Decade in power: How risks are rising for Sydney’s mega rail projects

SMH - Matt O'Sullivan  -  March 22, 2021

About 30 metres beneath the oldest part of Sydney, the newest addition to the harbour city is taking shape, carved out of sandstone. A massive vent pumps air from the surface into the underground cavern, which will be reshaped into a fully fledged train station over the next few years. It will form part of the second stage of a metro rail network stretching across Sydney. “We’re building an entire network,” Transport Minister Andrew Constance declares. “It’ll drive us out of recession.”

Transport Minister Andrew Constance at the Barangaroo station site

The first major step towards a metro rail network was made almost a decade ago. Weeks after the Coalition was swept to power in March 2011, the then transport minister Gladys Berejiklian decided to build a metro line carrying single-deck driverless trains to Sydney’s north-west. It was a break from her promise before the election to build the line to Rouse Hill as a regular extension to Sydney’s double-deck train network.

“It was definitely the way to go – I was certainly a backer. It was the latest technology, and we felt that Sydney deserved it,” recalls Les Wielinga, the head of the state’s main transport agency between 2009 and 2013. “There was a clear community demand for it. They felt that they had been short-changed by a number of governments in the past.”

A giant shaft and air vent to the site of the Barangaroo station 30 metres below the surface

Almost two years after the opening of the Metro Northwest line, the Coalition government faces growing challenges as it builds much larger and more complex rail lines under the heart of the city. Risks are compounded by a boom in major infrastructure projects across the country as governments seek to build their way out of the pandemic-induced recession.

“There are not enough competitors for these very large projects. They are getting bigger and more complicated,” Wielinga says. “There is a high risk that time and cost will go over the current budgets because the market is not there in the sense that there are enough competitors.”

The second stage of Sydney’s emerging metro network will comprise a line from Chatswood, under Sydney Harbour to the CBD and onto Sydenham and Bankstown. Internal documents have shown the cost of the Metro City and Southwest line, which is due to open in 2024, risks blowing out to as much as $16.8 billion, more than $4 billion above what had been budgeted.

Yet it is the third stage from central Sydney to Parramatta that is the most costly. Unlike the first two, the government has never put an official price tag on Metro West, which will be built in two parts because of its size.

The Transport Minister says cost estimates for the 24-kilometre line have not been released because the government is still working through the scope of the project. “It’s a bit hard to put a final cost estimate for internal budgeting purposes on a project until you actually have that work complete,” Constance says. “Anyone can pluck a number, which is why I’ve been very disciplined around cost ranges because that helps with competitive tension.”

More than four years after committing, the government is still to finalise parts of Metro West, including a turn-back for trains beneath central Sydney and the exact location of a CBD station. Constance says the train turn-back has to be “decided in the next six to 12 months”.

Internal forecasts have estimated the second stage of Sydney’s metro rail network will cost up to $16.8 billion

Leaked internal documents have revealed Metro West could cost almost $27 billion and be opened as late as 2033. However, the government is sticking publicly to its schedule to open the line in 2030. This is, however, later than its original time frame to open in the “mid-to-late 2020s”.

Metro West has also been scaled back from what senior transport bureaucrats planned several years ago. Behind closed doors, they had been working on plans for the underground line to extend as far east as Zetland, which is part of the Green Square residential precinct, and possibly include a second station in the CBD. But those plans were ditched by late 2019, as NSW Treasury pressured Sydney Metro, the agency delivering the projects, to rein in costs. The prospect of a metro train station at Zetland, which Constance concedes is an example of a transport failure because the highly populated area lacks a mass-transit solution, is a long way off.

The challenges building the biggest public transport project in Australia come amid sudden departures from the top of NSW’s transport bureaucracy. Rodd Staples, regarded as the architect of the metro lines, was fired as Transport for NSW secretary in November without cause, six weeks after a positive performance review with the Premier. Jon Lamonte, the head of Sydney Metro, quit last month for a job to run a New Zealand water utility.

Rodd Staples, regarded as the architect of Sydney’s metro rail lines, was removed as Transport for NSW secretary in November

Labor transport spokesman Chris Minns says a leadership vacuum could be costly for taxpayers. “It’s probably the worst time in the last 10 years to be unilaterally sacking your Transport secretary with so many projects on the run. You are dealing with very savvy private sector operators that move around the world, and experience can save hundreds of millions of dollars,” he says. “We would like to see more transparency from the government in relation to these multibillion-dollar projects – it is unclear what they will cost and it is unclear when they will be completed.”

But Constance refutes suggestions of a leadership vacuum and says he is on the cusp of appointing a Transport for NSW secretary. “We’ve got competent people in our agency and the beauty is that the agency’s dependency in terms of its direction is not down to two people,” he says.

Regardless, the bureaucracy faces ambitious time frames. The state government – in concert with the Commonwealth – has committed to build an $11 billion metro line from St Marys to the new Western Sydney Airport at Badgerys Creek by 2026, in time for the first planes taking off from the curfew-free airport.

Even before earth-moving equipment and tunnel boring machines start, the justification for the airport line has been savaged by Infrastructure Australia, which has warned the cost will far outweigh the benefits. The airport line is forecast to deliver 82 cents in benefits for every dollar spent building it, compared to $1.34 and $1.70 in benefits for every $1 spent constructing the Metro West and the City and Southwest lines respectively. A risk is that any blowouts in the budgeted costs of building the lines will further erode their forecast benefits when compared with their cost, at a time when the long-term consequences of the pandemic on travel demand are unclear.

The Grattan Institute’s transport and cities program director, Marion Terrill, is urging the state government to press pause on its mega projects. “It is a time of high uncertainty, so forging ahead with these projects that had been predicated on strong population growth doesn’t seem to make sense. The other thing we don’t know is whether these changing patterns of work and travel [due to the pandemic] ... are going to be sustained long term,” she says.

“Even before the pandemic, people were starting to talk quite a lot about the ability of contractors to do the work, and about a shortage of materials and equipment. The borders are closed, and everyone is competing for a set pool of labour, particularly specialist labour, which will bid up the price.”

If the confidential government estimates are realised, the capital cost of building Sydney’s metro rail network is on track to surpass $60 billion.

Chris Lock, a former deputy director-general of Transport for NSW’s projects division and who oversaw the delivery of the Epping-to-Chatswood rail link and the South West Rail Link, says COVID-19 and border closures have constrained the ability to get resources and specialist staff for large projects, but he believes the infrastructure sector has been “remarkably resilient and adaptable”.

“You can debate things [such as building a heavy rail or metro line] for years and years and never deliver anything. The role of delivery agencies and contractors is to deliver the infrastructure,” he says. “[The projects] are large, they are complex and complexity brings with it a whole range of management issues: large numbers of stakeholders, complex design and different interfaces, and large numbers of subcontractors and employees.”

A decade after securing power, the Coalition has made clear it will not press pause on rail projects which it has cast as central to plans to revive the economy. “Public transport into the future is going to come back. It will come back very strongly once the vaccine is rolled out,” Constance says.

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