Australian cities opened 10 urban rail projects in the past 20 years, eight of them since 2014. Australian rail investment aims to fulfill the government’s transit-oriented development goals to accommodate expected population growth. Much of this has been expanding existing networks in the country’s largest cities, though new rail networks have also been inaugurated in Canberra, Newcastle, and Brisbane.

In Australia, states and territories play the primary role in managing transit operations, planning, and capital projects. This simplifies the governance and organization of transit agencies, as the state or territory can smooth multijurisdictional issues within its borders. The private sector also plays a major role. Australia has delivering light rail in Canberra and on the Gold Coast as a P3, and other systems have operated under long-term concessions. Several construction projects have utilized private financing.


The Commonwealth of Australia is a federal parliamentary, constitutional monarchy comprised of six states and two territories. The federal government is composed of executive, judiciary, and legislative branches. It includes a governor-general representing the monarch, a multi-party Senate elected by citizens of the six Australian states, and a multi-party House of Representatives elected from single-member districts. Australia is a common law country.  

The Australian Government (also referred to as the Commonwealth) provides funding for rail transit projects and establishes framework legislation and regulations that determine infrastructure priorities for how lower levels of government and the private sector can invest in infrastructure. Except for the national rail network, which includes interstate rail, the Hunter Valley Coal Supply Chain, and a number of intermodal terminals under development, the national government does not own, nor does it build, roads and passenger rail infrastructure. 

Infrastructure Australia (IA) is a government-owned, independent statutory body established in 2008 to guide the national government on choosing infrastructure projects that provide the highest returns on investment and serve a national purpose. With consideration of IA’s advice, the Commonwealth determines which projects to fund in its annual budget.

State and territory governments are organized with the same structure as the federal government, with each state government (except Queensland and the two territories) composed of a bicameral parliament, an executive branch led by a governor and a premier, and a supreme court. There is one level of local government within each state.  

State and territorial governments are the primary planners, funders, and owners of transportation capital projects. Each state has a Department of Transport that plans, delivers, and constructs parts of major projects. All major metropolitan areas in Australia are largely contained within their respective state boundaries, helping to coordinate urban rail projects that span municipal boundaries. This includes the Australian Capital Territory, which contains Canberra. Similar to other federated countries, there is little national statutory influence over capital construction. 

States and territories receive approximately 45 percent of their revenues through transfers from the federal government. State and territory government tax revenues that directly support transit include vehicle registration, licensing fees, and public transportation fares. In addition, parking levies in Sydney, Melbourne, and Perth are used to fund public transit investments.

States and territories have established infrastructure advisory entities with varying degrees of independence. Some of these bodies, like Infrastructure New South Wales, play a strong role in infrastructure decision-making. Others are structured as independent infrastructure think tanks, like Infrastructure Victoria.  

Local governments indirectly influence public transit construction and service delivery through investments in local roads, transit stops, and bicycle/pedestrian infrastructure. Local governments advocate to the state and federal government for funding and list priority projects in long-range transportation strategy documents.

Transit agencies are owned and operated by state and territory governments. These agencies build transportation infrastructure and manage transit services. Transit service operation is either contracted out to government-owned organizations (e.g., NSW Trains, Sydney Metro), or to private companies (e.g., Transdev, Keolis Downer, Transit Systems, MTR). In two cases, Transport for Brisbane and the light rail system in Queensland (G:Link), local government is the primary owner and actor in public transport planning, operations, and funding.

Some states have recently made significant changes to their transit agencies and regional transportation governance. Queensland’s agency, Building Queensland, was absorbed into the Queensland Treasury in 2020. Following the November 2018 election in Victoria, the Department of Economic Development, Jobs, Transport and Resources that was formed in 2015 was split into two separate departments, one of which is the Department of Transport. With that change, VicRoads and Public Transport Victoria, both previously independent entities, were incorporated into the Department of Transport. 

Private sector involvement in the construction and delivery of transit service is common in Australia through P3s and contract outsourcing (i.e. franchising).vii All new rail transit lines brought into operation over the past two decades have a private operator, either through a long-term operating and maintenance concession or a design-build-operate-maintain P3. For example, in a $3.7 billion P3, Transport for New South Wales selected the consortium Northwest Rapid Transit to design, construct, finance, operate, and maintain the Sydney Metro Northwest, including railway, systems, stations, and rolling stock. From that consortium, Metro Trains Sydney was formed to operate and maintain the service for 15 years.

Project planning and regulation

National laws govern the protection of the environment, disabled persons, indigenous peoples, and some sectoral regulatory arrangements, such as telecommunications, airports and aviation, and interstate rail. These laws set standards for elements like construction noise and vibrations and the design of infrastructure that can accommodate people with disabilities. Australia also has a national policy framework and guidelines for P3s that complement guidance at the state and territory levels.

For example, the federal government’s Australian Transport Assessment and Planning (ATAP) guidelines provide tools to jurisdictions for planning, assessing, and developing transportation systems and guide the interjurisdictional meeting of Commonwealth, state, and territory ministers. The National Parks and Wildlife Act of 1974 in New South Wales requires project sponsors to consult with Registered Aboriginal Parties and prepare an Aboriginal Cultural Heritage Assessment Report. Any project with impacts on nationally and internationally important flora, fauna, ecological communities, and heritage places must comply with the Commonwealth’s Environment Protection and Biodiversity Conservation (EPBC) Act.

Large projects are also required to complete a federal and state environmental impact statement (EIS) and follow a formal planning process, but individual states and territories set the specifics for planning and conducting environmental reviews. In general, early project planning begins with state- and local-level strategic planning. Each state composes a land use plan, a transportation plan, and regional development plans every four to five years to determine infrastructure priorities across the state. Transit projects are generally delivered by the state transportation authority.

Stakeholder and community engagement occurs during the state’s or territory’s planning process and again during the required preparation of an EIS. Project sponsors conduct community outreach.

Several states have created processes that prioritize and expedite the planning and environmental review of certain projects. For example, in New South Wales the Minister of Planning and Public Spaces can declare a project to be Critical State Significant Infrastructure, which allows it to omit some of the traditional planning steps and provides more state resources for the environmental review. Similarly in Victoria, the Major Transport Project Facilitation Act of 2009 devotes additional resources for assessments, approvals, and assistance with delivery. In a similar effort to streamline environmental review at the national level, the federal government in June 2020 changed the rules for 15 major projects (not limited to rail) by allowing them to be conducted via joint assessment teams to reduce duplication between the state and national governments.

In some cases, independent standards development organizations like the Rail Industry Safety and Standards Board create standards, codes of practice, guidelines, and rules for the rail industry. For example, the Environmental Management in Rail Construction Code of Practice establishes consistent guidelines to assist organizations involved in rail construction with meeting environmental obligations.

There is concern about the lack of transparency or robustness in state land use and transport plans. In 2021, for example, the Victorian Auditor-General determined that the Victorian Department of Transport’s inability to produce a transport plan over the preceding 10 years resulted in poor transparency and an inability to integrate transport planning with broader government goals.

Project funding

The federal government receives approximately 81 percent of the total taxes collected in Australia and then provides funding to states and territories. State-levied taxes represent 30 to 40 percent of all state revenue, on average. The remaining state revenue is comprised of the sale of goods and services, dividends and distributions, royalties, other grants, fines, and fees. Transportation accounts for a large portion of state infrastructure capital expenses each year. In the four years beginning with 2021, the government is spending $218 billion on infrastructure, with transportation expected to represent 80 percent of those expenditures.

In addition to public funding, private financing is frequently used to develop rail transit projects in Australia. Since the 1980s, Australian governments have increasingly relied on P3s to develop public infrastructure assets and infrastructure-related businesses. The Canberra light rail and Gold Coast light rail projects were both design-build-finance-operate-maintain P3s in which the private sector was reimbursed for construction and operation costs through availability payments (i.e., payments based on particular project milestones or facility performance standards). In other cases, long-term operating and maintenance concessions are executed once the infrastructure is complete.

The Commonwealth has maintained a series of federal programs for surface transportation infrastructure investment at five-year intervals. For example, in 2009 Parliament passed the Nation Building Program, which invested $7.4 billion in rail out of a total investment of $36 billion committed to road and rail infrastructure. The federal government has since passed similar acts with comparable levels of funding, with Parliament appropriating funds to specific projects.

Projects seeking more than US$182 million (A$250 million) in federal funding must submit a business case to IA, which assesses the project against its Assessment Framework. IA uses project criteria to rate projects, but Parliament can fund a project regardless of its rating, albeit while risking negative public perception for funding a low-scoring proposal. Some interviewees noted the business case protocol is not enforced and said the influence and perception of IA’s impartiality has waned since 2015, in part due to partisan appointments by the Australian government to the IA Board.

Project construction 

Transportation departments or transit agencies at the state and territory levels build public transport projects. Project design typically involves close consultation with local governments and Aboriginal stakeholders, though some have criticized this engagement as superficial and pointed to poor coordination between state and federal heritage protection laws. For the ongoing Yanchep Rail Extension in Perth, the Public Transport Authority — Western Australia’s authority that oversees the development and operation of public transport — coordinated with the city of Wanneroo and the METRONET Noongar Reference Group, which provides input on projects that affect the Noongar Aboriginal peoples.

Each state and territory has its own rules and requirements for the transit project construction process. In New South Wales, the contractor is responsible for site management, which includes tasks like obtaining rights-of-way and permits from the local government in accordance with the NSW Roads Act of 1993 to carry out the work, as well as conducting property risk assessments.

Utility relocation is typically the responsibility of the agencies that deliver transportation projects, and states reimburse utilities for relocation expenses. Some utility owners are government entities, so in these cases the reimbursement is effectively a transfer of funds between government agencies. In New South Wales, a member-based association called the Streets Opening Coordination Council (SOCC) meets regularly to discuss transportation and utility issues. SOCC’s objectives include fostering coordination and encouraging the use of mutually agreed-upon codes and practices for excavations and utility relocation. Other states in Australia establish memoranda of understanding (MOUs) with utilities to coordinate utility relocation.

Despite MOUs and voluntary coordination councils, some projects have experienced delays associated with utility relocation. In the case of the Sydney Light Rail, the only project in Australia with tunneled sections, significant project delays were associated with technical challenges, lack of coordination, and litigation related to utility relocation. IA identified utility reallocation as one of the most significant risks to the future project pipeline. Some observers believe that taking time in the planning phase to work through project elements like utility relocations can mitigate costly delays during construction.

Australia’s transit projects over the past two decades have consisted primarily of at-grade light rail in its largest cities. The Canberra light rail was delivered $32 million under the original budget, with a final cost of $474 million, though it opened a half-year later than anticipated. The first stage of the Gold Coast light rail project was delivered on budget, and the second stage was completed four months ahead of schedule. While some projects, like the light rail extensions in Adelaide and the light rail in Canberra, have been built at or under international cost averages, most lines are more expensive on a per-mile basis. The Sydney light rail cost almost twice as much as originally budgeted due to scope changes and risks associated with utility relocation.

Tunneling is expected to increase in the future years, with the expected boring of more than 100 km of tunnels under Sydney in the coming decades. As part of these projects, a tunnel simulation training center was created to invest in the region’s tunneling workforce. In Victoria, the Metro Tunnel project to deliver twin 5.5-mile tunnels in Melbourne is currently underway.


From a governance perspective, Australia benefits from having its major metro areas fully contained within state or territorial boundaries, and transit planning and operational authorities mostly concentrated at the state level. This allows for greater planning autonomy from the federal government and reduces the need for cross-jurisdictional agreements on planning, funding, and construction.

The private sector also plays an outsized role in the development and operations of rail transit. Several projects were constructed during the past two decades using a design-build-finance-operate-maintain model, with the private consortia building and operating rail lines over 15 or more years. In the other cases, the infrastructure is constructed by private contractors and then a separate multi-year operational and maintenance concession is let to a private operator once construction is complete. Over the last 20 years, the private sector role helped finance projects and added expertise during a time when Australia did not have much experience building or operating urban rail systems.