20 March 2024

Liberals claim 'true costs' of light rail Stage 2A three times what was promised, figure rubbished by govt

| Claire Fenwicke
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Artist's impression light rail stage 2A

Andrew Barr says the Opposition has included projects not part of the capital costs to come up with the $1.46 billion price tag for light rail Stage 2A. Image: Artist’s impression, ACT Government.

The Canberra Liberals have accused the Chief Minister of not being upfront about the “true costs” of light rail Stage 2A.

Opposition Leader Elizabeth Lee claimed answers from Andrew Barr to some questions on notice, taken during the budget review committee inquiry, revealed the anticipated total cost of Stage 2A was more than $1.46 billion.

She labelled the number “astronomical” when compared to the almost $577 million price tag previously announced by Mr Barr.

“The total cost of delivering Stage 2A is almost three times what Andrew Barr said it would cost. It will cost Canberra taxpayers almost $1 million per metre of track,” Ms Lee said.

“That is equivalent to all Canberrans paying no rates for almost two years.”

Breaking down the numbers, the various pockets of money are:

  • $52.2 million for early planning and design
  • $129.8 million for raising London Circuit
  • $265.4 million for supporting Stage 2A delivery
  • $149.7 million for new vehicles, depot expansion and retrofitting to enable wire-free operations for Stage 2A
  • $576.8 million for capital expenses
  • $168.2 million for maintenance and operation costs
  • $124 million for interest costs.

She said this also brought into question the true contribution from the Commonwealth.

It was previously announced the Federal and ACT Governments would split the cost of this stage 50/50, which meant the Commonwealth was tipping in $288.5 million.

Ms Lee said when looking at the $1.46 billion cost, that meant in reality the Federal Government was contributing less than 20 per cent.

“Canberrans should be very concerned about the true costs of this project and the impact this will have on the Territory’s skyrocketing debt, which will reach over $18 billion in the forward estimates, costing the ACT almost $2 million a day in interest repayments alone,” she said.

“And the worst part of this revelation is that once again, we see Andrew Barr not being upfront in the budget papers about the astronomical hit to Canberra taxpayers’ hip pockets.”

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Shadow Transport Minister Mark Parton said this made it clearer why the ACT Government wasn’t giving any costings for the longer and more complex Stage 2B.

“The figures we are now looking at for Stage 2B are mind-blowing and the Labor-Greens government must tell Canberrans how much the tram to Woden will cost before the election,” he said.

“This project is madness … The Canberra Liberals are committed to providing a transport network that is cheaper, faster, greener and will get Canberrans where they want to go when they want to get there.”

The Canberra Liberals have claimed their own calculations have put the total cost of light rail Stage 2B at more than $4 billion.

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The ACT Government has hit back, accusing the Opposition of manipulating the numbers.

Mr Barr said it wasn’t fair to characterise the $1.46 billion as the overall cost of Stage 2A, and that his government hadn’t attempted to conceal the project’s full costs.

“There are no ‘extra costs’ identified … all costs are fully accounted for and published in the Budget,” he said.

Mr Barr disagreed with lumping some of those costs together to come up with the $1.46 billion figure, such as the Raising London Circuit project, which is an enabling project for light rail Stage 2A and not part of the transport network itself.

“It has additional benefits including bringing the city to the lake, unlocking more land for housing, commercial, retail, hospitality and hotels,” he said.

He explained the new light rail vehicles and expanded depot weren’t just for Stage 2A but would also support the delivery of services in Stage 1.

“The new light rail vehicles aren’t going to run just from Alinga Street to the lake and the expanded depot isn’t going to service light rail vehicles that only operate on the Stage 2A line,” Mr Barr said.

He said the money he had previously announced was always for the capital costs, and that the Opposition had also failed to acknowledge “significant offsets” to the overall project costs, including the Commonwealth’s contributions to construction costs and relevant land sales along the Stage 2A route.

“All this shows is that some things never change with the Canberra Liberals.”

Given the current status of the project, Mr Barr’s confident the costs won’t substantially increase, however he noted “unforeseen costs” were always a risk with the construction of major infrastructure projects.

He gave assurances these potential risks were factored into planning for all infrastructure projects.

Mr Barr’s also confident Stage 2B will continue as planned.

“The only risk to the viability of Stage 2B is a Liberal Government in the ACT.”

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Leon Arundell10:43 pm 01 Apr 24

The Auditor-General’s Report 9 of 2021 revealed that the government estimated that stage 2A would incur $23 million of development costs and $162 million of capital cost. Even if we add in the estimated $82 million of operation and maintenance costs, $1.46 billion is more than five times the government’s estimated cost.

devils_advocate10:17 am 02 Apr 24

Presumably they didn’t price in the inconvenience factor of all the road closures, traffic diversions etc to accomodate all the roadworks

peturbed_but_pretty10:43 am 02 Apr 24

which one is correct though?

Despite Barr’s folly, people still keep on voting Barr back in. I can’t figure it out unless it is simply that the libs do not appear to have any stand-out talent.

What barr is saying, they didn’t include all the extra costs for stage 1. Why do it for stage 2.

Raising london circuit didnt cost anything as they stole from projects in the rest of Canberra to pay for the tram. So the budget is the same, but the rest of us have to suffer under this crazy government.

HiddenDragon8:14 pm 20 Mar 24

“Mr Barr’s also confident Stage 2B will continue as planned.

“The only risk to the viability of Stage 2B is a Liberal Government in the ACT.”

Or a federal Labor government which crab-walks away from its undefined commitment to Stage 2B when the true costs emerge and the 50-50 funding split which Barr has effectively made a condition of Stage 2B proceeding is too high a price for a stretched federal budget to justify (when the same money could buy far more votes in crucial marginal seats elsewhere in the country).

devils_advocate7:20 pm 20 Mar 24

The costs are raising London Circuit and additional light rail storage depot?

So basically he’s conceding that Lee is 100% correct

These are entirely costs that would not be incurred but for 2A and properly included in the cost base

Also any value uplift of land is properly excluded, according to the infrastructure department

What a joke of a “government”

My brother in law complained that his small building business lost 3 workers to the much higher wages that Light Rail stage 1 paid them for simpler work.

Yes that’s great for the workers but not good for Canberra based construction companies fighting for limited skilled workers. Not good for the cost of doing building and construction or the balance of the economy in Canberra either.

devils_advocate9:52 am 21 Mar 24

Well not really.

There are two impacts of the scenario you describe.

First as you point out is that the market clearing wage for those trades has now increased, thereby increasing your B-I-Ls cost base.

However at the same time the reallocation of those scarce trades has now reduced the supply to his target market. All else being equal there is now fewer trades to work on available jobs.

Your BIL will be able to select from a greater number of more profitable jobs (moving up the supply curve, price increases) and increase his prices to partly or wholly offset the cost increases to his labour inputs.

Overall when wages increase in response to changes in demand I consider it a good thing.

Trevor Willis6:04 pm 20 Mar 24

ALL Canberrans are in for a very rough and expensive ride that will benefit very few of the population. Barr should have never started this shemozzle and should suffer the consequences in the next election. Unfortunately whoever takes over has this load to carry

It is complete absurdity to attempt to quantify this small piece of the network in isolation. It needs a “helicopter” over the whole completed network before true judgements can be made.
In any case, if you dont proceed with LR, what do you substitute it with? More buses people won’t catch, or the failed trackless tram ?

I agree with Mr Barr that you can’t add all the Libs have included. But at the very least you can add to the $577 million base construction contract another + $52 million for planning and design; + maybe half of the $129 million for raising London Circuit; + $265 million for supporting Stage 2A delivery. That’s $850 million for 1.7km of light rail track.

Wowsers that’s a lot of money for very little benefit. No wonder the Auditor General had concerns about the extension.

so if I buy a house or a car, then I should only worry about the initial purchase cost and not the ongoing costs by Barr’s logic?

Oh dear….. the ACT Liberals mimicking ‘creative accounting’ as ordered by their federal masters!. Maybe we should move back to ‘horse and buggy’ days!!!!!!

It would be a lot cheaper and more efficient than Bars train set.

Yes the only choice for transport infrastructure is between light rail or a horse drawn carriage.

As for “creative accounting”, yes that’s exactly what the government is doing by obscuring the true costs of constructing and running the light rail system.

Amanda Kiley9:15 pm 20 Mar 24

Creative accounting is all Barr has. He misplaced a $380m deficit in his latest budget – if that isn’t creative accounting I don’t know what is.

Going to be a lot more than that in ongoing extra fuel costs for every single motorist that has to stop at the soon to arrive red traffic lights. Cost shifting and pollution causing at it’s finest.

This just shows why whole of life costs are important with assessing the viability of any project like this.

Andrew Barr may well try to exclude costs as not part of the direct 2A light rail construction costs but they are the true costs of what is required to both build and then run the network.

2A and beyond didnt make sense when it was announced and it makes even less sense today. The claimed benefits just don’t stack up and the costs keep increasing.

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