Creative accounting hides $4b WestConnex blowout

The NSW government’s decisions to fund WestConnex-related projects outside WestConnex’s budget have reduced transparency and understated the full cost of the project by more than $4 billion, a report says.

NSW Auditor General Margaret Crawford.

This amount is outside the updated $16.8 billion business case presented for the 33km motorway network in 2015, which itself was adjusted $2 billion upwards from what was estimated in 2013, when the project was conceived by Infrastructure NSW as a single integrated concept.

A performance audit released on Thursday examined whether Transport for NSW and Infrastructure NSW effectively assessed and justified major scope changes to the project since 2014 when the Sydney Motorway Corporation was established to fund, deliver and operate WestConnex.

The report found “robust analysis” was used to develop and incorporate design improvements into the updated 2015 strategic business case for the project.

But Auditor General Margaret Crawford says the absence of a “whole-of-program” system of review for WestConnex allowed some costs and stated benefits to avoid scrutiny.

Sydney Gateway cost underestimated

The report says the $1.76 billion price tag for the high-capacity Sydney Gateway road and rail connection between the St Peters Interchange and Sydney Airport, and $2.3 billion worth of network integration costs, were funded outside the WestConnex budget.

The report found the government significantly underestimated the cost of the road component for the Sydney Gateway, which blew out from $800 million to $1.8 billion.

The Parramatta Road improvement program was also funded outside the WestConnex budget to the tune of $198 million.

“Decisions to exclude or remove these elements from WestConnex without justification have seen $4.26 billion of projects funded outside the $16.8 billion budget,” Ms Craword said.

Source: NSW government

More transparency needed

The report makes a number of recommendations including establishing centralised record keeping for major infrastructure projects and ensuring better transparency when complex projects are split into sub-projects.

Rob Sharp

The CEO of Infrastructure NSW Simon Draper said the recommendations of the report would strengthen oversight and reporting around large complex programs.

“Infrastructure NSW has commenced work to enable program level assurance for programs that consist of large complex projects,” he said.

Transport for NSW Secretary Rob Sharp said TfNSW is committed to assessing the impact of scope changes costs and benefits for complex projects.

He said WestConnex was critical city-shaping infrastructure that would ease traffic, create jobs and connect communities. It has already reduced traffic along Parramatta Road by a third, he said.

In August 2018, the NSW Government sold 51 per cent of its stake in Sydney Motorway Corporation for $9.26 billion.

It is currently in the process of selling its remaining 49 per cent stake of Sydney Motorway Corporation, which TfNSW says is part of an asset recycling program providing for investment in schools, hospitals, roads and public transport.

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