The sunk-cost fallacy is the delusion that, if you’ve already spent too much money on an obvious dud, you might as well keep spending even more. Governments more than anybody are prone to this sort of grandiose throwing of good money after bad. It’s easy enough, after all, when it’s not your money.
One of the biggest sunk costs in Australian history is Snowy 2.0, which is quite an achievement, given the stiff competition: Kevin Rudd’s NBN, Julia Gillard’s NDIS, Anthony Albanese’s ‘Net Zero’ and more. But when it comes to digging enormously costly holes, Snowy 2.0 is in a dire class of its own.
Indeed, the most spectacular financial train wrecks we endure under the Canberra regime share a common heritage: they are born of politicians who favour the glamour of a ribbon-cutting ceremony over the tedious necessity of actually doing their homework. The NBN was birthed from Rudd’s fevered imagination without a shred of genuine cost-benefit analysis to guide it and Gillard’s NDIS was launched with the fiscal foresight of a toddler in a lolly shop, entirely lacking a plan for long-term sustainability. The difference, of course, is that a private entrepreneur playing with his own capital would have gone bust decades ago. Our masters in parliament, however, gamble with the public purse to secure ‘legacy’ bragging rights, leaving the rest of us to foot the bill for the remainder of our working lives.
The genius (just ask him) behind this specific folly was Malcolm Turnbull, whose self-regard is surpassed only by his capacity for ruinous ambition. As geologist Professor Ian Plimer recently observed regarding the project’s genesis:
‘Snowy 2.0’ was a brain fart by Malcolm Turnbull who knew he was the smartest person in the room. However, the room was full of green blood-sucking blowflies, oleaceous sycophants, activist bureaucrats and ill-educated idealogues. The Snowy 2 due diligence process took less than two years for a 27-kilometre-long tunnel 10 metres in diameter underneath Kosciuszko National Park.
The project was effectively an exercise in blind, ideological desperation. Instead of conducting rigorous geotechnical work, the powers-that-be prioritised the green dream, treating actual geological reality as an inconvenient nuisance to be brushed aside.
Geotechnical studies cost $100 million, did not provide the necessary data and could have been undertaken more effectively and cheaply using a bent coat hanger divining rod. The due diligence process was later criticised by the audit office, government reviews and even Minister Chris Bowen for inadequate geotechnical studies resulting in early design failures, trapping of tunnel boring machines and, at that time, a $12-billion cost blow-out.
Naturally, the cost has now ballooned to over $40 billion. The machines, Florence and her sisters, have been treated to a harsh subterranean lesson in geological reality that would make a mine-shaft engineer weep with frustration. It is a masterclass in how to ignore basic physical constraints in favour of a renewable nirvana that provides less power than a single coal-fired station operating at leisure.
Snowy 2 gave politicians the chance for photo ops in front of Florence, rewarded incompetent elites with egos incommensurate with their achievements and allowed grandiose announcements about building new infrastructure while established infrastructure fell apart. Known fatal flaws were ignored during a blind frantic rush to a green nirvana. The project was an uncosted ideological dream with no checks and balances resulting in a massive waste of taxpayer and consumer money. Wilful wanton waste is the never-ending story of renewables.
The only really smart option left is the exit door. But politicians and their public servant remoras are not smart people, for all their collections of degrees. Besides, no politician wants their eternal legacy to be a multi-billion-dollar hole in the ground.
We are told that Snowy 2.0 is the ‘battery of the nation’. In truth, it is a monument to the vanity of politicians who would rather set fire to a pile of other peoples’ cash than admit they were wrong. It’s time to cease the digging, shut down the machines, and consign this wretched, sinking enterprise to the history books where it belongs.
It is, quite simply, time to cut our losses and abandon Snowy 2.0 for good.
