“We could be up for $6.6 billion all up for Stages 1 and 2. By about 2038 we may be paying installments on all three stages – nearly $1.6 billion that year!” Former senior town planner RICHARD JOHNSTON analyses what light rail is really costing the ACT and how long we’ll be paying it off.

New Treasurer Chris Steel has discovered that the ACT has a serious budgetary problem! 

Jon Stanhope and Khalid Ahmed’s column (“Budget shock: how Andrew Barr broke the bank” CN February 13) says the government has cracked a one-billion dollar deficit for the first time (actually $1.228 billion) and now has net debt of more than $9 billion, with total revenue this year not quite $8 billion.

In this context have you, like me, been wondering, how much is the tram costing the ACT, how is it going to be delivered, where does the money come from and how long will we have to keep paying?

With the help of some colleagues and other information from various sources, I have come up with a summary table showing likely costs of Light Rail Stages 1 & 2 over about 40 years. 

On Stage 1, which you probably thought was all done and dusted, the Capital Metro Contract Summary June 2016 says the ACT entered into an agreement with Canberra Metro PC Pty Ltd for the design, construction and financing of a 12-kilometre light rail service from Gungahlin to Civic and the operation and maintenance of the system for 20 years, following the construction’s “delivery phase”.

The Canberra Metro consortium comprises seven private-sector partners including John Holland, Mitsubishi Corp, Deutsche Bahn Engineering and CAF (light rail vehicle supplier). 

It is called a “public private partnership” (PPP), although the ACT’s role seems to be limited to paying out taxpayers’ funds over 20 years, on each contract.

At the end of the Stage 1 “delivery phase” (2019) we understand the ACT paid Canberra Metro a lump sum of $375 million, and thereafter was to make monthly payments over 20 years totalling about $1,275 million (Page 14 of the contract summary) making a total of $1.65 billion in total. These figures appear to allow for inflation at about 5 per cent per annum.

According to Stanhope and Ahmed (CN August 24, 2022) all the proceeds from ACT asset sales (public housing) and Commonwealth incentive payments under the Asset Recycling Initiative program, estimated to total $515 million, were to go to Light Rail Stage 1. There is now a major shortfall in public housing.

The ACT signed another contract, in December 2023, with Canberra Metro for Light Rail stage 2a, a 1.7-kilometre extension from Civic to Commonwealth Park. It was reported on March 20, 2024, that the total costs of stage 2a would be about $1.46 billion, including “retrofitting the existing fleet to enable wire-free operations” and “raising London Circuit” – about $130 million.

I have assumed for the table that the ACT will have paid for raising London Circuit in 2025 and will pay Capital Metro about $300 million as a lump sum at the end of the light rail delivery phase (expected 2028). The ACT will then pay off the remainder over 20 years (as per Stage 1). The Commonwealth is expected to make a contribution of about $300 million to the ACT for this project. Note that these figures are in $ 2024.

There seems to be no cost information available from the government on stage 2b, from Commonwealth Park, across the Lake, and on to Woden.

ACT budget shock: How Barr broke the bank

A paper by Max Flint, of Smart Canberra Transport (March 11, 2024), says: “The most probable build cost now for stage 2b (10.1 kilometres) is $2.33 billion”, plus another $1.17 billion for operations and maintenance over 20 years, $3.5 billion in all (presumably in $ 2024). 

I assume Mr Flint’s figures include a new rail bridge over Lake Burley Griffin by the ACT government to follow Commonwealth work upgrading the existing road bridges, which will presumably also be complete by 2028. 

I have assumed for the table that the new rail bridge may cost about $150 million (the recently completed two-lane road bridge over the Clyde River at Nelligen reportedly cost $148 million), and be completed by say 2033.

Canberra Metro could then be contracted to build Light Rail stage 2b, if all necessary approvals etcetera have been obtained.

It may be necessary, of course, to break this into substages, given the complexity of issues such as getting from State Circle to Adelaide Avenue (or alternatively taking the route through Barton) and providing stations accessible across the Adelaide Avenue and Yarra Glen grade-separated motorways.

So we could be up for $6.6 billion all up for Stages 1 and 2. By about 2038 we may be paying installments on all three stages – nearly $1.6 billion that year! 

That marks the end of payments on Stage 1, but potential ongoing installments of about $150 million each year until we finish paying for stage 2a in about 2047. That’s assuming, of course, the government doesn’t decide to enter more long-term contracts for light rail!

Richard Johnston is an architect and town planner, and formerly a senior executive in the ACT Planning and Land Authority. He is a life fellow of the Planning Institute of Australia.