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If you build it they will come – maybe: Auditor issues warning on Cross River Rail

Queensland biggest infrastructure project, the $6.9 billion Cross River Rail, is at risk of failing to provide value for money unless public transport usage improves dramatically from current levels, the Palaszczuk Government has been warned.

Dec 01, 2022, updated Dec 01, 2022
The massive cavern that will house Cross River Rail's new underground station at Albert St. (Supplied image)

The massive cavern that will house Cross River Rail's new underground station at Albert St. (Supplied image)

An examination by Queensland’s Auditor-General Brendan Worrall has revealed that the project’s costs may outweigh the benefits it delivers if a slump in the number of rail passengers is not reversed quickly.

Cross River Rail, a massive project that will deliver a new 10.2 kilometre train line and several rail stations in Brisbane and the Gold Coast, has been hailed as a solution to south-east Queensland’s congested transport network.

The project’s 2017 business case estimated its benefits would exceed its costs by about $1.9 billion and that every dollar invested would return $1.41 in benefits to Queenslanders. The Government is particularly focused on the economic value produced by new underground rail stations to Roma St, Albert St, Boggo Road and Woolloongabba

However, the auditor-general’s examination of the forecast increase in rail users the government has relied on to justify the project shows the figures have been severely affected by factors such as  the Covid-19 pandemic.

“The business case projected that the daily rail passenger usage in South East Queensland with the operation of CRR would increase by 103 per cent over the period from 2015 to 2026 (an average increase of 6.65 per cent per annum),” Worrall reported.

“The actual Queensland Rail Citytrain Network Passenger trips (pre-CRR) data shows the increase in passenger trips for the 4 years from 2015 to 2019 was only 6.6 per cent (an average of 1.6 per cent per annum).”

While he noted rail passenger numbers had begun to improve as the state emerged from the pandemic, it warned “there will need to be a significant increase in passenger trips over time for the forecast benefits of the project to be achieved”.

The auditor-general also pointed to the fact that most of Cross River Rail’s forecast benefits were tied to the expected shift of commuters off SEQ’s roads and onto rail.

Queensland Auditor-General Brendan Worrall

“Assumptions related to the expected numbers of rail users, and to the impacts on road users (which represent 64.7 per cent of the anticipated benefits), are difficult to predict, particularly given changes in commuter behaviour since the Covid-19 pandemic,” his report said.

“The expected benefits of the CRR project should continue to be monitored, and appropriate transport and other strategies implemented, to maximise rail patronage and road user benefits over the medium and long term,” it said.

“The Covid-19 pandemic has impacted on working arrangements, with many people still working from home and not needing to travel.”

“Queensland has also experienced significant population growth in recent years, and this is expected to continue in the lead-up to the Brisbane 2032 Olympic and Paralympic Games.

“These factors are both likely to impact rail patronage and any consequential impact on road usage.”

The auditor-general estimated Cross River Rail’s cost at $6.888 billion, with $5.389 billion coming from public funds and the rest from the private sector.

As of June 30 this year, $4.6 billion had already been spent but the report noted that, as a result of “market forces and schedule adjustments, he actual amount spent to date is about $452 million (9 per cent) less than the projected expenditure for the CRR budget”.

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“The project is being delivered at a time when a lot of public infrastructure is being constructed all over Australia, causing competition for resources,” Worrall said.

“High rainfall, the Ukraine conflict, and the Covid-19 pandemic have also affected the delivery of the project. These factors have delayed supply and increased the costs of materials and the workforce.”

The Cross River Rail Delivery Authority had increased its workforce and extended working hours to deliver the project.

“The Delivery Authority will need to continue to monitor performance and budget, and adjust for impacts relating to the supply chain and consequential pricing outcomes,” the report said.

The delivery authority’s chief executive, Graeme Newton, responded to the report by saying the original business case’s assumptions had been impacted by the pandemic but that passenger numbers had started to improve

“The Delivery Authority is monitoring impacts that have continued to materialise on the CRR
project, including shipping delays and additional manufacturing and freight costs and wait
times for key supplies such as rail steel, lift components, signal relays and signal heads, and
escalation in raw material inputs such as stainless steel,” Newton said in a letter to the auditor-general.

After the report was tabled, Transport Minister Mark Bailey’s office released a statement in which the minister said rail transport was going from strength to strength.

“The passenger experience can only get better as work continues on major public transport infrastructure projects including Cross River Rail, Logan and Gold Coast Faster Rail, Gold Coast Light Rail, and the delivery of 65 new trains through the Queensland Train Manufacturing Program,” he said.

Translink released figures last month saying heavy rail had reached 75 per cent of pre-Covid patronage.

 

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