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Tram project to cost taxpayers $939 million in today's dollars, says ACT government

The 12-kilometre tram line from Gungahlin to the city will cost ACT taxpayers $939 million in today's dollars, including operations, capital and financing.

Transport Canberra acting deputy director-general  Duncan Edghill outlined the costs on Tuesday, as the private-sector consortium contracted to build and operate the line reached financial close.

Last week, the government announced it had signed a contract with the Pacific Partnerships-led Canberra Metro consortium for $710 million. The precise figure is $707 million, and it is the construction cost for the 12-kilometre line.

Mr Edghill said the $707 million figure came with a 75 per cent confidence level – meaning there is a 75 per cent chance the tram line will be built at $707 million or less. The figure has come in considerably below the 2014 business case figure of $783 million.

The $707 million figure also includes a contingency of about  20 per cent for the government side of the shared risk. Although most of the risk of the project costing more than expected is worn by the consortium, the government will share any extra costs associated with planning approvals, unexpected contamination and "force majeure" events.

But as far as taxpayers and the ACT budget are concerned, the relevant figure is $939 million, which is the net present cost of the entire 20-year project – the cost in 2016 dollars of the construction, operations and financing.

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Mr Edghill said the consortium would be paid a $375 million lump sum at the end of construction – likely to be 2019 – then a monthly "availability" payment for 20 years.

The availability payment averages $64 million a year for 20 years, starting at $47 million in the first 12 months of operations, and reaching about $75 million in 2038. (The numbers were adjusted at financial close on Monday so will be slightly different.) But Mr Edghill said the availability payments were in actual dollars for each of those years, not in today's dollars, so simply adding them up (to $1.3 billion) gives a distorted result.

Mr Edghill said the ACT budget impact would be spread across capital and recurrent spending. The lump sum would come from the capital budget; the monthly availability payments would come from both capital and recurrent budget.

The government will get fare income and will bear the brunt of lower revenue if fewer people than expected use the tram.

But Mr Edghill said the contract with Capital Metro allowed payments to be withheld if the consortium was not performing – such as missed services, late trams, dirty trams, or unacceptable levels of fare evasion.

The 2014 business case predicted 15,120 passengers a day by 2021, two years after it begins operation, rising to 20,207 by 2031. In the morning peak, 3946 passengers would use the tram in 2021, and in the afternoon peak 3607.

The project reached financial close on Monday, marking the beginning of the contract.

Capital Metro Minister Simon Corbell welcomed the "significant milestone".

"The light rail project will provide an improved public transport network for Canberrans, along with a significant economic boost, supporting thousands of jobs," Mr Corbell said.

Liberals transport spokesman Alistair Coe said the government should publish the contract and all subcontracts in full.

"For Canberrans to be properly informed about the biggest infrastructure spend in the history of the ACT, the contracts need to be fully published and the full terms laid out for all to see," Mr Coe said. "The government's decision to sign this massive contract and not release the details is despicable."

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