ACT Auditor-General’s Report, Canberra Light Rail Stage 2 – Economic Analysis.  Report No 8/2021

Since the decision to proceed with Light Rail Stage 1, the Territory has pursued an intention to extend the network to Woden as part of Stage 2. In September 2019, the ACT Government announced it had decided to split Light Rail Stage 2 into two components:

  • Stage 2a – a 1.7‐kilometre extension of the existing City to Gungahlin light rail track from the City to Commonwealth Park via London Circuit (West) and Commonwealth Avenue; and
  • Stage 2b – a 9‐kilometre light rail track from Commonwealth Park to Woden via State Circle (East).

On 10 September 2019, a redacted version of the City to Woden Light Rail: Stage 2a City to Commonwealth Park Business Case (Stage 2a Business Case) was made publicly available. 

The purpose of the audit was to review the effectiveness of the economic analysis for the Light Rail Stage 2a Business Case.

Extracts from conclusions of the report

Project Cost Estimates:

  • “… the economic appraisal, the September 2019 Stage 2a Business Case identified a present value figure of $162 million (2019, discounted at 7 percent) for capital costs associated with the construction of Light Rail Stage 2a. However, the capital cost of Light Rail Stage 2a is expected to be higher…”
  • Table 1.1 puts the present value cost of Stage 2A $268 million (2019 prices discounted at 7%pa).

Note: SCT has estimated the cost of Stage 2A at $400 million (2019 prices, using a more realistic discount rate.)

  • “Inadequate information was provided in the Stage 2a Business Case in relation to the development costs, the methodology for quantification and the assumptions underpinning the estimate.”

Note:  A development contract for Stages 2A and 2B has been let to a consultant for $98 million.

Project Cost Estimates:

  • “The Benefit Cost Ratio for Light Rail Stage 2a, calculated to two decimal places, was 0.38 excluding Wider Economic Benefits and 0.56 including Wider Economic Benefits. These were rounded up to 0.4 and 0.6 respectively for the Stage 2a Business Case.”

Note:  An admitted Benefit to Cost Ration (BCR) of only 0.56 and an AG estimate of 0.4.  It will most likely be much less.

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