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Audit commends light rail project delivery

By Michael Reid - 16 June 2016 36

light rail

Minister for Capital Metro Simon Corbell has welcomed the release of the auditor general’s performance report into the initiation of the light rail project between Gungahlin and the City.

The report found that Capital Metro Agency’s “governance, administrative and project management framework is sound and generally accords with better practice”.

It further stated that preparations to date had positioned the Capital Metro Agency to be able to “meet the challenges of implementing light rail in the ACT”.

“This report shows that this crucial project for Canberra is being delivered in a thorough, professional and transparent manner that is best practice and positions the project for success,” Corbell said.

“It is important to note that as contracts have been signed and financial close has now been reached that the final cost for stage one of light rail is now known and is lower than estimated in the full business case.”

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Audit commends light rail project delivery
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dungfungus 9:17 am 22 Jun 16

At least the Liberals in Western Australia have the guts to bail out of a promise when the money isn’t there:
https://au.news.yahoo.com/thewest/wa/a/31885385/max-light-rail-left-out-of-masterplan/

dungfungus 8:27 am 22 Jun 16

KentFitch said :

Masquara said :

Maya123 said :

Still no word on cost of relocating services on Northbourne Ave? Do either the government or ActewAGL even have a dollar figure on this, plus the costs of rehashing the power grid to get the tram rolling? It seems to be a scary black hole we are slowly spiraling towards the center of.

This is what the government said exactly 3 years ago:
http://www.canberratimes.com.au/act-news/200m-utility-cost-on-light-rail-20130624-2otal.html
Where is the report and where is the $200 million to be set aside to cover the contingencies?

Where are the pro-tram apologists to explain this cover-up?

I’ll bite.

“Capital Metro acting project director Glenn Bain said $200 million had been set aside for the possible relocation or strengthening of utilities and other infrastructure that lay beneath the Northbourne Avenue median strip and along other parts of the light rail route.”

Sounds to me like the cost has been included in the capital metro project.

More so when reading further in it talks about how much the track laying and vehicles will cost. Kind of explains why the capital cost component is what it is.

You did actually read the article before linking didn’t you?

Perhaps then you can direct me to the part of the Capital Metro business plan that says “relocation of services $200,000”?
And I ask again, where is the audit report?

JC 12:30 am 22 Jun 16

Masquara said :

Maya123 said :

Still no word on cost of relocating services on Northbourne Ave? Do either the government or ActewAGL even have a dollar figure on this, plus the costs of rehashing the power grid to get the tram rolling? It seems to be a scary black hole we are slowly spiraling towards the center of.

This is what the government said exactly 3 years ago:
http://www.canberratimes.com.au/act-news/200m-utility-cost-on-light-rail-20130624-2otal.html
Where is the report and where is the $200 million to be set aside to cover the contingencies?

Where are the pro-tram apologists to explain this cover-up?

I’ll bite.

“Capital Metro acting project director Glenn Bain said $200 million had been set aside for the possible relocation or strengthening of utilities and other infrastructure that lay beneath the Northbourne Avenue median strip and along other parts of the light rail route.”

Sounds to me like the cost has been included in the capital metro project.

More so when reading further in it talks about how much the track laying and vehicles will cost. Kind of explains why the capital cost component is what it is.

You did actually read the article before linking didn’t you?

dungfungus 10:10 pm 21 Jun 16

dungfungus said :

I would like to see what the ACT Auditor General has to say about the ACT Labor/Greens Govt signing the light rail contract(s) before the upcoming election, that would cost m$300-400 in the event that they are terminated (as threatened by ACT Liberals) :

http://www.abc.net.au/news/2016-06-20/cancelling-act-light-rail-contracts-would-cost-millions/7526778?section=act

In 2008 the then NSW Labor government announced the go ahead for the Sydney Metro which was a project to create a huge rail network West from Town Hall station in Sydney City which was focused on “urban densification”.
Costs were estimated at $2 billion but later revised to $5.3 billion and he project was a disaster from thereon.
In February 2010 Labor Premier Keneally cancelled the project saying “We’ve listened to the community and made a tough decision,” and pledged to reimburse tenderers and property owners for losses incurred as a result of the work that had occurred to that point. The properties were sold back for about half that they were purchased for.
At that stage $412 million had been spent on the project and the contractors were reimbursed an additional unknown amount. Industry sources suggest it would have been over $60 million which was the amount spent on the project in planning etc.
Does this sound like what our Labor/Green minority government are heading into?
The contractors don’t appear to be doing anything at the moment – perhaps they are waiting for history to repeat itself and present their invoice for “services rendered to date”.
Hope so.

dungfungus 9:42 pm 21 Jun 16

Masquara said :

Maya123 said :

Still no word on cost of relocating services on Northbourne Ave? Do either the government or ActewAGL even have a dollar figure on this, plus the costs of rehashing the power grid to get the tram rolling? It seems to be a scary black hole we are slowly spiraling towards the center of.

This is what the government said exactly 3 years ago:
http://www.canberratimes.com.au/act-news/200m-utility-cost-on-light-rail-20130624-2otal.html
Where is the report and where is the $200 million to be set aside to cover the contingencies?

Where are the pro-tram apologists to explain this cover-up?

rommeldog56 6:00 pm 21 Jun 16

I would like to see what the ACT Auditor General has to say about the ACT Labor/Greens Govt signing the light rail contract(s) before the upcoming election, that would cost m$300-400 in the event that they are terminated (as threatened by ACT Liberals) :

http://www.abc.net.au/news/2016-06-20/cancelling-act-light-rail-contracts-would-cost-millions/7526778?section=act

dungfungus 8:33 am 21 Jun 16

Maya123 said :

Still no word on cost of relocating services on Northbourne Ave? Do either the government or ActewAGL even have a dollar figure on this, plus the costs of rehashing the power grid to get the tram rolling? It seems to be a scary black hole we are slowly spiraling towards the center of.

This is what the government said exactly 3 years ago:
http://www.canberratimes.com.au/act-news/200m-utility-cost-on-light-rail-20130624-2otal.html
Where is the report and where is the $200 million to be set aside to cover the contingencies?

wildturkeycanoe 8:15 am 21 Jun 16

Still no word on cost of relocating services on Northbourne Ave? Do either the government or ActewAGL even have a dollar figure on this, plus the costs of rehashing the power grid to get the tram rolling? It seems to be a scary black hole we are slowly spiraling towards the center of.

dungfungus 6:15 pm 18 Jun 16

Just as the Blue Sky Tram will bankrupt the ACT, the “on again-off again” VFT which would bankrupt the whole country, has be finally scuppered by PM Malcolm Turnbull: http://www.heraldsun.com.au/technology/brakes-put-on-fast-train-with-no-plans-to-bite-the-bullet-on-cost/news-story/500e1f15c003ca81b507796d943cc400
While this has been the only positive thing Turnbull has done since becoming PM, it’s leadership in action.
Come on Mr Barr, show us that you can do the same thing.

dungfungus 5:31 pm 18 Jun 16

dungfungus said :

And passenger numbers don’t count for anything as the operator does not see the income from fares. These are collected by the government not the operator.

Either way, ACt Ratepayers will be tipping in more $ if the numbers don’t meet targets. So, passenger numbers “don’t count for anything” ?

I think not.

Of course, passenger numbers will not always be commensurate with fare revenue as trams are easy to travel on and evade paying unlike buses where there is some gatekeeper function by the driver.
The only way that can be controlled is to maintain highly paid enforcers (with a union EBA) which will cost heaps more than it collects, but it will happen.
And remember, most Canberrans have never travelled on these Euro-trams which are designed for standing near the doors.
Surveys have revealed that people outside Europe prefer to travel on trams, trains and busses (public transport) only if they get a seat. Don’t ask me for a “source”, look it up yourself.
In all respects, the Blue Sky Tram is going to be a spectacular failure.

dungfungus 9:14 am 18 Jun 16

chewy14 said :

greenbamboo said :

gooterz said :

From what I heard on the news this morning, the Auditor-General was not very impressed with the underlying assumptions as to the tram’s pay back rate. They found that the transport component payback was massively negative ($0.49 back for each dollar invested) & there also seemed to be some doubt regarding the size of the real estate gain. It appeared to be significantly bigger than the yield claimed for similar projects elsewhere. I understand that the govt was told to keep the Auditor General informed with more up to date figures into the future.

Do not forget that the claimed payback of 1.20 is over the life of the contract, presumably 20 years, & that equates to around 1% per annum. Far less than inflation.

If the contract was signed in AUS.. We might already be in front. If the price is in Euro’s we’re behind.

Good point!
It is almost certain that the contract for the purchase of the trams will be in Euros but we don’t know if they are being purchased outright or leased. If it is the latter than most of the leasing companies are domiciled in Europe so it will still be Euros.
In fact, this needs to be publicly known as a highly likely drop in the AUD will dramatically increase the costs as most items in the blue sky tram project excluding the rolling stock will be imported, probably even the steel rails.

If they are leased then any variation in cost will be borne by the contractor.

If they are purchased then the cost may well vary, either way too.

You have apparently seen the “Commercial in Confidence” sections of the contract, JC.

dungfungus 9:13 am 18 Jun 16

dungfungus said :

Acton said :

So if the Australian dollars tanks down to say $0.50 US, the tram will cost us more like two billion dollars?? Scary indeed. But our exports will pick up immensely, things like coal, steel, aluminium…all those industries that went broke or are being propped up by the government till the clouds go away.

Economics 1.01: Production is the result of demand.
There is no increasing global demand for commodities so our commodity exports will stay in the ground no matter what the exchange rate is.
Similarly, the lowering of interest rates has not increased the level of borrowing but it has ruined the retirement of many baby boomers.
The blue sky tram will fail whatever else happens.

It isn’t that simple, countries are always buying steel and other products. If our dollar falls against other currencies, our exports become cheaper and more marketable. Basic supply and demand is not all that defines how much we can sell, but buyers can change suppliers if they get a better price. Best go back to school.

I did say “increasing” demand so, sure, counties are still buying steel but not from us.
In fact, soon we will not have a steel industry left.
We are competing against Brazil to sell iron ore and with the opening of the enlarged Panama canal China will be sourcing most of its iron ore from that country which is worse off than us so their sale price will be cheaper. You acknowledge that buyers can change suppliers if they get a better price.
I would like to go back to school but I fear I already know more than the teachers who are seem to be totally deficient in what is going on in the real world.

rommeldog56 8:03 am 18 Jun 16

dungfungus said :

This has already been announced. There is an annual fee for running the line which is indexed through the life of the contract. Why you think it would have exchange rate variations is beyond me. The annual payment is to pay off the construction costs, which may vary over the construction period, but clearly not over the operating period. Plus the ongoing operating costs which will be in AUD anyway.

If there is an financing arrangement (which are mostly us$ or Euro based) and capital items such as the trams themselves are made OS, then there will almost certainly be exchange rate variation clauses in the contracts (which will also enshrine the exchange rate used). To think otherwise is naive. Where exchange rate variations exist, I can not see the tram consortia “sucking up” that risk/cost without building that component into the pricing. Certainly not over 20 years. Anyway, if they don’t publish the contracts, ACT Ratepayers will never know. The contracts should be made public.

rommeldog56 7:54 am 18 Jun 16

dungfungus said :

And passenger numbers don’t count for anything as the operator does not see the income from fares. These are collected by the government not the operator.

Either way, ACt Ratepayers will be tipping in more $ if the numbers don’t meet targets. So, passenger numbers “don’t count for anything” ? I think not.

wildturkeycanoe 7:20 am 18 Jun 16

Acton said :

So if the Australian dollars tanks down to say $0.50 US, the tram will cost us more like two billion dollars?? Scary indeed. But our exports will pick up immensely, things like coal, steel, aluminium…all those industries that went broke or are being propped up by the government till the clouds go away.

Economics 1.01: Production is the result of demand.
There is no increasing global demand for commodities so our commodity exports will stay in the ground no matter what the exchange rate is.
Similarly, the lowering of interest rates has not increased the level of borrowing but it has ruined the retirement of many baby boomers.
The blue sky tram will fail whatever else happens.

It isn’t that simple, countries are always buying steel and other products. If our dollar falls against other currencies, our exports become cheaper and more marketable. Basic supply and demand is not all that defines how much we can sell, but buyers can change suppliers if they get a better price. Best go back to school.

ungruntled 11:21 pm 17 Jun 16

I just seem to keep seeing more & more deception from the Barr government on this issue.

Why are they so determined to get this damn tram ? Who IS benefiting? It’s not the community, that’s for sure. Hopefully it’s not the government – unless people get too afraid to vote them out because they pushed the contract signing thru. It’s certainly not the ACT economy – whatever they may say. If it’s the developers, they’re predominently from out of town & will take any profits that MAY acrue out of town with them & most likely bring in many of their own staff.

So who?

And Mick, why are you putting forward Corbell’s spin on this very negative Auditors Report?

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