13 May 2019

Light rail may have been a little late but the final bill is less than expected

| Ian Bushnell
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Passenger numbers for light rail are exceeding expectations. Photo: George Tsotsos.

The final cost of building light rail Stage 1 between the city and Gungahlin has come in at $675 million – under budget by $32 million on the contract and $109 million on the original business case.

The contract with Canberra Metro for design and construction with a 2018 start was worth $707 million, compared with the business case estimate of $783 million and a 2019 start.

Stage 1 was due to be delivered by the end of December 2018 but did not start operating until Easter, four months later.

Chief Minister Andrew Barr said the final result was due to Government’s foresight to establish a dedicated project team with sound governance, talented leadership, motivated staff and expert advisers from across the country, and the project partner, Canberra Metro.

He said Canberra Metro went above and beyond in delivering light rail, and, through CMET, continued to provide a high level of service as the light rail operator.

“The final result has verified the ACT Government’s commitment to delivering an affordable and sustainable light rail network for the city. Light rail is already proving incredibly popular, moving thousands of Canberrans every day and we’ve delivered it substantially under budget,” Mr Barr said.

He said the lower than anticipated cost meant the benefit-cost ratio would increase to at least 1.3, rather than the original, conservative estimate of 1.2.

“That means for every dollar invested, Canberrans get $1.30 back in benefits, including better transport, lower congestion, more jobs and the increasing value of homes and businesses along the route,” Mr Barr said.

Minister for Transport Meegan Fitzharris said light rail was also beating the business case predictions on patronage, with passenger numbers already exceeding 2021 levels.

“Light rail is proving to be hugely popular already, with more people using it every day, and as a result we’ve added more frequent services during peak times to manage this demand,” she said.

“Along the light rail corridor the benefits are plain to see: with light rail getting people to work, opening up new customers to local businesses and seeing hundreds of Canberrans employed on building and construction projects along the alignment that are already using their proximity to light rail to attract buyers.”

Ms Fitzharris said Stage 1 saw around 5000 people work on the project, and the Government hoped to build on that industry knowledge as it continued planning for Stage Two to Woden, which is expected to cost about $1.6 billion.

“Indeed we are already funding early works to prepare the Woden interchange for the next stage of light rail,” she said.

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The final bill is still to come, as detailed in the ACT government’s own budget papers. Their own prediction is an eye-watering debt of $2.835 Billion by 2022. Where is the money going to come from?

I’m amused by the bright signs on the front and back of the trams – “Alinga St Service” or “Gungahlin Place Service”. Seriously, where else could they possibly go?

Final cost? There’s a fair amount of construction still going on. A deliberate early closing of the books?

Not to forget they still need to go back and build the stop at Mitchell. They’ll also need to fix the poor road design on Flemington Road at EPIC and Mitchell sooner rather than later.

How many public housing tenants were sent to the outer suburbs so their property footprint could be sold to private developers just to increase the Light Rail’s return on investment?

How many outer suburban bus commuters had to lose their stops to make it a faster commute for the lucky few near a Rapid route?

Mr Barr must be the most un-Labor leader in the country’s history. Take from the poor and give to the rich.

Capital Retro11:03 pm 13 May 19

ACTEWAGL are still to release the amount they contributed by way of capital works for the tram.

I estimate it would be between $50 – $100 million but we will probably never know. They must be spending all those millions they have borrowed somewhere.

HiddenDragon7:04 pm 13 May 19

“That means for every dollar invested, Canberrans get $1.30 back in benefits, including better transport, lower congestion, more jobs and the increasing value of homes and businesses along the route,” Mr Barr said.”

Those of us who live nowhere near the current, or any likely future, tramline will be thrilled to see some of this bonanza of benefits quantified and reaped through a value capture tax on all those lucky homes and business along the route – that should help to keep annual rates rises to a slightly less terrifying level, and pay for some of the stuff that needs doing around the town.

The table showing Actual costs under “Contingency” is misleading. Actual costs are against the base design and construction costs, leading to total of 675 in the first row.
“Contingency” is magic money used during planning to cost risk and risk treatments. That they had to dip into contingency is not good news; it means that [something unwanted] happened and they had to dip into the magic money (which does happen in the real world). Or, that [something unwanted] did not happen and the cost of the base design and construction over-ran due to poor forecasting of expected costs.
Bottom line is there is a degree of spin in the table and the figures provided. We will probably never know.

Apples and oranges. Are they saying the cost of the contract is equal to the cost of the project?

Ongoing costs, legal costs. Remediation work. Auditor said over 1 billion.

Also saying you spent 600m doesn’t equate to 700m value because of the business case. There’s an assumption that light rail will actually ease congestion but it won’t.

Capital Retro9:24 am 13 May 19

“hundreds of thousands of dollars in property price rises”

Recent reports indicate the exact opposite. The length of time the tram takes is 50% higher than planned also. Overall, the “regeneration” plan has been a massive failure.

This is simply wrong.

Property prices along the light rail route have monstrously outpaced property price gains in other areas of Canberra over the last few years, largely driven by the prospect of the project being completed. Any look at the data on Allhomes will cure you of your misconceptions.

Would you care to source that travel-time claim, Capital? Both planned and actual.

Capital Retro9:03 pm 13 May 19

It is on page 23 of 09 May 2019 Canberra Weekly which should be accessible online tomorrow. If you want to read it immediately you can pick up a free (printed) copy almost anywhere in Canberra. The comments were by Libby Kimber & Denholm Samaras who quoted different travel times of 34 mins 50 seconds and 37 mins 45 secs.
This is the only report I have seen anywhere – I don’t believe Transport Canberra have claimed any times near the 24 minutes they planned but if you have any other information please share same.

Capital Retro9:11 pm 13 May 19

Your information is dated – the real story is what is happening now: https://www.canberratimes.com.au/story/6104468/house-prices-fall-steepest-in-northern-suburbs/

I had already posted this link on another thread but no one commented. I hope you didn’t buy shares in the tram.

I knew that that report was going to be your reference but it actually proves my point rather than yours. When house prices in a couple of areas drop near 10% after increasing more than 50% in a few years, are you seriously going to claim that is a reduction in price over the entire light rail route?

The article even tells you why it’s occurred. Investors may have gotten too exuberant over light rail and overshot the peak. Now that light rail has started, they’re holding off slightly to see what the actual effects and performance of the network is like.

The facts are that since the announcement of light rail, property prices along the route have significantly outpaced growth in other areas of Canberra. You need to look at 5 years of data, not 5 minutes.

Recent small drops in a few areas do not in any way countenance that point.

Capital Retro11:26 am 14 May 19

Property prices have increased 50% in many areas over the past 5 years, not just the artificially created light rail corridor/catchment area. The recent biggest falls in house prices have been in Franklin which is light rail heartland and there have been unit price falls in Dickson and Canberra City.

Do you really believe that in the current financial climate sales of thousands more units in Northbourne Avenue will be supported?

“Property prices have increased 50% in many areas over the past 5 years, not just the artificially created light rail”

No, they really haven’t, you’re just making stuff up.

You mention house prices in Franklin, even with the recent drops, the suburb growth has exceeded ACT wide growth in the last 5 years.

The inner North as a whole is up around 50% in the last five years, far outpacing the overall Canberra growth average of around 30%.

And that’s even being generous as if you pick the pockets of land closest to the light rail routes, the gains are far in excess of those wider averages.

“Do you really believe that in the current financial climate sales of thousands more units in Northbourne Avenue will be supported?”

This has very little to do with the price effects of light rail, you’re talking about market oversupply which will affect the whole of Canberra in a similar fashion across the board.

Once again, despite what you think, the data disagrees. Land values around the light rail route have grown and will continue to grow higher than City wide averages as the urban intensification continues along the route.

Capital, methinks you are being a bit misleading here. The 37/34 minute travel times you quoted here include the dwelling time at the original station and the time spent walking between the termini and the respective libraries at Civic and Gungahlin. They don’t represent the time it takes for the light rail vehicle to travel between the Alinga Street and Hibberson Street stations, which is what TC’s 24 minute travel time refers to.

Capital Retro2:20 pm 14 May 19

So, how long is it taking?

I can’t speak for others, but I haven’t had a run between Alinga and Hibberson Streets that lasted more than 30 minutes, with the shortest run being a speedy 18 minutes.

Capital Retro8:10 am 15 May 19

Did the 18 minute run stop at all stations?

It did, but it was an early morning weekend service so there weren’t too many people getting on/off at each stop.

“He said the lower than anticipated cost meant the benefit-cost ratio would increase to at least 1.3, rather than the original, conservative estimate of 1.2.”.

This is the only thing that matters here. So the project has gone from a completely woeful cost benefit ratio of 1.2 to a completely woeful cost benefit ratio of 1.3.

A ratio that no investment manager or infrastructure planner would go near with a barge pole. Especially when the majority of that benefit doesn’t come from transport benefits but rather development benefits and land price increases.

Although it’s definitely provided a boon for the well off inner city property owners who’ve been gifted hundreds of thousands of dollars in property price rises paid for by the general ACT taxpayer.

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