link road and toll system scheduled for completion

Safety & Environment
AirportlinkM7 contains world-class safety features including variable speed and message signs, an advanced fire safety system and cameras for automatic traffic detection.

The toll road is monitored 24 hours a day, 7 days a week. It is ensured that the equipment and maintenance of the roads are checked in a timely manner. The tunnel also measures the height of vehicles and warns and suggests diversions for over-height vehicles. In terms of the environment, the air quality is checked both inside and outside the M7 tunnel. It is ensured that the air quality of the environment is all up to standard.

Social & Economic
The AirportlinkM7 has a positive social and economic impact on the surrounding communities and the city of Brisbane overall. Firstly, it has improved transport efficiency by reducing travel times from the city to the airport. Secondly, it has created a large number of jobs during construction, which has benefited the local economy. Statistics show that when using the AirportlinkM7, drivers will avoid up to 14 sets of traffic lights and reduce their travel time by up to 88%.

Fee Policy
The AirportlinkM7 uses an electronic toll collection system to collect tolls. The tolls vary according to the type of vehicle and the distance travelled. The tolls can be found on the Linkt website.

Discussion Questions

 * 1) Public-Private Partnership (PPP) projects are now very popular in many countries. What is the performance of both parties in this case study? Is this approach effective?
 * 2) With the information you have learnt about the policy issues the Brisbane Airport link faced, if you were the project lead, how would you prioritise the issues and why?
 * 3) According to the Australian Shareholders Association (ASA), they considered the Brisbane Airport Link as the “biggest construction project disaster in recent history”. Do you agree with this statement?
 * 4) Do you believe the intended benefits of the Brisbane Airport Link justified the drawbacks associated with the project?
 * 5) As a policy maker, what would you have done differently with the Brisbane Airport Link?