Bungled NSW trains project blows out by $826 million

The cost of a fleet of new Spanish-built trains for NSW has blown out by $826 million due to a dispute with the manufacturer over design changes to the fleet and inadequate planning.

Budget papers show $873 million had been spent on the botched rail project up to June this year, while a further $1.4 billion has been allocated for it over the next four years.

It will take the cost of the 29 trains and rail infrastructure upgrades to accommodate them to $2.29 billion, up from a previous estimate for the project of $1.48 billion which included financing costs.

The space between seats on the new regional trains has been a major point of contention between Transport for NSW and the Spanish manufacturer.Credit: NSW government

The Herald revealed early this year that an internal assessment by the government’s infrastructure adviser had been scathing of Transport for NSW for its handling of the regional train project.

The first of the new long-distance trains were meant to start running on key interstate lines from Sydney to Melbourne, Brisbane and Canberra, and across NSW in January. However, internal forecasts have shown it could be as late as December 2025.

Transport for NSW has been embroiled in a long-running dispute with a consortium led by Spanish manufacturer CAF, which is building the new fleet, over “contentious design changes” sought by the agency to the trains.

The NSW budget papers also show the cost of the state’s new intercity trains, which were at the centre of a prolonged industrial dispute last year, has increased by $660 million to $3.54 billion.

The blowout in that project is due to modifying and storing the Korean-built fleet, which will start running on lines to Newcastle, the Blue Mountains and the South Coast in 2024, more than four years later than originally planned.

About $2.34 billion has already been spent on the new intercity trains, and the government has allocated another $1.2 billion over the next four years.

A spokesperson for Transport Minister Jo Haylen said the budget included additional costs for both the new intercity and regional train fleet projects.

He said the extra cost of the new regional trains reflected what would be needed to support their entry into service, including additional infrastructure enabling works across the network. “The former government needed to increase these budgets to account for additional costs,” he said.

The government has kept an election promise to invest $303 million for rapid bus links to the new Western Sydney Airport from Penrith, Campbelltown and Liverpool. However, the funding is a fraction of Transport for NSW’s previous internal cost estimates of $1.6 billion for the project.

Following a review of the state’s infrastructure by former Roads and Maritime Services chief Ken Kanofski, the government has delayed or altered projects worth more than $2.5 billion.

As previously flagged, a new motorway tunnel in the Blue Mountains has been deferred while the state’s fast rail program has been paused pending the release of a review by the federal government into infrastructure projects.

The state government has committed $770 million to establish an urban roads fund, which is earmarked for 23 projects over the new four years, including improvements to key corridors in Heathcote and Riverstone.

Funding will also go to planning for upgrades for the Fifteenth Avenue transit corridor between Liverpool and the new city of Bradfield near the new Western Sydney Airport.

All up, the budget commits $72.3 billion to new and upgraded transport infrastructure across the state over the next four years, including $7.9 billion for a metro rail line to Western Sydney Airport which is due be completed in 2026.

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