Despite its clear, measurable success and popularity, a constant swirl of controversy seems to surround light rail in the ACT. Whether focus is on the first stage of light rail from Gungahlin to Canberra’s City Centre, the second stage that will extend the line south to Woden across Lake Burley Griffin, or future stages beyond, PTCBR has noticed a set of common anti-light rail points circulating in Canberra that range from the tendentious to the outright false.
We embrace robust public debate about transport and infrastructure in the nation’s capital – and we believe that such debate should be based in fact, not fiction.
To this end, PTCBR is launching a new series of articles: Light Rail Mythbusters. Over the coming weeks and months, we’ll be tackling the main anti-light rail myths, mistruths, and negative talking points commonly seen and heard in the ACT. We seek to put forward factual discussion and rebuttal of these points as an aide to anyone who seeks a deeper understanding of the issues – and to produce a handy resource to send to those who still haven’t accepted the results of the 2012, 2016 and 2020 ACT elections.
The first topic we’ve chosen to discuss is one frequently subject to hyperbole, misunderstandings, and imaginative rhetoric: cost.
Past, present, future, capital, operational: what is the real cost of light rail in the ACT?
The Claim: Light Rail is a significant drain on the ACT’s budget
The Reality: Less than 1% of the ACT Government’s annual expenditure is allocated to the cost of building, operating and maintaining Canberra’s existing light rail network.
Opponents of light rail often talk about cost – how much Stage 1 cost to build, how much it costs to operate, how much future lines will cost. It’s usually the first port of call for any critic looking to take a swing at the project.
There’s plenty of commentary about this issue – but what’s the real story?
Stage 1: Gungahlin to City
The construction cost for Canberra’s Light Rail Stage 1 came in at $675 million for 12 kilometres of double track, 14 Light Rail Vehicles (LRVs), a depot and 13 stations. The initial estimate was $783 million, which places the final cost at $108 million under budget. Compared to other light rail projects in Australia and around the world, the Gungahlin to City light rail line stands as a fantastic example of a well-executed project that balanced quality and value-for-money and is recognised as such.
How does that cost factor into the ACT budget? Understanding this first requires an understanding of how light rail is administered and funded here.
Light Rail Stage 1 is run under a public-private partnership (PPP) between the ACT Government and the Canberra Metro consortium, which comprises private companies responsible for all aspects of the system including operations, maintenance, supply of LRVs, and more. The Project Agreement between the two parties is for the design, construction and financing of the light rail line and operation and maintenance of light rail over a 20-year period. For details, refer to the City to Gungahlin Light Rail Project Delivery Report, June 2019.
Under the Project Agreement, the ACT Government pays Canberra Metro a set amount each year that goes towards repayment of construction costs and ongoing operations costs – this is called an “availability payment”. The table below shows the payment profile over the course of the 20-year agreement, after which the assets revert back to the ACT Government at no cost:
Figure 1 shows how much money Light Rail Stage 1 has and will cost the ACT budget each year. For the most recent financial year (2022-23), the availability payment was $57 million. This is also reflected in budget estimates. (Note that $57 million is significantly lower than the $100 million per year figure suggested by former ACT Opposition Leader and vocal light rail stage one critic Alistair Coe.)
To put this $57 million figure into context, let’s examine the ACT budget for the financial year 2022-23. Below is a graphic from Government’s 2022-23 ACT Budget documents showing major spending categories:
We can quickly spot the biggest spending categories – health and education far out in front at $2.2 billion and $1.6 billion respectively, with city services next at $527 million. Transport costs us just $291 million, and within that transport cost sits the light rail availability payment of $57 million. The numbers are clear – among Territory government expenditure, light rail barely rates as a significant cost.
Let’s break this down even further. The chart below, generated from ACT Budget 2022-23 figures and Light Rail Stage 1 availability payment figures, shows the major categories of spending in the 2022-23 budget. The light rail availability payment has been removed from the “Transport” category and shown separately – in bright red – to highlight how light rail expenditure fits into the ACT Government’s yearly expenditure:
All up, less than 1% of the ACT Government’s annual expenditure is allocated to the cost of building, operating and maintaining Canberra’s existing light rail network.
The idea that light rail is a “drain” on the ACT Budget simply does not stand up to scrutiny – the fact is that the Territory pays a set amount each year to run the Gungahlin to City line under a clearly-defined funding arrangement.
Some may wish to insist that the money that pays the light rail availability payment each year could have been spent elsewhere – that is, that we should not have proceeded with the Gungahlin to City line. One could say the same thing about anything in a given budget. Government spending is a matter of balancing competing priorities and carrying out the wishes of the electorate that voted in that government – and that is what the ACT Government has been doing. When we vote in our elected representatives, we are voting for the policies they present to us, and Canberrans have voted in a pro-light rail government in three successive elections now. It is also clear from the numbers above that the cost of light rail Stage 1 is simply dwarfed by spending on health and education – even if the entire cost of light rail went to one of those other spending categories, it would be a minor contribution at best.
Let's make sure we're comparing apples with apples. Infrastructure costs are often presented to the general public as lump sums, whereas many other types of government spending like health and education are presented differently - perhaps in terms of discrete projects or as the cost per financial year, if discussed at all. This creates a distorting effect whereby infrastructure costs can seem truly enormous, especially when most of us aren't dealing with costs at this scale every day and don't have easy points of reference. However, when we understand these numbers in context - e.g. within a budget, alongside comparable projects, and/or in comparison to alternate projects - and when we know what they mean, they become comprehensible and we can start to evaluate them properly.
That’s Stage 1 explained. What about costs beyond that and into the future?
Future Light Rail Costs
Light Rail Stage 2A to Commonwealth Park. With the recent announcement that the contracts to build Light Rail Stage 2A are signed, we now know the cost of the project – $575 million. At first glance this may seem like a big investment for 1.7 kilometres of new light rail track, but it is important to view this project for what it truly is: investment in a genuinely city-shaping urban renewal project that will bring new life to neglected areas of the city, and an enabler for much more productive land use. Stage 2A also includes front-loaded costs that won’t have to be spent on Stage 2B, including wire-free running requirements.
Unlike Stage 1, construction for Stage 2A will occur in constrained, built-up areas where factors such as utilities and existing structures need to be carefully managed, and where stringent heritage requirements apply. PTCBR has strong views on what we perceive to be excessive design and heritage-related requirements that are affecting both the cost and pace of light rail delivery, but the reality is that they are a part of the project and must be adhered to. It’s also important to note that as a short extension of 1.7 kilometres, Stage 2A isn’t able to benefit from economies of scale in the same way the larger, 12 kilometre project like Stage 1 could and did, hence the difference in the per kilometre cost.
Like many other projects across Australia, Stage 2A has also been affected by the current construction environment in which delays are accompanied by considerable cost increases; reasons for this include disruptions to global supply chains, scarcity of materials, a tight labour market, and skills shortages. While there will always be a range of factors affecting the price tag of any given project, it’s clear that time matters when it comes to cost. Locking a project in and proceeding without delay or major design changes, as was done for Stage 1, will be critical in avoiding unnecessary cost escalations for future stages of light rail.
Five new LRVs, modifications to existing fleet, expanded depot. In 2022 a $199 million contract was signed for procurement of five new LRVs, modification of the existing fleet for catenary-free or “wire-free” running, expansion of the Mitchell depot, and associated operations and maintenance costs. You can find those details here under the heading “Variations”. The new LRVs and modifications to the existing fleet are necessary to ensure compliance with the requirement for wire-free LRV operation in Canberra’s Central National Area, as set by the National Capital Authority. This isn’t just for Stage 2A – it also ensures our entire fleet of 19 LRVs can make the full, wire-free journey across the lake and through the Parliamentary Zone to Woden as part of Stage 2B, and across Constitution Avenue to Russell and the Airport as part of the future Stage 3.
Light Rail Stage 2B to Woden. The next stage of Canberra’s light rail network, Stage 2B, will take the line from Stage 2A’s interim terminus at Commonwealth Park over Lake Burley Griffin, through the Parliamentary Zone, and south to Woden. This extension was ACT Labor’s key commitment at the 2016 ACT Election.
Now that approvals are completed and contracts are signed for Stage 2A, planning and preparation for Stage 2B is underway. We understand that this will be a technically complex project with various engineering and design challenges and will require ongoing negotiations with key stakeholders, including the National Capital Authority, the Department of Climate Change, Energy, the Environment and Water, and both houses of the Australian Parliament. In this complex environment, speculation about cost is both difficult and of limited use – and PTCBR will be refraining from discussion of potential cost beyond what is already on the public record.
Let's set ourselves up for success. Timely and cost-effective construction needs an established workforce to make it happen. The ACT Government made a grave misstep in not pushing straight on with further light rail stages after the successful completion of Stage 1 - this has meant that the ACT now needs to compete for materials and skilled labour in an increasingly crowded construction market. Going forward, we need to maintain a pipeline of work for the ongoing delivery of Canberra's light rail network to enable us to retain our construction workforce and keep costs down.
What about Raising London Circuit? While Raising London Circuit (RLC) certainly helps with the effective operation of Light Rail Stage 2A, it was not designed nor intended to be an integral part of the project. Despite what RLC marketing may state, it has always been a separate project with its own business case and construction contract.
As can be seen in the below extracts from the Stage 2A EPBC referral and the RLC business case, the original plans for Stage 2A did not depend on an at-grade London Circuit:
RLC is in fact part of a broader plan for Canberra’s Central National Area, devised by the National Capital Authority in the early 2000s as part of its Griffin Legacy project. It is now being delivered by the ACT Government and the City Renewal Authority to create better connections to and from Lake Burley Griffin, improve urban amenity, and boost economic performance by significantly improving land use in Canberra’s City Centre.
RLC will undoubtedly improve the urban environment that Light Rail Stage 2A will operate in, but it is a mistake – albeit one encouraged by ACT Government messaging – to suggest that they are part of the same overarching project and should be included under the same cost umbrella.
Future light rail lines – Belconnen, Airport, Fyshwick, Molonglo and beyond. We don’t know how much future light rail lines will cost, but we do know that the cost of delivering infrastructure projects goes up over time. Thirty years ago, a full city-wide network was forecast to cost just over $1 billion in 2019 dollars. The longer we wait to build each stage, the more expensive it is going to be to connect each of Canberra’s town centres by fast, frequent, reliable and popular mass transit.
PTCBR has compiled an interactive map showing the ACT Government’s current intentions for Canberra’s city-wide light rail network. Recently, contracts have recently been awarded for a body of work entitled “Transport Canberra Future Light Rail – Network Plan Refresh and City Future Proofing”; while it’s great to see renewed action from government regarding future planning, words on a page are one thing and shovels in the ground are another. We will continue to lobby both the ACT and Federal Governments to speed up delivery of this vital city-shaping project.
Cost: it’s both simpler and more complicated than you think
In this article we’ve discussed the cost of building and running light rail, but it is also important to consider the cost of not doing so. Remember, the status quo isn’t free!
What is the cost of not building light rail? More congestion, more air and noise pollution, longer commutes, higher cost of living, scarce parking, more dangerous roads for all – take your pick. Canberra is a growing and changing city in a world increasingly affected by climate change, and we don’t have endless space for more cars and roads and carparks. It would be environmentally, economically and socially negligent to continue building our city in such a way that forces Canberra households into increasingly unsustainable car dependency.
Instead, we should be building a city that is future-focused, resilient, and provides its residents with genuine transport choice. This means, among many things, strong investment in public transport.
We trust that this first instalment of our Light Rail Mythbusters series has answered your questions and provided clarity on the cost of light rail in the ACT. Despite what some would have you believe, there is no mystery about what is currently spent on light rail in the ACT – and the money we do spend on it, now and into the future, is an important investment in our city’s liveability and future resilience.
The next time someone complains about light rail “draining” the ACT budget, you know where to send them!
Stay tuned for more instalments in this series over coming weeks. Future topics include:
- “Light rail is old technology – we need something new!”
- “Buses are more flexible than a fixed-track system – why not just expand the network?”
- “Electric buses would produce the same environmental outcomes for a smaller price tag!”