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Australia Sydney's Delta outbreak adds $500 million to infrastructure price tag

03:15  27 september  2021
03:15  27 september  2021 Source:   smh.com.au

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Sydney's Delta outbreak and two-week construction ban will add about $500 million to the cost of the state's major infrastructure projects, with the NSW Transport Minister saying COVID restrictions could also impact timelines of some mega projects.

As Sydney's construction sector prepares to surge back to full capacity from Monday, Treasurer Dominic Perrottet revealed the state estimated the Delta outbreak would add hundreds of millions to the state's major builds.

He said the Delta lockdown had caused "significant disruptions" to the state's $108 billion infrastructure pipeline, which would inevitably impact project costs.

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"Our early estimates are that it could cost the state around $500 million," Mr Perrottet said.

"NSW Treasury is working with clusters across government to determine an accurate estimation of the costs to projects but, given the sheer number of projects, it's obviously going to be significant."

Sydney's construction industry was put on ice for two weeks in late July as the city battled to contain the rapid spread of the COVID-19 Delta strain. Since then, it has operated at 50 per cent capacity, with those restrictions set to be lifted on Monday.

Transport Minister Andrew Constance said while time lost to the 2021 lockdown and construction restrictions could be made up on some of the state's flagship infrastructure projects, timelines on others could be affected.

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"In many cases there are ways to catch up, but we're working in a global environment so we are going to see disruption to some things there is no doubt because of the way in which the international supply chains go," Mr Constance said.

Major construction is still underway on the government's mammoth metro rail projects across western and south-western Sydney, while road headers are also continuing to churn beneath inner Sydney on the state's signature WestConnex motorway.


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Work on close to $8 billion worth of major infrastructure projects - including the new airport and Southwest Metro - was paused within Sydney's coronavirus red zones between late July and the second week of August.

An Infrastructure Partnerships Australia (IPA) analysis of Sydney's construction sector estimated that $7.8 billion worth of major infrastructure projects are directly impacted by the mid-year restrictions.

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Mr Constance said his agency had worked in good faith with the construction industry during the ban, and hoped that would continue as the inevitable negotiations about contract variations begin.

"We got the sites back as best we could, and we're now moving to the next stage, and we hope there's goodwill there in a lot of cases," Mr Constance said.

"In some contracts we actually have built in disruption for COVID, but some of our long-standing contracts, which were signed before the pandemic, don't."

"There's plenty of work in the many years ahead with the [infrastructure] pipeline, but we have to recognise that head contractors have to keep their supply and subcontractors going too. So hopefully we can mitigate against a form of cost as best we can where there's any dispute."

Mr Constance added that he believed the NSW government had better managed its relationship with the construction sector than his Victorian counterparts.

"There's a marked difference between the relationships we have with the sector compared to Victoria and the approach the Victorian government is taking," Mr Constance said.

NSW Treasury is currently working with Infrastructure NSW on infrastructure-related COVID-19 impacts. The NSW half-yearly budget review is likely to provide an update on infrastructure spending at the end of 2021.

Labor transport spokeswoman Jo Haylen said the pressures COVID had placed on the government's infrastructure pipeline would only be compounded by previous blowouts on major projects.

"Blowouts on existing projects mean there will be less money in the infrastructure pipeline for the future," Ms Haylen said.

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