4 October 2023

Millions or billions? Unredacted documents give insight into potential cost of light rail stage 2B

| Claire Fenwicke
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Gungahlin Light Rail Photo: Region Media

The guessing game over how much it will cost to get light rail to Woden continues. Photo: Region.

The Public Transport Association of Canberra (PTCBR) has questioned claims made by the Canberra Liberals that light rail stage 2 will cost more than $3 billion following the release of unredacted documents.

An Ernst & Young economic appraisal report from 2019 was released under Freedom of Information laws in March of this year; however, the costs were redacted.

This was raised with the ACT Ombudsman by the applicant – whose identity is unknown – with the authority deciding the documents could be released with the costs visible.

The report suggested, in 2019 terms, that the building cost for light rail from City to Woden would be around $960 million.

Putting that number into the Reserve Bank Australia’s inflation calculator suggests that it would be $1.09 billion for the 2022/23 financial year (compared to the 2019/2020 financial year, calculated with an average annual inflation rate of 4.3 per cent).

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PTCBR chair Ryan Hemsley said that while costs would have increased since then, this didn’t paint a picture of a “$3 billion disaster”.

“There’s been a lot of speculation around how much it will cost to bring light rail across the lake,” he said.

“Despite what some politicians may want you to believe, these figures show that stage 2B to Woden doesn’t have to cost a fortune.”

Operating and maintenance costs for the City to Woden line were estimated to amount to $190 million.

Modelling around possible benefits of extending light rail to Woden showed it could deliver total economic benefits of $1.217 billion (based on 2019 conditions).

This benefit mainly came from increased land value and better land use, particularly around the Acton Waterfront, North Curtin, and expected increased densification in Woden.

analysis table from FOI document

Predicted economic benefits from light rail stages 2A and 2B. Photo: FOI.

“This means, for every $1 of total expenditure, City to Woden Light Rail is expected to return $1.04 worth of benefits to the ACT economy,” the EY 2019 report stated.

“It is expected that the project delivers marginally greater benefits [than] its costs.”

Mr Hemsley said the costs of the project are now greater, and the economic benefits will take longer to realise, highlighting why the community could accept no more delays.

“We can’t afford to spend the next five years arguing about how to get light rail through the Parliamentary Zone,” he said.

“The ACT Government needs to pick a route and get on with the job of delivering light rail to Woden.”

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But the Canberra Liberals are standing firm on its prediction the project will cost $3 billion.

Shadow Transport Minister Mark Parton said the 2019 economic appraisal was “full of holes” when it was written and was now a “complete fantasy”.

“The Canberra Liberals absolutely stand by our 2022 estimate of cost and delivery date for this disastrous project at $3 billion and 2034,” he said.

“History will show that the Liberals estimates are extremely conservative.”

Mr Parton again pushed the ACT Government to release more information, such as the business case, for the project to justify why it should go ahead.

“We all know that the entire project will be at least three times this estimate and, additionally, the creative accounting used to estimate benefits reads like a stand-up comedy script,” he said.

Mr Parton pointed to both the Auditor-General’s report into the stage 2A business case – which found the government didn’t pay enough attention to the economic analysis of that section of light rail – as proof the government shouldn’t be taken at its word.

The report also questioned whether the project’s economic benefits had been overstated.

“As a reference point, I would draw your attention to [a recent] tender for four new trams, 150 metres of new track at the depot, a car park and a battery storage building for $199 million,” Mr Parton said.

“If that’s the cost for such a small piece of the tram puzzle, it’s ludicrous to believe that the entire project will come in under $3 billion.

“This 2019 economic appraisal was way off the mark then and it’s completely irrelevant in 2023 and beyond.”

The government has previously committed to releasing the stage 2B business case once procurement has been finalised and contracts signed.

A redacted version of the stage 2A City to Commonwealth Park business case has already been released.

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mikaloviche111:26 am 02 Jan 24

In the late 60’s we moved to Canberra settled in a new house in Curtin . The Yarra Glen hadn’t been built yet . The ruling body was the NCDC National Capital Development Commission . They had a vision and there was virtually no say in it or politics as the ACT didn’t have self government ( those were the good old days) . Woden plaza was built near the Yarralumla wool shed it looked hideous and is still to this day . Buses to Civic were a cattle class circuitous route hurling around through all the suburbs . I have relished in the fact that at no matter what cost building light rail is indeed the best thing to ever happen to this sad little country town . WBG had a plan for trams . The thing that Canberra didn’t plan for was restaurants and malls that have sprung up and changed industrial areas like Belconnen and especially Dickson shops has been taken over by private enterprise once the bean counter nerds had gotten their little heads around the idea of rezoning tyre places and the like to a real pumping night life and culture. light rail is amazing put it every where . oh and Canberra won an international award for worst carbon footprint and car use anywhere in the world WBG has a lot to answer for the American motor car rules in Chicago.

Whilst O agree wholeheartedly woith your assessment of the NCDC, LR etc… I must fervently claim that “WBG has a lot to answer for” in regard to our carbon footprints and American motor car rules… WBG did not plan a sprawled city. His city was compact, manicured, and beautiful. The semi-arid sprawl of under-utilised land which is Canberra is entirely the result of the various stuffy undemocratic federal bodies and their successors, who all opposed his beautiful plan.

Let’s face it, Burney Griffin’s plan looked pretty but functionally is a dud. Agglomeration economies, for all sorts of reasons, want to pull the bureaucracies to the CBD and vice versa, and also pull the other artificially decentralised offices from the artificially-developed, decentralised town centres, into the CBD. The initial concept was some kind of utopian socialism or something, completely disregarding how cities evolve their own economic gravity. Now we have to figure out how to provide connectivity between all these stupidly scattered CBD functions. Buses aren’t cool. It’s a pity trams have become so expensive, true, but in the circumstances they’re the best remediation for the planning mistake that is Canberra. Also, once transit corridors are settled, it only makes sense to line them either side with high density multi storey residential development. Once you’ve sunk in 3 billion to remediate past bungling, just leaving the corridor as grassy buffer spaces backing onto paling fences and cream brick burbs, or redundant parkland, doesn’t cut it any more.

The Griffin plan was also to limit the population to make the place self sustainable. That was 350,000 people ago.
Anyone who relies on the Griffin plan with our current population is an ..

What on earth are you talking about? Every city has town centres, and while its true that civic is a small cbd, even in a city with a larger CBD you would still need transit to get people there. Whats more, you claim this was because Griffin was some socialist, but Griffin’s plan only encompassed central Canberra. The suburb expansions of Belconen, Woden, Tuggeranong, and Gungahlin were entirely the choice of the government, and in fact, contrary to Griffin’s plan of a compact city. Not to mention that the parts of Canberra that were designed by Griffin are considered some of the nicest places in the city. At least you recognize that trams and densification are the way foward, but the rest of your comment is honestly baffling.

CBD = central business district = “town centre”. Most cities have a radial pattern. What are *you* talking about? Canberra has not reached the size where suburban (“sub” “urban” = subsidiary to the main centre) centres evolve into CBDs in their own right, like you might arguably say Paramatta has in Sydney: but even then Paramatta’s only subsidiary to the main CBD. No, in Canberra, the decentralised, multi-polar, explicitly non-centralised concept was planned by daffy bureaucrats; spatial economics be damned. The only people in Australia who were in the business of daft ideas like that were post-war utopian modernists, i.e. reformers who admired Soviet chutzpah (I won’t trigger you more with the “S” word). You’re right on two points though: it’s pretty (but dumb); and true it can’t all be blamed on WBG, he only kicked it off by putting a huge lake in between interconnected functions. It could have been mostly salvaged way back in the 60s by just letting market forces build up Civic as a conventional single CBD instead of pursuing business district decentralisation into Belco, Woden etc. Plenty more could be said. I’m sure you won’t get the point, isn’t bureacratic state planning wonderful, all that.

‘Buses aren’t cool’ – that is your argument for a tram? Buses are much safer for vulnerable people, especially at night, as there’s better vision and control of those travelling. Trams and trains are often really risky places for women and girls, with sexual assaults being common as they’re less easily observed and prevented than on buses.

Aside from that very real issue, electric buses are cheaper and will have a much smaller carbon footprint, with no construction costs, no loss of trees and green space, along with routes that get people where they need to go, rather than miles from their destinations.

There’s no way a tram to Woden will pay for itself, with government projections like all ACT government press releases, sales and marketing documents not based in facts.

I think you are criticising the wrong guy. WBG did not plan a sprawled and decentralised city like the one we live in. His plans began and ended in what we now call the inner north and inner south, and his city was far more dense and compact than what we have today. The rest of this joint is the result of NCDC and their predecessors, who all opposed his plan. As soon as they could, the federal bodies in charge threw his ideas in the bin. The only things we have today of his plan are the basic layout of the parliamentary zone and LBG.

Anyone who actually supports this mess or is silly enough to take the numbers presented seriously should actually read the Auditor Generals report on 2A… or even just the summary.

“Major Projects Canberra advised that it undertook quality
assurance activities through its review of draft reports from EY (and the other
specialist models and reports) but that its methodology and processes for quality assurance of the Cost Benefit Analysis were not documented. The lack of
documented methodology and processes for quality assurance of the Cost Benefit
Analysis, combined with the absence of spreadsheets demonstrating the calculations
or an economic model, impairs Major Projects Canberra’s ability to demonstrate the
accuracy and appropriateness of the economic appraisal of Light Rail Stage 2a.”

Even the report itself states that the figures provided had no supporting evidence or documented methodology to demonstrate even the highly doubtful and very slight positive business case provided.

They might as well have started the report with the summary of: “These numbers are pure fantasy”.

I forgot, one of the best parts of that summary was:
“A significant amount of the benefits identified for Light Rail Stage 2a are predicated
on it being a catalyst for acceleration of development of the Acton Waterfront.
Neither the Stage 2a Business Case or Economic Appraisal Report provides
information or evidence on how Light Rail Stage 2a is expected to accelerate
development at the site.”

““It is expected that the project delivers marginally greater benefits [than] its costs.””

Even their business case that was (based on the 2A) full of holes, assumptions and used “proprietary calculations” for how they came up with their numbers shows that this is a terrible idea and makes no financial sense …and all this is before inflation went crazy and a bunch of building companies and suppliers went under.

Imagine what the reality will look like?

Leon Arundell8:39 am 05 Oct 23

Why does this article quote Ernst and Young’s estimates, when the ACT Government’s estimates of the costs and benefits of light rail stage 2 are publicly available in Audit Office Report 8 of 2021: https://www.audit.act.gov.au/__data/assets/pdf_file/0005/1859630/Report-No.8-of-2021-Canberra-Light-Rail-Stage-2A-Economic-Analysis.pdf

Leon Arundell8:35 am 05 Oct 23

The ACT Government estimates that Bus rapid transit (BRT) is a far better option than light rail. One stage of BRT offers a benefit-to-cost ratio of 2 to 4.8 and a net benefit of $243 million to $939m (compared with less than 1.04 and less than $44m for Stage 2 of light rail). We can build two stages of BRT (e.g. Civic to Woden AND to Belconnen) for the cost of one stage of light rail. The ACT Government’s 2019 estimate of the cost of Stage 2 was $1.17 billion PLUS the cost of providing wire-free operation through the Parliamentary Triangle. Audit Office Report 8 of 2021 provides official cost and benefit estimates for light rail stage 2 of light rail.

Turning a 15 minute trip into 35 is hardly saving time?

Why is it worth $101,000,000

The land value uplift is also a fake measure. As it decreases the land elsewhere.
Are we going to cut more buses to make light rail happen? that increases travel time.

If travel time is also worth $101,000,000 why did Chris Steel cut public transport and school trips, expresso buses, and some of the express routes? Do they not buy it either?

HiddenDragon7:30 pm 04 Oct 23

It certainly is a big stretch from $960 million to $3 billion, but it is also quite some stretch to suggest that the RBA’s Inflation Calculator (based on the Consumer Price Index, which has building costs as only one small component) provides any sort of guide to the likely ultimate cost, even with an optimistic completion date, of an ACT project which will be competing with countless other building and infrastructure projects throughout the nation for scarce skills and other inputs.

This issue is no longer just a matter of the usual partisan debate within the ACT, based on the smug assumption that if enough voters are sold on an idea, the money to pay for it will magically materialise.

Serious people are starting to raise serious questions about the finances of Australia’s sub-national jurisdictions, a concern driven not just by an objective analysis of the trajectory of those finances, but also by the dawning realisation that there won’t be a quick return to the days of cheap and easy government debt funding – big, costly projects are going to be under much closer scrutiny in the years ahead.

OTH, Dan Andrews spent 1.1 billion just to *cancel* Melbourne’s East West link project and that was 2015 prices, before putting 10 billion into the Westgate tunnel and 16 billion into the north-east link.

Leaving aside the fact that there’s no way the project will be delivered for anywhere near the FOI’d price tag because of increases in costs (and assumptions), the main game is the cost benefit analysis showing that even using heroic assumptions, it barely breaks even. And that once again the benefits are significantly dominated by land development, rather than anything to do with public transport or community benefits.

The opportunity costs are enormous to put that much capital into a project that does nothing but densify current greenspaces and unused land.

It’s absolutely crazy to think that no other alternatives have even been considered and they won’t release any details until they’ve already locked in contracts.

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