A report commissioned by a trade union calls into question the financial wisdom of the NSW government decision to have new trains built in South Korea.
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A spokesman for Transport Minister Andrew Constance dismissed the report, saying it was a waste of union members’ money.
Penny Wise and Pound Foolish was carried out by economist Jim Stanford for the Australia Institute’s Centre for Future Work.
The report was commissioned by the Australian Manufacturing Workers’ Union (AWMU) in the wake of Mr Constance’s decision to grant the contract for the new intercity train fleet to a consortium that will build them in South Korea.
The report claims the NSW government did not carry out a “comprehensive and transparent” accounting of the full economic costs of building the trains domestically versus overseas.
Instead, the report said the government simply chose the lowest-cost bidder.
“Guided by a myopic focus on choosing the cheapest option possible, the NSW government’s decision to buy 512 passenger rail cars from Korea will cause significant damage to its own bottom line – let alone to the economic and social well-being of the state,” the report stated.
Mr Stanford’s report called into question Mr Constance’s claims the successful bidder was 25 per cent cheaper than the next-best option.
He said that 25 per cent gap could be made up by state and federal tax revenue generated on economic activity had the trains been made in Australia.
“The NSW government has made this decision on a sticker price,” said AMWU NSW Secretary Tim Ayres.
A spokesman for Mr Constance slammed the report.
“This is a report commissioned by the union and written by a unionist,” the spokesman said.
“The AMWU shouldn’t have bothered wasting their members’ hard-earned funds in putting it together.
“What we’ve done is make the decision that is in the best interests of taxpayers and customers. These new trains will be more comfortable, more spacious and have features never before seen on longer distance services.”
He said NSW had the strongest economy and the lowest unemployment rate in the country.
“We’re investing record levels in infrastructure and have a number of major projects on the go,” he said.