Sydney’s three metro rail projects blow out by more than $6 billion

3 months ago 13

The cost of Sydney’s three metro rail projects has blown out by more than $6 billion due to disputes with contractors, skyrocketing construction expenses and design and scope changes, which has sparked a blame game between the Minns government and the Opposition.

As foreshadowed by the Herald, the Minns government has confirmed that its signature rail project, Metro West, is now estimated to cost between $27 and $29 billion to complete by its targeted opening date of 2032. The 24-kilometre line will extend from the Sydney CBD to Westmead.

The Metro West rail line between central Sydney and Parramatta is now forecast to cost up to $29 billion.

The government also confirmed reports by this masthead that legal claims made by the private consortium building the metro line to Western Sydney Airport might raise the project’s total price tag by more than $1 billion to more than $12 billion.

The project is already set to open 12 months late in December 2027, a year after the first flights are expected to take off from the new international airport.

Compounding the financial woes, the cost of completing the troubled final stretch between Sydenham and Bankstown of the M1 metro line has blown out the cost of what was formerly known as the Metro City and Southwest project to as much $23 billion, from a previous forecast of $21.6 billion.

The price tag of the city and south-west sections of the M1 line is now more than double the forecast cost last decade of about $11.5 billion. The opening of the south-west section has been delayed to as late as next September, two years after a 13-kilometre section of heavy rail track was closed to complete the conversion to metro train standards.

The government said on Friday that building three metro rail lines at the same time, instead of consecutively, had placed extra pressure on costs, and led to the projects competing with each other.

As a result, the government is injecting an extra $2.4 billion into the Metro West and Metro Southwest projects.

It said the extra funding was also needed after construction cost escalations, scope and design changes, and significant pressures on expenses.

Transport Minister John Graham sought to lay blame on the previous Coalition government for the latest blowouts. “Delivering major projects must be backed up with real money, not false promises like the ones left behind by the former government,” he said.

“Our detailed review has identified cost overruns, budget black holes and the infrastructure equivalent of robbing Peter to pay Paul.”

A station under construction beneath Hunter Street in the Sydney CBD for the Metro West project.

He cited a budget review of the metro projects finding that his Coalition predecessors failed to properly account for the unbudgeted cost of $540 million in enabling works for over-station developments, as well as $110 million spent on a new racecourse at Eastern Creek that left a funding gap.

In addition, contracts for tunnelling works blew out by $500 million, which the government said had not been disclosed to the public.

Coalition transport spokeswoman Natalie Ward accused Graham of attempting to “take out the trash” and said blame for the cost blowouts lay squarely with the government.

“The Minns Labor government has provided excuses, blame and denial on its failure to manage and deliver critical infrastructure for Sydney,” she said.

“Over two years ago, the Premier commissioned a metro review and none of today’s excuses were identified then. If it was so bad then, why didn’t they tell the public?”

The new baseline cost estimates for the metro rail projects come ahead of the government’s mid-year budget update later this month.

Sydney Metro chief executive Peter Regan said it was close to finalising evaluation of the next phase of large contracts to be awarded for work on Metro West, which was the largest and most complex of the three rail projects.

“[It] has now given us a very good sense as to what the full cost and the true cost of the project will be in the current market conditions,” he said.