The NSW Government has completed its comprehensive and independent review into the Sydney Metro project.
The Sydney Metro Review examined value for money, delivery models, project governance and passenger impacts, evaluating the delivery of Sydney Metro to date, the current state of progress against delivery targets and making recommendations for getting the maximum value out of the project, including looking at better land use, urban renewal and better integration with the wider transport network.
The review was conducted by NSW Regional Growth Corporation chair Mike Mrdak and SunCentral chief executive Amanda Yeates.
They said that the Sydney Metro capital portfolio was facing serious external volatilities relating to cost escalation and market delivery capacity, which have changed since investment decisions were made by the previous NSW Government.
“Our view is that there is a limited degree to which Sydney Metro can further absorb these changed macroeconomic conditions via internal value engineering. Accordingly, maintaining the investment commitments in place and adopting the most appropriate procurement model and choice of delivery partners for Sydney Metro West are critical decisions in the next few months,” they said.
“We do not believe these general pressures will be unique across Government to Sydney Metro, and that there is a role for NSW Treasury and/or Infrastructure NSW moving forward to be responsible for centrally assessing and regularly reporting on the specific impacts of changed macroeconomic and market conditions affecting major in-flight infrastructure investments.”
Major recommendations
• That the NSW Treasury, in consultation with Infrastructure NSW and the Construction Leadership Group, should establish a process and accountability for developing and regularly updating a common suite of sector-specific infrastructure escalation models, to promote consistency and currency of financial assumptions across all infrastructure agencies and enable centralised reporting of market volatility .
• That Transport for NSW should provide advice to the Minister for Transport regarding the status of the Parramatta Road Corridor Urban Transformation Strategy and any further opportunities to improve integrated bus and active transport interventions and road access connections in the Homebush to Parramatta region.
• Informed by extensive stakeholder support, that the NSW Government should commit to retaining the current nine-station alignment of Sydney Metro West (at a minimum), and:
- Target an opening by 2032 (an immediate priority should be preparing a sensible re-baselining of the delivery program according to recently re-profiled funding, timing requirements to finalise delivery models, and optimal risk mitigation of any inadvertent compression of linewide works)
- Proceed to tender-phase no later than Q2-2024, in order to preserve market participation and delivery momentum.
• In respect of viable enhancements to the existing Sydney Metro West project, that Sydney Metro (supported as appropriate by NSW Treasury, the Department of Planning & Environment, and TfNSW) should:
- Prepare a whole-of-precinct land-use analysis for the existing nine-station precincts, incorporating assessments of relevant Government and other major landholdings, current zonings and constraints, a preferred plan for how these (enlarged) precincts could best support a significant increase in housing supply to meet Sydney’s medium- and longer-term housing targets, and a succinct end-state vision enabling all Government, industry, and community stakeholders to align investment behind a common master-planning strategy
- Prepare a business case for improved bus connections (including necessary bus service infrastructure) to broaden the catchments of the existing 9-station precincts, to drive community benefits such as new housing and increased public transport patronage in the areas adjacent to the Metro alignment
- Review the current design and construction plans for strategic station option locations, to ensure they are at least not precluded from safeguarding in the immediate term, while rapid business cases are prepared (noting the significant complexities of each of these locations). Preliminary advice should be provided on a potential landowner and community engagement approach.
• That Sydney Metro should provide the NSW Government with a consolidated property and placemaking strategy covering all existing lines, including any options to further advance the NSW Government’s priorities regarding housing supply, and the likely time horizons of developments’ completions. This advice should consider benefits of Sydney Metro potentially retaining longer-term property interests as well as funding options for these enhanced precinct works (including via return of revenues to Sydney Metro, and/or reinvestment of revenues into housing supply).
• That the Department of Planning and Environment should provide advice to NSW Government regarding potential opportunities for future land-use change which would facilitate meeting State housing targets and improve urban access and amenity for communities in vicinity of T1 Western-line heavy rail stations, in the context of changed demand once Sydney Metro West opens.
• That the NSW Treasury and the Department of Planning and Environment, supported by TfNSW and Sydney Metro, should prepare an actionable proposal for NSW Government consideration regarding the application of the Transport Project Component (TPC) value capture mechanism to Metro station precincts as part of a forward-looking transport investment and funding strategy.
The review panel said other than value-for-money, it believed the core questions for any megaproject with a multi-package scope of works such as Sydney Metro should be: ‘Who is best placed to manage the integration risk for package, technical, and commercial interfaces, and what incentive/disincentive regime(s) would best support this accountability?’
“Answering this question requires a robust discussion on necessary levels of overall contractual flexibility, and the market’s maturity and recent evidence of demonstrable collaboration from involved parties,” it said.
The review also recognised that the Sydney Metro Board and senior team had the capability, depth, and resourcefulness to deliver the overall infrastructure program to a very high quality and with all the necessary governance and probity safeguards that the NSW Government and community would expect.
“However, we are concerned that the organisation is under increasing stress – market volatility and contractual pressures, alongside an aggressively competitive labour market, with multiple directed changes to scopes of work, have added continual pressures on the senior team,” the panel said.
Finally, despite having invested significantly in uplifting infrastructure market capability in NSW (especially for Metro-based projects) over the past decade, the panel noted that there did not appear to be a specific and actionable longer-term pipeline in place beyond current projects.
“The NSW Government should aim to provide certainty on future extensions as a priority before potential sector-wide demobilisation begins around 2026,” it said.
“Having regard to the increased investments in energy-based projects, FY2025-2026 is considered to represent a critical turning point for maintaining construction-sector capabilities in transport infrastructure.
“In short, we recommend a clear forward pipeline of staged Metro projects be developed and progressed within a financially sustainable long-term envelope.
“There are multiple additional considerations relevant in this regard to Sydney Metro’s overall workforce management strategy and retention of skills and experience.”
Transport Minister Jo Haylen said the review delivered Sydney an improved version of Metro West.
“It’s a new project for the whole of Sydney, building more housing and doubling rail capacity between the Parramatta and Sydney CBDs,” she said.
“It won’t just mean a new metro service, it means better train services for Western Sydney too, including in the outer west and Blue Mountains on the T1 Western line.
“Metro West will also cut crowding by 30 per cent at stations like Strathfield, Redfern and Burwood.”
Sydney Metro Chief Executive Peter Regan said Sydney Metro West had made great progress this year, with four out of six tunnel boring machines in the ground building the new 24-kilometre metro line from Westmead to the Sydney CBD.
“We welcome the findings of the Sydney Metro Review and the certainty they provide to our hard-working teams across Western Sydney delivering Australia’s biggest public transport project,” he said.