Another infrastructure cost blowout hits NSW taxpayers

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By Leith van Onselen

The infrastructure being built to fix the problems caused by mass immigration continues to create headaches for taxpayers in Queen Lucy Turnbull’s Sydney, with The Australian reporting that the firm contracted to build the Sydney Light Rail Project is demanding another $200 million from taxpayers as compensation for delays caused by the NSW State Government:

The Spanish contractor in dispute with the NSW government over the Sydney CBD light rail project is demanding more than $200 million for the construction of a dam near Centennial Park which it says led to delays in the project.

In a Yes Minister-type situation, the contractor, Acciona, is also claiming funds for having to change five times where an electricity substation was to be built — after negotiations repeatedly fell down with the government and the Centennial Park and Moore Park Trust.

…Acciona is expected to claim that because of delays the dam caused to the entire project it is owed $200m-$300m… The Australian revealed in April that Acciona, which is part of the ALTRAC consortium building the $2.1 billion project, was claiming $1.2bn from the government ­because of cost blowouts.

The firm is claiming “deceptive and misleading conduct” by the government in relation to the project because it says Transport For NSW did not do enough to reveal the cost of removing electricity utilities from under city roads and replacing them. The government accuses the contractor of a “go-slow” and says the project completion date is ­likely to be 12-18 months late, now pushed out to 2020. NSW Transport Minister Andrew Constance has said the government will not be “held to ransom” by the contractor…

The Australian revealed yesterday that the cost of dumping ­Acciona and starting anew on the Sydney CBD light rail project would be more than $1.5bn.

As noted last week, NSW taxpayers are already facing huge cost blowouts from:

  • a claim worth more than $1 billion from the builders of Stage 2 of the WestConnex ­motorway that links western Sydney with the inner city;
  • a claim of an extra $1.2 billion from Acciona to build the Sydney CBD light rail; and
  • an extra $400 million to $500 million to repair cracked spans relating to the Skytrain for the North West Metro project.
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These types of infrastructure projects and cost blowouts will continue as long as Sydney adds a projected 90,000 people a year, primarily via mass immigration:

For what? Just so Sydney can grow to the size of London mid-century against the wishes of residents?

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.