NEW figures for the proposed sinking of the rail line between Perth and Northbridge have brought claims that the City of Perth’s original vision has fallen victim to the State Government’s cost shifting.
Preliminary figures for the Northbridge rail link redevelopment project have indicated that, over the 10-year life of the project, sinking the rail to Milligan Street will cost $128 million.
It’s estimated the difference between revenue raised from the sale of railway land and the project’s costs will leave the City of Perth with a debt of $93 million (inclusive of $25 million interest on loan).
An Ernst & Young report commissioned by the City of Perth originally estimated costs of $110 million to sink the rail all the way to Mitchell Freeway. This was to be countered by $100 million generated by land sales.
Proponents of the rail project claim the State Government has added a number of its own costs to the balance sheet for the City of Perth to cover, adding to the cost blow-out.
According to the preliminary figures, the City of Perth is being requested to cover more than $30 million of what sources believe are State Government costs.
The State Government requirements include: that the City of Perth contribute $20 million to a new bus station; pay $6 million for the government-owned Entertainment Centre car park land; and contribute nearly $3 million to modifications to the Perth Central Station and tunnel maintenance.
It is also understood the State Government has requested that the City of Perth pay $500,000 per year to the Government for lost parking fees.
One source spoken to by WA Business News said the Government-appointed rail committee was under huge pressure from the State Government to finalise its report on the project so that the rail contract can be signed off at the end of February next year.
Another source said the City of Perth was being pushed into a corner and was unable to verify project cost estimates with New Metro Rail.
“Because we can’t verify the figures it makes it difficult to have any faith,” he said.
Another contact said New Metro Rail had decided not to sink the rail beyond Milligan Street, an option rail proponents believe would release more valuable land and make the project more viable.
Property Council of WA executive director Joe Lenzo said there was industry concern that the cost would balloon out and that City of Perth ratepayers would bear the burden.
“The City of Perth and the State Government ought to put their heads together again to come up with a financial package that won’t leave the City of Perth ratepayers with a huge debt on their hands,” he said.
Among the business people contacted for comment by WA Business News, Pricewater-houseCoopers managing partner Andrew Edwards said the project had the potential to push rates up and that there did not appear to be any analysis of whether the project would increase the number of people coming into or doing business in the city.
Clayton Utz acting partner in charge, Paul Fitzpatrick, said while sinking the rail would make Perth a more aesthetically pleasing and functional place, if the business community were asked to fund the project’s profit shortfall, attitudes to it may harden.
“The State Government has an obligation,” Chamber of Commerce and Industry of WA deputy chief executive, Ross McLean, said.
“It can’t treat the City of Perth like any other municipality, it contains our commercial pre-cinct, civic affairs and houses government and it is the capital city.”
Planning and Infrastructure Minister Alannah MacTiernan was unavailable for comment.
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