A new rail crossing under the harbour and trains so frequent that no timetable is needed will lift the "heavy, wet blanket" of transport congestion weighing down Sydneysiders, Premier Mike Baird says.
The Coalition government is hoping the big ticket rail project - long mooted but never before funded - will be enough to counter public fears over electricity privatisation at the state election in March.
Baird: Sydney Rapid Transit to 'transform commuting'
NSW Premier Mike Baird and Transport Minister Gladys Berejiklian comment on the proposed Sydney Rapid Transit system. Nine News
The partial electricity sale would fund the crossing, which is needed to cope with a natural growth in passenger numbers and the thousands of extra commuters set to flood the network when the north-west rail link is built.
The proposed system, known as Sydney Rapid Transit, would connect the north-west rail link to the city via a line running under the harbour. Passengers would no longer have to change trains at Chatswood. The line would continue west to Bankstown, replacing the existing Bankstown line.
The rapid transit network would run separately to the rest of the rail system, using single-deck trains operating as a "turn up and go" service, doing away with timetables. It would not accommodate double-deck inter-urban trains.
The new harbour crossing would free up space on existing lines and allow more frequent services.
Along with upgrades to the rest of the network, the project aims to provide capacity for up to 30 trains per hour in each direction, allowing 60 per cent more trains in peak periods across the network, carrying an extra 100,000 people per hour.
Five new train stations will be built at Central, Pitt Street, Martin Place, St Leonards-Crows Nest and Victoria Cross, near North Sydney. The city stations are expected to alleviate overcrowding at Town Hall and Wynyard.
Premier Mike Baird did not commit to a time frame for the new harbour crossing, which was already part of the government's long-term transport plan.
Infrastructure NSW will be asked to provide costs and timing for the work by November. Previous estimates have put the cost of a crossing at $10 billion or more.
"Clogged roads and crowded trains are like a heavy, wet blanket sitting on our lives," Mr Baird said.
"NSW, on the back of what we are announcing today … will never be the same again.''
On Tuesday, Labor leader John Robertson opposed the privatisation plans but would not say if he supported the need for a second harbour rail crossing.
Before the last election, when he was transport minister, he rejected the idea. He instead advocated a "staged approach" to increasing rail capacity in the city, including a line connecting Redfern with a new station near Wynyard.
"Mike Baird hasn't promised a second harbour crossing today - he's promised a committee will look into a second harbour crossing," Mr Robertson said.
Greens MP Mehreen Faruqi said a second harbour crossing that was not integrated into the rest of the network would restrict capacity and "waste billions".