Calls to review PPPs after Sydney light rail saga

25 January 2019 - 12:00 am UTC

An inquiry into the Sydney Light Rail has called for a review of the “effectiveness” of Public Private Partnership contracts for significant state infrastructure projects. 

 
The call to tighten up PPP contracts were among the findings of a NSW parliamentary inquiry released today (25 January) into the bungled construction of the CBD and Eastern Suburbs Light Rail, where costs have blown out by AUD 549m (USD 389.8m) to AUD 2.1bn. Litigation is underway between Transport for NSW and contractors Acciona Infrastructure over the movement of utility lines and disruptions on George Street, a major traffic artery. 
 
Chaired by the Hon Fred Nile from the Christian Democratic Party, the NSW Public Accountability Report states “serious questions have been raised in relation to the project’s timeframes and costs,” given Sydney’s first light rail has already been delayed by a year, and the March 2020 date for the trams commencing service is looking uncertain.
 
The inquiry also notes Acciona has subsequently claimed that the light rail is now likely to cost AUD 2.9bn-3bn, and now expects the project to be completed in May 2020, contrary to Transport for NSW timetable which suggests a March kick off date.
 
The ALTRAC Light Rail consortium which also includes Transdev, which was awarded the finance, design, construction, testing and commissioning PPP in 2014. Acciona’s share of the construction contract jumped from the original figure of AUD 870m to AUD 1.45bn by October 2018, the report also notes. 
 
The New South Wales Auditor General also found in an earlier report that the AUD 549m cost blowout prior to the PPP contract signing in December 2014 was due to “mispricing”and “omissions” in the business case, and predicted that costs would rise even further.
 
The project costs were higher and benefits lower than the approved business case, the AG also found, and planning and procurement did not ensure the best value outcome for the state.
 
Transport for NSW also departed from usual procedure by not requiring a preliminary business case or two early independent gateway assurance reviews, the Auditor General 2016 report also found. 
 
The report also called for an “urgent review” of all claims from residents whose properties have been found to be adversely impacted by the CBD and South East Light Rail, acknowledging residents and local business have also been significantly hit by the construction, which has essentially made parts of Sydney CBD a building site since late 2015, forcing several city retail business and cafes to shut down. 
 
Proving ongoing mental health support to affected business owners and families also features among the 20 recommendations cited in the final report, with acknowledgement of the huge personal toll the construction has taken on surrounding neighbourhoods.
 
The report also called for a full investigation undertaken into the mishandling of human remains by Acciona Infrastructure workers along the light rail construction line at Surry Hills that was captured on video and subsequently leaked to the media in October.
 
There have also been calls for Transport for NSW investigate the need for an additional stop at Wimbo Park in Surry Hills, once the light rail has been finalised, bringing the number of stops to 20, if it gets the green light.
 
The 12km light rail line will extend from Circular Quay along George Street to Central Station and through Surry Hills to Moore Park, heading east to Sydney’s eastern suburbs including Kensington and Kingsford and Randwick.