Train dispute risks $246m cost blowout for Sydney Metro

A prolonged dispute between the NSW government and rail unions risks blowing out the cost of a new metro rail line under Sydney Harbour by hundreds of millions of dollars and delaying the mega project by another six months.

The government on Monday launched legal proceedings in the Fair Work Commission after negotiations with rail workers again broke down over the weekend amid warnings of further industrial action this week.

In a letter from the Crown Solicitor’s Office to Fair Work, marked sensitive and seen by the Herald, the government claims industrial action will cause “significant” loss to the NSW economy and increase the cost of the Sydney Metro City & Southwest rail line by $246 million.

Premier Dominic Perrottet and Transport Minister David Elliott inspect the Sydney Metro City tunnels last year.Credit: James Gourley

A separate affidavit - signed on Monday - from a senior Sydney Metro executive outlining a range of scenarios for the project warned further delays could see costs escalate by more than $1 billion.

The affidavit said industrial action was preventing work on the Sydenham to Bankstown rail conversion for the metro rail project, which now risks opening in the third quarter of 2025, more than a year late.

If critical work is delayed another 10 days during the holiday period, the costs are estimated to blow out by $246 million.

Lawyers representing the two sides appeared before Fair Work on Monday as the government sought interim orders preventing industrial action ahead of a full hearing later this week. The premier is expected to meet with rail unions early on Tuesday before a Fair Work Commission hearing.

It was revealed last week that the government estimated the economic cost of industrial action, which includes bans on operating foreign-built trains, at $45 million a day.

Commuters on the state’s transport network have faced delays and cancellations to services due to ongoing industrial action by rail union workers.

Union leaders have warned of potential all-out strike action if they could not reach an agreement with the government over modifications to the state’s new intercity train fleet.

The government conceded to union calls over the fleet last week, agreeing to $260 million worth of changes to the trains.

However, the government has refused to sign a legal deed committing to the changes without an outcome on the broader enterprise agreement covering thousands of workers.

Another affidavit to the industrial umpire from a senior Sydney Trains executive estimates the ongoing cost to the rail operator risked running into the tens of millions of dollars.

The government’s move to halt industrial action could also result in two senior ministers being called back from their holidays into the commission to give evidence.

Unions NSW deputy secretary Thomas Costa said he expected both Transport Minister David Elliott and Employee Relations Minister Damien Tudehope would be required to give evidence before Fair Work.

“The unions would be insisting that Elliott and Tudehope provide evidence in those hearings on their intimate role in the negotiations,” he said.

“We are concerned that the government is no longer bargaining in good faith.”

A spokeswoman for Tudehope’s office said evidence would be provided by experts with the ability to explain how the impacts of industrial action arise.

“The Fair Work Commission is not a political arena for the unions to continue to flout the resolution process, and use the people of NSW as pawns to further their own agenda,” the spokeswoman said.

She confirmed the minister would be away until mid-July.

NSW Rail, Tram and Bus Union secretary Alex Claassens said the motives behind the government’s move to initiate legal proceedings were “incredibly disingenuous”.

“It’s a bit rich for the person ultimately responsible for the one and only time trains have been stopped at all this year - when the NSW government shut down the rail network in February - to stand up and say that he wants the inconvenience to commuters to stop,” he said.

NSW Premier Dominic Perrottet said rail workers’ insistence on continuing industrial action after the government made concessions to union demands to modify the new intercity trains was proof that their strategies were politically motivated.

“The response of the RTBU in my view was purely political. To continue industrial action shows a lack of good faith,” he said on Monday.

“We’ve done everything we can to a point where we agreed last week, based on the numerous discussions that have taken place, to have modifications made to the best trains you can have in the world.”

Last Friday, commuters were caught in the crossfire between the two sides as they faced the worst disruption on the city’s public transport network since February when the government shut down the entire rail system for 24 hours.

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