New South Wales’ premier, Kristina Keneally’s shock decision to axe Sydney’s planned US$4.5bn metro extension has infuriated the Australian construction sector, and spurned the Australian Industry Group (Ai Group) into demanding 100% reimbursement of the tens of millions of dollars spent to date by each of the three JV’s vying for the tunnelling work on the project.
The consortia affected by the last minute 90 degree turn around are; Line 1 (McConnell Dowell Corporation/Abigroup/Obayashi Corporation); Metro Primo – (Leighton Contractors/Seli); and the Thiess/John Holland JV.
An estimated US$60M has already been spent by the construction industry on the now shelved 7km long, twin 5.6m diameter tunnel project, after it was assured just over a year ago that the project was a certainty.
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Elected in December last year, Keneally angered the Australian construction industry on February 21st with the cancellation announcement saying the tunnelled metro section running between Central Station and Rozelle, was not vital to Sydney’s future transport needs as laid out in its A$50bn, 10 year Metropolitan Transport Plan.
Chief Executive of the Ai Group, Heather Ridout blasted the decision saying, “The State Government had made a commitment to proceed with the project. The risk of a client not proceeding with a project once it is in the market is not a risk that companies could or should have to price into a contract proposal. It is a cost that should not be borne by the bidders.
“When the project was announced, the Government established an enormously ambitious timetable for its procurement. The industry has met that challenge and in doing so has committed significant resources to the project.”
“The Australian Industry Group accepts the sovereign right of Government to change policy but with that right comes the responsibility to deal equitably, responsibly and in good faith with the companies and consortia that have incurred losses in responding to this project,” Ridout added.
Premier, Ms Keneally, has spoke of ‘legal’ costs being reimbursed for homeowners and businesses who’s land was penned in for acquisition, and told reporters that the NSW government “will reimburse all reasonable costs”.
“There will be a working group set up between Transport, Treasury and we’ll bring in an independent outside firm, someone like a KPMG (accountancy)… to help us work through with the tenderers their costs so that we can reimburse them,” Ms Keneally said.
But this hasn’t pacified the construction industry who in reality believes not enough is, or will be done to compensate its companies.
Jim Barrett, executive director of the Australian Constructors Association said, “This is not like having the local painter come in and quote for painting three of your bedrooms and he takes half-an-hour, then walks out and gives you a sheet of paper with a price….we are talking about very sophisticated tunnelling, geotechnical work.”
In the government’s defense, Keneally added, “We’ve listened to the community and made a tough decision, this is about re-allocating spending to where it is needed. We appreciate that some parties may have been adversely affected.”
“The NSW Government recognizes that resources and efforts have been put into the process by the tenderers for the major construction contracts, but they will be dealt with fairly and properly,” Keneally concluded.
The Premier’s Plan – the Metropolitan Transport Plan: Connecting the City of Cities – now includes:
The US$4.1bn Western Express CityRail Service – a separate dedicated rail track to slash travelling times from western Sydney to the city. It will achieve faster and more frequent services with a goal of up to 50 per cent more services and 17 per cent more passengers on the CityRail network on an average weekday.
This will occur through:
1) Separating a dedicated track from all other traffic;
2) Construction of a new 5km long priority tunnel – City Relief Line – which will be built from 2015 in the city to separate western services from inner-city trains to provide shorter journey times;
3) Construction of eight new platforms to increase capacity at Redfern, Central,
Town Hall and Wynyard to relieve congestion;
4) New express train services will be introduced for the Blue Mountains, Richmond, Penrith, Blacktown and Parramatta;
5) Increase City Rail’s capacity on all lines and allow the introduction of express rail services to western Sydney.
Start of work on the US$6.1bn North West rail link from Epping to Rouse Hill with six stations at Franklin Road, Castle Hill, Hills Centre, Norwest, Burns Road and Rouse Hill in 2017
A US$454M expansion of the current light rail system – bringing its total length to 16.9km with up to 20 new stations and almost 10km of new track – a more than doubling of the distance of the existing route
Improvements to bus services – costing US$2.6bn
Over the next 10 years, US$2.8bn for new trains and this is in addition to the 626 arriages on order
Creation of the new Sydney Metropolitan Development Authority to drive future transit-oriented development and urban renewal. Authority will be similar to the highly successful Redfern Waterloo Authority and Barangaroo Delivery Authority. It will be responsible for implementing the integrated metropolitan land use strategy and will report to the Minister for Roads and Transport and the Minister for Planning with its own board with a Federal Government representative
An historic partnership with the City of Sydney to develop a memorandum of understanding on public transport; movement on laneways and streets and planning issues such as pedestrian friendly areas and civic spaces. To ensure that future State and Federal governments are still able to build high capacity public transport if and when they are needed, corridors and planning approvals will continue to be secured, such as metros