Case study 1: Sydney's CBD and South East Light Rail

The NSW Government first allocated significant funds to the CBD and South East Light Rail project in the June 2013 state Budget. The expected cost then was $1.6 billion.9 The plan was to run a new light rail line from Circular Quay through George Street to Central Station and to the University of NSW via Anzac Parade and Alison Road. Later that year, the Government said the benefits would be worth $4 billion, and the benefit cost ratio would be 2.5.10

Seven years on, it's a very different story. Services began operating along the full length of the line in April 2020, at an eventual cost of about $3.1 billion.11 The latest published benefit estimate is $3 billion,12 but that hasn't been updated since 2015,13 and therefore does not include a reduction in the benefits that were initially estimated from changes to bus services.14 Nor does it include a benefit reduction that arose because the construction was more distressing to residents and businesses than had been anticipated15 - so much so that they have filed a class action.16

Figure 1.3: The average cost of completed projects leapt in 2019

Average final cost of completed projects, $2020 million 

Note: Includes all public road and rail projects costing more than $20 million.

Source: Grattan analysis of Deloitte Access Economics Investment Monitor.

What happened in those seven years? A damaging dispute with the contractor was part of the story, and so was a series of governance shortcomings.

____________________________________________________________________________

9. NSW Government (2013, Section 4, p. 46).

10. Audit Office of New South Wales (2016, p. 7).

11. Audit Office of New South Wales (2020, pp. 1-2).

12. Audit Office of New South Wales (2016, p. 4).

13. Audit Office of New South Wales (2020, p. 1).

14. Ibid (p. 3).

15. Legislative Council Public Accountability Committee (2019, p. ix).

16. Supreme Court of New South Wales (2020); and Parkes-Hupton (2019)