THE New South Wales Auditor-General has criticised Transport for New South Wales (TfNSW) over the combined $A 6.8bn ($US 4.4bn) cost of the New Intercity Fleet (NIF) and the Regional Rail Fleet (RRF) ordered by the state. It has also criticised the authority’s handling of the five-year delay to the NIF entering service.

The RRF contract was awarded in February 2019 to Momentum Trains, a consortium of CAF, UGL Rail and Pacific Partnerships.

The contract includes the design, manufacture and maintenance of the new fleet and also the design, construction, maintenance and operation of a new purpose-built maintenance facility in Dubbo, which has been completed and is now operated by UGL.

Deliveries of the new fleet are continuing with six trains now in Australia. However, the Auditor-General says the capital cost of the new fleet has risen by an estimated 53% to $A 2.3bn from $A 1.26bn when the contract was awarded. The first trains were expected to enter service in 2023.

The NIF, a new generation of inter-city diesel trains known as the Mariyung fleet, was built by the RailConnect NSW consortium of UGL, Hyundai Rotem, and Mitsubishi Electric Australia under a contract awarded in August 2016.

Initially comprising 55 10-car trains, the contract was later extended to 610 cars for a total of $A 2.4bn. However, the cost has since risen to $A 4.5bn and the trains only entered service in late 2024 after deliveries began in late 2020, following a dispute with the Rail, Tram and Bus Union (RTBU) over safety concerns. 

In its report, the Auditor-General says TfNSW did not effectively procure either of the two new fleets. In particular, the report says that TfNSW failed to:

  • effectively scope or estimate the full costs of the NIF or the RRF to inform assurance activities or investment decisions, while significantly underestimating the cost of enabling works for both projects
  • properly account for the number of NIF trains needed to avoid overcrowding, despite being aware overcrowding was likely on some peak services, which led to additional works and costs, including purchasing additional trains at higher prices, and
  • engage effectively with drivers and onboard staff during planning and procurement, limiting its ability to manage the risks of industrial action, specifically those related to the decision to introduce driver-only operation of the NIF.

On the positive side, the Auditor-General says TfNSW did follow the processes required by the NSW government and its own procurement policies, and managed probity and conflict of interest issues in alignment with those policies.

The Auditor-General has made five recommendations to TfNSW:

  • improve its use of demand forecasting to inform investment decisions and rolling stock procurement activities
  • introduce mandatory requirements for stakeholder consultation to inform rolling stock procurement projects
  • develop effective assurance processes at all project stages
  • improve public transparency by reporting clearly, consistently and comprehensively on the scope, timeline and costs of projects, and
  • ensure written advice to ministers and the NSW cabinet is comprehensive, evidence-based and objective.