The Cross City Tunnel was a $700 million project undertaken to reduce the volume of traffic flowing through Sydney's central business district, improve surrounding environmental conditions and enhance traffic flows (Roads and Traffic Authority 2008: p.1). It comprises twin 2.1 kilometre tunnels than run between Darling Harbour and Kings Cross, linking the Western Distributor to New South Head Road (New South Wales Parliament 2006a: p.9), and a connecting tunnel to provide a direct route for vehicles travelling from the eastern suburbs to the harbour crossings (New South Wales Parliament 2006b: p.13).
More specifically, the objectives of this project included:
- Decreasing city congestion, aiming to remove up to 90,000 vehicles from surface roads (New South Wales Parliament 2006c);
- Reducing travelling times for motorists by allowing them to avoid 18 sets of traffic lights (New South Wales Parliament 2006c);
- Improving public transport (Roads and Traffic Authority 2008: p.1);
- Improving air quality around the central business district (Roads and Traffic Authority 2008: p.3);
- Providing better access within the city for pedestrians and cyclists (Roads and Traffic Authority 2008: p.3); and
- Reducing traffic noise levels (New South Wales Parliament 2006c).
The Tunnel itself was designed to be self-funded through cashless electronic tolling technology (Building Knowledge Nexus 2007). It was the first such system to be implemented on a tollway in New South Wales (Leighton Contractors 2009 p.1) and is now inter-operative with other Sydney motorways (Roads and Traffic Authority 2006: p.20) and tolling systems in Victoria and Queensland. Due to these and other factors (including those already mentioned), it was claimed that the challenge of the Cross City Tunnel was one of the most "technically and logistically complex" enterprises of its kind ever undertaken within Australia (Building Knowledge Nexus 2007).
Before the concession deed was awarded however (New South Wales Auditor-General 2006: p.21), a decision to extend the length of the Tunnel was announced by then State Premier, Bob Carr, in order to further recalibrate traffic flows (New South Wales Auditor-General 2006: p.18). In September 2000, the Roads and Traffic Authority (an operating agency within the New South Wales State Government transport portfolio, with responsibility for managing the State's road networks, road capacity planning and maintenance, and improving road safety (Roads and Traffic Authority 2006: p.4)), invited private sector parties to submit Registrations of Interest (Roads and Traffic Authority 2008: p.4) in order to win the concession. Towards the end of 2002 (New South Wales Auditor-General 2006: p.21), the Cross City Motorway Consortium, a private sector conglomerate, was awarded the concession for a period of approximately 30 years (Roads and Traffic Authority 2006: p.19). After this period, the ownership of the Tunnel was to be transferred to public sector ownership (Roads and Traffic Authority 2006: p.115).
The Cross City Motorway Consortium consisted of:
- Baulderstone Hornibrook Pty Limited, Bilfinger Berger Aktiengesellschaft, and Deutsche Bank Aktiengesellschaft to design, construct, own, operate and maintain the Cross City Tunnel (New South Wales Parliament 2006a: p.14);
- Connell Wagner, sub-contracted to provide engineering services (Building Knowledge Nexus 2007); and
- Hyder, sub-contracted to verify the project design (Building Knowledge Nexus 2007).
Major construction of the project commenced in January 2003 (Roads and Traffic Authority 2006: p.115) and the facility was opened to traffic in August 2005 (New South Wales Auditor-General 2006: p.21), some two months ahead of schedule (Roads and Traffic Authority 2006: p.19), although associated road works were not completed until April 2006 (New South Wales Parliament 2006b: p.13).
By December 2006, and with debts totalling $560 million, the Cross City Tunnel was placed into receivership (ABC News Online 2006). A spokesman for the administrator, KordaMentha, stated that although the Tunnel would continue to operate 'normally', options to address vehicle usage would be pursued at a later stage (ABC News Online 2006). The direct financial impact of the collapse was absorbed by the Cross City Motorway Consortium as a result of the transfer of patronage risk from the Government to its private partner (New South Wales Parliament 2006b: p. XII). Tax payers were assured by the Roads Minister that the Tunnel would remain open for the full length of the original agreement (Baker, Irvine and Davies 2006).
In 2007, a new consortium (Cross City Motorway Pty Ltd) led by ABN AMRO and Leighton Contractors was appointed as the operator (concessionaire) of the Tunnel under a PPP arrangement formed with the Government (ABN AMRO 2007: p.1; Productivity Commission 2007). The deal meant that ABN AMRO provided core financing and Leighton Contractors was responsible for the day-to-day management of the Tunnel (Sydney Morning Herald 2007). These responsibilities extended to the full maintenance, operations and asset management services of the Cross City Tunnel that included the communication networks, mechanical and electrical systems, traffic safety, and the tolling system (Leighton Contractors 2009: p.2).