NSW Treasurer warns of market pressures amid mega project blowouts

NSW Treasurer Matt Kean says market forces are piling pressure on the government’s massive pipeline of transport projects,following revelations that its flagship rail line under Sydney Harbour is running billions of dollars over budget.

The state government is facing significant cost overruns across several road and rail projects that form part of its $110 billion infrastructure pipeline due to labour shortages and COVID-19 pressures.

TheHerald revealed on Thursday that the government’s signature City and Southwest Metro rail line had blown out by at least $2.2 billion,while the state conceded earlier this week that the price of theM6 motorway project had increased by $400 million.

NSW Treasurer Matt Kean.

NSW Treasurer Matt Kean.Nick Moir

Responding to questions on Thursday about the cost blowouts,Mr Kean said the government was committed to delivering its massive road and rail promises but it would review how to do it in the most cost-effective way possible.

“We’ve made a number of commitments,we’ve already got a $110 billion infrastructure pipeline and we’ll be working through the process about how we deliver that in the best interest of taxpayers as soon as possible,” Mr Kean said.

“Our focus will be on delivering those projects in the most cost-effective way possible.”

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Labor leader Chris Minns said the government needed to get a handle on the transport portfolio and its major infrastructure projects.

“The taxpayers of this state need to know that every dollar that goes over budget is a school we can’t build,a hospital that we cannot build or much needed funds for frontline public servants,” he said.

In a sign of the challenges for the City and Southwest project,tender documents show the amount payable to contractors for work at Sydenham station alone is estimated to have surged by $456 million to $757 million.

Martin Locke,an adjunct professor at the Institute of Transport and Logistics Studies at the University of Sydney,said the government could consider delaying projects which it had not started construction on,such as the Northern Beaches Link motorway and the second stage of the Parramatta light rail line.

“But it will be problematic to attempt to slow down projects such as the Western Harbour Tunnel and Metro West rail line which they have already awarded contracts for,” he said. “Once you have started,it is prohibitively expensive to put the project on hold.”

Infrastructure Partnerships Australia chief executive Adrian Dwyer said the forces pushing project prices up were not unique to NSW.

“This is not a Sydney problem - it’s not even an Australia problem,” he said. “We’re seeing prices across all sectors increase on infrastructure.”

Data from the industry body indicates NSW will spend about $6.7 billion per quarter on infrastructure between mid-2022 and early 2026.

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Matt O'Sullivan is Transport and Infrastructure Editor at The Sydney Morning Herald.

Tom Rabe is a State Political Reporter with The Sydney Morning Herald.

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