Shock multibillion-dollar blowout in Sydney’s largest metro rail project revealed

The cost of Sydney’s largest metro rail line is set to blow out by at least $2 billion due to the skyrocketing price of building underground train stations and delays to awarding major contracts partly caused by the Minns government initially wavering on the mega-project.

Confidential estimates obtained by the Herald forecast that the cost of the Metro West passenger train line will hit $27.3 billion – $2 billion higher than the state government’s official forecast for its signature transport project.

Yet there are fears within Sydney Metro, the government agency charged with overseeing the project, that the final cost of the 24-kilometre underground rail line between the central city and Parramatta will soar to more than $30 billion.

Sydney Metro’s estimate of $27.3 billion was made about six months ago and comes before it awards major contracts for nine stations along the line.

The leaked internal documents reveal that the total cost of the nine stations is now forecast to be $6.46 billion, up by almost a third from $4.9 billion calculated last year as part of pre-tender estimates.

The cost of a station beneath Hunter Street in the CBD is put at a staggering $1.08 billion, making it easily the most expensive of those built along three metro train lines in Sydney over the past decade.

The total cost of the Metro West stations rises to $6.77 billion once estimates for upgrades to existing heavy rail stations at Westmead and North Strathfield are included. The existing stations for double-decker trains will be linked to the new metro stations, allowing passengers to easily switch between services.

An underground station in Parramatta is regarded as the most complex on the Metro West line because of risks inherent in building on a floodplain.

Illustrating the scale of the blowouts, internal documents show Sydney Metro calculated in 2020 that the cost of eight stations for Metro West would be $3.82 billion – nearly half of the latest estimates. A station beneath Pyrmont had yet to be committed to by the then Coalition government at the time of those confidential cost estimates five years ago.

The final cost of Sydney’s largest transport project will be largely determined by the awarding of major contracts for stations over coming months.

However, transport mega-projects have a history of increasing substantially in cost after contracts have been awarded due to variations in scope and contractors making claims.

A single contract for construction of stations at Westmead, North Strathfield, Burwood North, Five Dock and The Bays precinct at Rozelle is expected to be awarded late this year.

The bundling of those five stations into a single contract, along with a major bidder pulling out of the tender for the Hunter Street station in the CBD, has sparked concerns about a lack of competitive tension between contractors for the work.

Several months ago, Multiplex and Brookfield pulled out of the tender for the station beneath Hunter Street and two towers up to 60 storeys above, leaving a single bid from a consortium comprising billionaire Justin Hemmes’ Merivale, property giants Lendlease and Mirvac, and investor Coombes Property.

An option for Sydney Metro would be to retender contracts, but that does not guarantee a lower price for the government. It also risks delaying construction.

Coalition transport spokeswoman Natalie Ward said taxpayers were paying the price for indecision on the project.

“The government ignored the warnings of their own review to get tenders in the field. That $2 billion could have gone to toll reform or improving rail reliability – instead it is being wasted on blowouts entirely of the government’s own making,” she said.

Two years ago, a confidential review into Sydney’s rail mega-projects warned the government that there would be “extensive time and cost pressures on overall delivery” of the Metro West project if there were delays to major contracts for stations, rail infrastructure, trains and systems.

A NSW government spokesperson said it was watching every dollar spent on Metro West and would not resort to privatisation, while contracts for future stations were subject to rigorous assessment to ensure tenderers met all requirements and delivered value for money.

“The Minns Labor government inherited a $12 billion budget blowout from the Liberals on Metro West, and it becomes clearer by the day they failed to properly budget for metro projects,” the spokesperson said.

After winning the 2023 election, the Minns government cast serious doubt on the future of Metro West before later committing to the project. Plans for an extra station at Rosehill, near Parramatta, also compounded the challenges for the project.

While a station could still technically be retrofitted to the line at Rosehill, the government has ruled out building an extra one on the Metro West line after Australian Turf Club members voted in May against selling the racecourse there to allow it to be replaced with a “mega-city” of 25,000 homes.

Adding to financial pressures on the government, the Herald has previously revealed that a new metro rail line to Western Sydney Airport is at risk of a $2.2 billion cost blowout and opening a year late.

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