The NSW treasurer has stepped up to "take full responsibility" for a cost blowout in the CBD-eastern suburbs light rail link, after an audit revealed poor planning and omissions in the original business case for the project had cost taxpayers an extra half a billion dollars.
The anticipated budget for the CBD and South East Light Rail project jumped from $1.6 billion in November 2013, when the business case was published, to $2.1 billion when Transport for NSW (TfNSW) signed the main works public-private partnership contract just over a year later.
Then-transport minister Gladys Berejiklian came clean on the price hike in 2015, attributing it to “customer improvements to the original scope” of the project.
But a damaging report released by NSW Auditor-General Margaret Crawford on Wednesday put paid to that explanation, finding that the vast majority of the blowout – $517 million – was caused by “mispricing and omissions in the business case”.
Current Transport Minister Andrew Constance and his predecessor faced the media on Wednesday afternoon but would not be drawn on precisely how long they had known that scope adjustments contributed to only a small portion of the total cost increase.
“I take full responsibility for the issues raised in the auditor-general’s report,” Ms Berejiklian said.
“I felt I explained everything I knew at the time.”
Wednesday’s report found that the project benefits fell from the 2013 estimate of $4 billion to an estimated $3 billion in December 2014, mostly due to increases in travel-time assumptions.
Trips from Circular Quay to Randwick and to Kingsford are now expected to take four minutes longer than was initially thought.
“These changes reduced the project’s benefit-to-cost ratio from 2.4 to 1.4, excluding wider economic benefits,” the report stated.
The auditor-general said TfNSW should have taken measures to improve transparency and “confirm value for money”.
Her report found the project was set to be delivered on time and that TfNSW probity and due diligence processes were robust.
But the auditor-general also found that TfNSW’s approach to assurance reviews did not provide the independent assurance required for a major infrastructure project, and “inadequate planning and tight timeframes” meant third-party agreements and project scope were not finalised before starting the tender process or before signing the main works contract.
“Scope uncertainty may have increased bid prices and exposed the project to ongoing cost increases,” the report said.
Opposition Leader Luke Foley seized on the findings, saying the government rushed the project so it could be completed before voters next head to the polls in 2019.
“The auditor-general’s revealed today that $517 million of public money’s been burned because the government didn’t follow proper process,” Mr Foley told reporters.
“This is all about the Libs getting to cut a ribbon prior to the next state election.
“That’s why we’ve had the unseemly haste, that’s why we’ve had corners cut, and that’s why the taxpayer is dudded over half a billion dollars.”