The NSW Auditor-General has exposed the failings of the former Liberal-National government’s privatisation agenda on rail procurement and delivery.
The Auditor-General has confirmed a combined $2.5 billion blow out in the cost of purchasing intercity and regional trains, including a costly privatisation of the Regional Rail Fleet that has so far failed to get a single new train into service.
The rail rolling stock procurement Performance Audit found the purchase of the New Intercity Fleet and the Regional Rail Fleet, which the Liberals set up as a public private partnership, were “not effectively procured” from 2014 onwards under the former government.
These train procurements have so far cost NSW a combined $6.8 billion compared to original estimates of $4.3 billion.
The Auditor-General found transport planning failed to account for the capacity needed to prevent overcrowding at peak times meaning the former government had to add more carriages at higher prices.
A decision by the Liberals to embark on replacing the intercity fleet with a driver-only model was also an expensive one for NSW, with the audit report critical of foresight around the potential industrial relations risks that played out.
Further, costs of enabling works, including widening tunnels and expand train platforms on the Blue Mountains Line to accommodate the intercity Mariyung fleet, were underestimated and led to cost increases.
According to the Auditor-General, the NIF cost $4.5 billion from an estimate of $2.8 billion in 2014. The RRF has so far risen from $1.5 billion to $2.3 billion.
The Minns Labor Government has worked hard to rectify the failed procurements and delivery of these much-needed new trains with the Mariyung now in service on the Central Coast and Newcastle Line and the Blue Mountains Line. The South Coast Line is next to get new trains in 2026.
The NSW Government has also introduced the Tangara Life Extension and the Future Fleet Program to make trains more reliable and while delivering a long-term pipeline of suburban fleet replacement and modernisation through to the 2050s.
In contrast to the privatised, overseas procurement of the Liberals, this program will harness local skills, to build new trains progressively, to replace the suburban passenger fleet.
The NSW Government will ensure new trains have at least 50% local content and will commence procuring replacements for the ageing suburban passenger fleet from 2027.
Minns Labor Government getting on with delivering the regional rail fleet
Following this damning report the Minns Labor Government has today announced it has reached agreement to acquire and then dissolve Momentum Trains, the Public Private Partnership set up under the former Liberal-National government in 2019 to procure the new fleet.
Transport will instead work directly with the train manufacturer Construcciones y Auxiliar de Ferrocarriles (CAF) and maintenance provider UGL, to provide a more time and cost-effective pathway to deliver the new fleet.
The new structure will save NSW taxpayers an estimated $400 million over the life of the project.
These arrangements end ongoing commercial disputes and claims which have caused prolonged delays to the project, which the former government had promised would enter service in 2023.
The Auditor-General found the PPP model was widely known to be an inflexible delivery model which would increase “the risk of additional costs to government if the contractor was delayed of the project scope was later varied”.
The Regional Rail Fleet order comprises 29 next generation trains that will replace the State’s ageing diesel fleet of XPTs, Xplorers and Endeavours, bringing a new era of comfort, accessibility and safety for passengers and crew across NSW and interstate.
Now that the new structure is in place, Transport will work directly with the manufacturer on a reset delivery schedule. To date, only six of the trains have been delivered to Australia and they are at different stages of testing.
Minister for Transport John Graham said:
“The Auditor-General has comprehensively laid out the cost of the Liberals’ failed privatisation in rail procurement and bungling approach to delivery that has left regional communities across NSW and areas like Newcastle, the Central Coast, Wollongong and the Blue Mountains waiting years too long for new, reliable trains.
“This failure has cost NSW taxpayers $2.5 billion on top of the original estimate of $4.3 billion to build these trains and get them into service.
“The Regional Rail Fleet project has been yet another example where the former government promised that privatisation was the most efficient means of delivery, but the reality has been delay, dispute and despair for passengers.
“The Minns Labor Government is committed to bringing rail manufacturing back to NSW and the Auditor-General’s report is a good reminder that building local can ensure quality but also value for money.
Minister for Regional Transport Jenny Aitchison said:
“Regional NSW deserves quality trains. This resolution will ensure the delivery of long-awaited new trains for regional commuters.
“The Liberals’ and Nationals’ ideological obsession with privatisation and poor planning meant that regional commuters have had to wait over ten years for these trains to be delivered, and they failed to deliver one train in their time in government.
“The recent commencement of the new Mariyung services on the Blue Mountains Line is testament to the fresh approach taken by the Minns Labor Government in fixing the Coalition’s failures and building better communities right across NSW.
“We are continuing to deliver renovations on the XPTs to ensure continuity of services, increased reliability and better passenger experiences for regional rail commuters while they wait for the delivery of the new regional rail fleet.”