Each month light rail is delayed, Canberra Metro will lose millions

Each month light rail is delayed, Canberra Metro will lose millions

Canberra Metro stands to lose between $2.8 million and $4.7 million each month Canberra's light rail project is delayed, money it will never recoup because of the way the contract is designed, ACT government officials say.

The Gungahlin to Civic rail line is scheduled to be completed in December, and both the government and the consortium has maintained they will meet that deadline despite reports of missed milestones.

A light rail vehicle being tested in Mitchell: Canberra Metro says stage one will be completed in December.

A light rail vehicle being tested in Mitchell: Canberra Metro says stage one will be completed in December. Credit:Sitthixay Ditthavong

However in Estimates this week, government officials said even if the tram is delayed, it is not the territory that will lose out.

Under-Treasurer David Nicol said the territory's $375 million capital contribution to the project would not be paid until operations began.


"It’s quite a significant incentive for the consortium to start operations as soon as is safe for them to do so," he said.

Availability payments each month to a total of $47 million for the first year will also be delayed until commencement.

The exact monthly payments are commercial in confidence, but they range between $2.8 million and $4.7 million a month, a government spokeswoman said.

Capital Works director of infrastructure, finance and reform David Asteraki said if completion was delayed, the consortium would never see that money.

“The end date of the contract is fixed relative to the due date for construction completion rather than actual date of construction completion so if they’re late we don’t pay those availability payments but those payments are lost forever because there’s no catch up at the end so it’s a very powerful incentive," Mr Asteraki said.

The light rail project is only the territory's second public-private partnership. The first has been beset by delays.

The courts project is running nine months behind schedule, the estimates committee heard.

And while some trials may have to be moved to Queanbeyan in the interim, officials were at pains to stress the territory was not in the negative because of the delays.

The ACT saves approximately $1.16 million a month each month stage one is delayed, and $1.74 million a month for stage two.

The territory will pay for the courts over the next 25 years, and will only begin paying once construction has been completed.

However if completion is delayed by three months, the contract runs for 24 years and nine months, rather than the contracted 25 years.

The government appears to have set its eye on more public-private partnerships with the creation of the Capital Works division in February that's responsible for procuring private partners and handling transactions.

The arrangements mean large-scale infrastructure projects are largely kept off-the-books until they are handed over.

However governments across Australia will soon be forced to bring billions of dollars worth of infrastructure projects onto balance sheets, with new rules soon to be brought into force.

As it stands, the ACT records the projects as finance leases, which - in the context of light rail stage one - means the project's liabilities, cash flows and assets are not recorded, even though the project will become operational in December.

However new accounting standards will force governments to acknowledge the risks they are exposed to because of public-private partnerships.

The Pegasus report on the ACT government warned the impact of these new rules on the territory's budget balances was uncertain.

However a government spokesman said while the new rules had been discussed at the recent board of treasurers meeting, they would not be in effect for several years.

Katie Burgess is a reporter for the Canberra Times, covering ACT politics.

Most Viewed in Politics