PORTFOLIO COMMITTEE NO. 6 – TRANSPORT AND CUSTOMER SERVICE Friday 30 August 2019 Examination of proposed expenditure for the portfolio area TRANSPORT AND ROADS UNCORRECTED The Committee met at 9:30 MEMBERS Ms Abigail Boyd (Chair) The Hon. Mark Banasiak The Hon. Catherine Cusack Ms Cate Faehrmann The Hon. Wes Fang The Hon. John Graham The Hon. Shayne Mallard The Daniel Mookhey The Hon. Peter Primrose PRESENT The Hon. Andrew Constance, Minister for Transport and Roads CORRECTIONS TO TRANSCRIPT OF COMMITTEE PROCEEDINGS Corrections should be marked on a photocopy of the proof and forwarded to: Budget Estimates secretariat Room 812 Parliament House Macquarie Street SYDNEY NSW 2000 Friday, 30 August 2019 Legislative Council Page 1 The CHAIR: Welcome to the public hearing for the Inquiry into Budget Estimates 2019-2020. Before I commence I acknowledge the Gadigal people, who are traditional custodians of this land. I also pay respects to the Elders past and present of the Eora nation and extend that respect to other Aboriginals present. I welcome the Minister for Roads and Transport and accompanying Transport officials. Today the Committee will examine the proposed expenditure for the portfolio of Transport and Roads. These hearings are webcast, so we are all live on the Parliament's website. They are also open to the public. In accordance with the broadcasting guidelines, while members of the media may film or record Committee members and witnesses, people in the gallery should not be the primary focus of filming or photography. I remind media representatives that you must take responsibility for what you publish about this Committee's proceedings. The guidelines for the broadcast of proceedings are available from the secretariat. All witnesses in budget estimates have the right to procedural fairness according to the procedural fairness resolution adopted by the House in 2018. There may be some questions that a witness could only answer if they had more time or with certain documents to hand. In those circumstances witnesses are advised that they can take a question on notice and provide an answer within 21 days. Any messages from advisers or members' staff seated in the public gallery should be delivered through the Committee secretariat. Minister, I remind you and the officers accompanying you that you are free to pass notes and refer directly your advisers seated at the table behind you. Transcripts of the hearing will be available on the web from tomorrow morning. Finally, could everyone please turn their mobile phones to silent for the duration of this hearing. Before we commence the hearing, I advise witnesses that Government members will not ask questions during the morning session. For that reason we have shortened the session by one-third so this session will conclude at 11.30 a.m. All witnesses from departments, statutory bodies or corporations will be sworn prior to giving evidence. Minister, I remind you that you do not need to be sworn as you have already sworn an oath of office as a member of Parliament. The same applies to Ms Eleni Petinos. For all other witnesses, I ask that you each in turn, firstly, state your name, position title and agency and, secondly, swear either an oath or an affirmation. PORTFOLIO COMMITTEE NO. 6 - TRANSPORT AND CUSTOMER SERVICE UNCORRECTED Friday, 30 August 2019 Legislative Council Page 2 ANTHONY WING, Point to Point Transport Commissioner, sworn and examined ANAND THOMAS, Program Director, Parramatta Light Rail, sworn and examined STEVE PASCALL, Project Director, Sydney Light Rail, sworn and examined ELIZABETH MILDWATER, Deputy Secretary, Greater Sydney, Transport for NSW, affirmed and examined RODD STAPLES, Secretary, Transport for NSW, sworn and examined HOWARD PAUL COLLINS, Chief Executive, Sydney Trains, sworn and examined SIMON DRAPER, Chief Executive Officer, Infrastructure NSW, affirmed and examined FIONA TRUSSELL, Acting Chief Executive, Roads and Maritime Services, sworn and examined JOHN HARDWICK, Executive Director, Sydney Division, Transport for NSW, sworn and examined JON LAMONTE, Chief Executive, Sydney Metro, sworn and examined STEFFEN FAURBY, Chief Executive, State Transit Authority, sworn and examined GRANT GILFILLAN, Chief Executive Officer and Director, Port Authority of NSW, sworn and examined The CHAIR: I declare the proposed expenditure for the portfolio of Transport and Roads open for examination. The questioning of this portfolio will now begin. All witnesses, including the Minister and Ms Eleni Petinos, will be questioned in the morning session. After a lunch break we will continue questioning of Government witnesses. The Minister and Ms Eleni Petinos will not be questioned in the afternoon or evening sessions. As there is no provision for any witness to make an opening statement before the Committee commences questioning, we will begin with questions from the Opposition. The Hon. DANIEL MOOKHEY: Hello, Minister. Mr ANDREW CONSTANCE: G'day. How are you? The Hon. DANIEL MOOKHEY: Very well. Good to see you again. Mr ANDREW CONSTANCE: That is the way, Mr Mookhey. I am glad to see you The Hon. DANIEL MOOKHEY: It is pronounced Mookhey. We will get it right this time. Mr ANDREW CONSTANCE: Hang on, it is spelt M-O-O so— The Hon. DANIEL MOOKHEY: I believe, Minister, I probably have an understanding of how to pronounce my name. Mr ANDREW CONSTANCE: Okay, just be relaxed. The Hon. DANIEL MOOKHEY: But we are off to a good start. Take it on notice. Mr ANDREW CONSTANCE: Thank you for getting leave from ICAC. It is good you are here too. The Hon. DANIEL MOOKHEY: We were playing bingo as to how soon it would be before you raised that. You are winning so far. Mr ANDREW CONSTANCE: Fire away. You are wasting your time. The Hon. DANIEL MOOKHEY: Thank you for the appearance of yourself and all your officials, and hello to Ms Eleni Petinos. In June you announced that taxpayers will be paying Acciona another $576 million to settle its lawsuit, which alleged that your Government engaged in misleading and deceptive conduct, amongst other things. The light rail was meant to cost $1.5 billion and we learnt within six months of the contract being signed that it would cost $2.1 billion. We now have the price tag up to $2.7 billion. Just a very simple question to start off with: What is the light rail going to cost? What is the forecast final cost for the CBD light rail? Mr ANDREW CONSTANCE: When I announced the reset of the public-private partnership [PPP] I made it clear that we would have the final cost when the passengers were on board and that should be December. The Hon. DANIEL MOOKHEY: Yesterday the Treasurer said that he anticipates the cost is going to be circa $3 billion. Is that also your expectation? PORTFOLIO COMMITTEE NO. 6 - TRANSPORT AND CUSTOMER SERVICE UNCORRECTED Friday, 30 August 2019 Legislative Council Page 3 Mr ANDREW CONSTANCE: My expectation is to be able to finalise the cost when we have the first passenger on board. The Hon. DANIEL MOOKHEY: And that, you say, is likely to be in December? Mr ANDREW CONSTANCE: When we announce the $576 million PPP reset, which had a number of important outcomes as a result of that commercial negotiation, I indicated there would be additional costs above that and that we would know the final cost when we saw passengers on board in December. The Hon. DANIEL MOOKHEY: Transport for NSW entered into that settlement on 31 May this year, is that correct? Mr ANDREW CONSTANCE: I think so. I can check that. The Hon. DANIEL MOOKHEY: Mr Staples? Mr STAPLES: I would have to check the exact date, but that sounds about right. The Hon. DANIEL MOOKHEY: And did the $576 million settlement, or as you call it the PPP reset, resolve all of Acciona's outstanding claims? Mr ANDREW CONSTANCE: There was $1.5 million of claims and modifications that were resolved as part of that reset— The Hon. DANIEL MOOKHEY: Sorry, can you just repeat that? Mr ANDREW CONSTANCE: —along with $1.1 billion of— The Hon. DANIEL MOOKHEY: Minister, can you just repeat that? I did not hear it. The Hon. CATHERINE CUSACK: Point of order: I am interested in these answers. If the member asks a question and then talks over the Minister I cannot hear what the Minister is saying. The Hon. DANIEL MOOKHEY: I legitimately just did not hear the Minister's response. The CHAIR: I think he was just asking for the microphone to perhaps be brought closer. Are you having trouble hearing? The Hon. DANIEL MOOKHEY: I cannot actually hear. Minister, can you bring the microphone forward. Mr ANDREW CONSTANCE: It is okay. I would hate for you not to hear this answer. It is important. The Hon. DANIEL MOOKHEY: Thank you. Mr ANDREW CONSTANCE: When we announced the reset of the PPP there was a number of outcomes in terms of that commercial negotiations. One of the key elements was there was about $1.5 billion of claims and modifications that were in dispute. They were resolved, along with a court case that Acciona subsequently withdrew. That was a claim of around $1.1 billion. We were able to incentivise another contractor through that reset to be able to meet the delivery program in 2019 for the first stage, and the second stage by March to Kingsford and Kensington. For us, it was an important reset. They lost skin and, of course, we lost skin. Ultimately we have ended up, as the Premier and I experienced the other day, with a fantastic project in the heart of our city. The Hon. DANIEL MOOKHEY: Good to hear. When you say that it resolved the $1.5 billion of outstanding claims made by the consortium, presumably that would that would cover the design and construction claims, the utility work claims and operational maintenance claims.