The Committee for Sydney has today called on the NSW Government to consider new and additional funding options to fully fund Sydney’s mass transport plan, warning that uncertainty could put future major projects at risk.

The government is investing a record $93 billion in infrastructure funding over the next four years, on game-changing projects like Sydney Metro, Sydney Light Rail and Parramatta Light Rail. These projects will deliver transformative benefits to Sydneysiders for decades to come.

However, it is becoming clear that the next set of projects are stalled. There have not been significant new tenders in the market since the end of 2018. We know the pipeline is ready – so the most likely reason for the delay and uncertainty is that Government is struggling to come up with the funding.

No one can deny how expensive these infrastructure projects are. But they are absolutely essential for the long-term viability of Sydney.  In truth, the projects under construction are largely a form of catch-up, after a decade of not adding infrastructure, while population continued to grow.

However, by 2040 Sydney is projected to have a population of 8 million people – the same as London. But we’re many times larger geographically. There is simply no way for a city of that size and scale to function without a comprehensive mass transport system. For Sydney to keep working, it is going to have to come up with the funds to build new infrastructure far into the future.

West Metro, the extension of West Metro to the new airport, North/South rail in Western Sydney, Parramatta Light Rail Phase 2, Western Harbour Tunnel and a host of other critical infrastructure projects need to move forward now.

If these projects are delayed any longer, the workforce that Sydney has spent the last five years gearing up for our major infrastructure projects will have nowhere to work when the current round of projects finishes. And they’ll most likely move to Melbourne where their infrastructure boom is just starting.

It has taken incredible fiscal discipline to come up with the $93bn that has been committed on infrastructure. $20 billion came from the long-term lease of the poles and wires, but the rest came from the general budget. Most funding for infrastructure does not come from selling assets, but from discipline about controlling other costs, making the long-term investments a priority. Whilst the NSW Government is investing record amounts into infrastructure, real terms capital spending is budgeted to decline between now and 2021-22. Now is the time to talk about how we fund the shortfall in order to maintain investment.

We live in a world of finite resources, and governments will always have to make hard choices about priorities. But there is a difference between current services that government provides and investments, which will yield long-term returns. A fully developed metro network, supported by other key transport investments like light rail and rehabilitation of the older train network, will unlock economic potential, lower household transport costs, and re-align the way the city works for an era of climate change.

The Government should look seriously at selling the remaining stake in WestConnex and other assets to recycle. It should also seriously consider putting in place land value recapture levies and exploring the merits of a land tax. Additional borrowing is a clear option, taking advantage of the historically low interest rates. Public private partnerships (which means paying for infrastructure over time through annual availability payments) is another form of borrowing, but one that transfers some of the risk onto private parties. And there is certainly scope to increase user charges across a range of projects.

Primarily, the funding will come from the general budget of the state of NSW, and it is a matter of prioritising investments in infrastructure, particularly in mass transport, which will generate the most significant long-term social, economic, and environmental returns. It’s worth remembering that the majority of $93bn being spent on infrastructure over the next four years coming from general government revenue ($64.1bn) and that a relatively small amount is funded by Federal Government ($6.3bn) and asset recycling proceeds ($11.2bn). 

While no Premier or Treasurer wants to be the one to tip a Government from a small surplus to a small deficit, certainly no Premier or Treasurer should want to be the one that turns off the infrastructure boom right when we need it the most, and before the job is done. 

Note to editors:

1. The Committee for Sydney is an independent think tank and champion for the whole of Sydney, providing thought leadership beyond the electoral cycle. The Committee aims to enhance the economic, social, cultural and environmental conditions that make Sydney a competitive, resilient and liveable global city. The Committee has a diverse membership with over 150 member organisations.