How a bungle over train seats forced NSW to buy more expensive carriages

Taxpayers have been forced to buy extra intercity trains at greater cost because NSW’s transport department initially decided to reduce the number of carriage seats, despite modelling showing that it risked overcrowding, a scathing assessment of the purchase of two new train fleets has found.

A report by NSW Auditor-General Bola Oyetunji – released on Tuesday – also found that “foreseeable changes” to the operating model for the state’s new intercity trains, which caused years-long delays and sparked industrial action, added $1 billion to the cost of the fleet, which is forecast to hit $4.5 billion.

The report is withering in its assessment of the agency’s purchase of both the intercity and long-distance regional train fleets, which have been years late and cost taxpayers billions of dollars more than originally forecast.

In an example of those failings, Transport for NSW decided last decade to reduce passenger capacity to two-by-two seating on the new intercity trains to be used on two lines, despite modelling showing that it would lead to overcrowding on some services.

It later deduced that it would need to buy almost 100 extra carriages to provide more capacity at an increased cost per carriage of up to 63 per cent.

The earlier decision to buy carriages with two-by-two seating would have resulted in a 23 per cent cut to capacity on the Central Coast and South Coast lines. In comparison, existing Oscar trains used on those lines have two-by-three seating.

“This decision was made despite Transport for NSW knowing that there were existing problems with overcrowding on the intercity trains and that patronage was forecast to increase in the future,” the report said.

In addition, the cost of widening tunnels and other work on the Blue Mountains line for the new intercity trains has surged by 72 per cent to $149 million.

Illustrating the scale of the problems, the combined capital cost to complete the purchase of the new intercity and regional train fleets has blown out by more than 50 per cent on original forecasts to $6.8 billion.

The report also reveals that the first of the new regional trains, which will carry passengers as far as Melbourne, Brisbane and Broken Hill, is not expected to begin services until April next year, which is more than three years late.

It is also later than the worst-case scenario of the first of 29 new trains entering service by this December, which was detailed several years ago in a confidential Infrastructure NSW’s assessment. So far, only six of the trains, which will eventually replace decades-old XPT, Xplorer and Endeavour trains, have arrived from Spain.

The auditor-general found Transport for NSW failed to include the full scope and cost of rail infrastructure grades, which are needed to accommodate the new regional train fleet, in its initial assessment of the project.

The agency has been embroiled in a long-running dispute over design changes with the Spanish-led consortium building the new regional fleet as part of a public-private partnership.

The report found that Transport for NSW’s decision to exclude the operation of the new regional trains from the public-private partnership “significantly increases budget risks”, which the agency failed to manage properly.

As a result, the Minns government has reached agreement with CAF and other contractors to dissolve the public-private partnership known as Momentum Trains. Transport for NSW will now work directly with the Spanish builders and engineering company UGL.

Transport Minister John Graham said the Auditor-General report had “comprehensively laid out the cost” of the previous Coalition government’s failed privatisation in rail procurement.

The government said the deal would “end ongoing commercial disputes and claims”, and save $400 million over the life-time of the project which includes ongoing maintenance.

The auditor-general’s report details a long list of failings by Transport for NSW, ranging from not effectively scoping or estimating the full cost of the new trains to poor engagement with drivers, guards and operational staff.

The transport agency also failed to manage the higher risks involved in setting up a public-private partnership for the regional trains, which has meant that operational challenges are lumped on Transport for NSW and not the contractor.

In a shot at Transport for NSW’s disclosure, the auditor-general found that documents prepared by the agency are frequently stamped cabinet-in-confidence, including in instances where they do not meet the definition.

“Transport for NSW applies higher sensitivity classifications to many more documents than is required or can be justified … and this limited transparency,” it said.

In a response, Transport for NSW said it endeavoured to provide accurate financial information about project progress and status in the state budget, noting that commercial negotiations “added complexity”.

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