Frustrated commuters forced on to replacement bus services after defects were discovered on Sydney's inner west light rail cars will be compensated with half-price fares.
The NSW government on Friday revealed the L1 Dulwich Hill line could - in the "worst-case scenario" - be out of action for up to 18 months to fix significant cracking found on all 12 trams.
Replacement buses have been running since last week, and are already transporting 5000 passengers a day.
Transport Minister Rob Stokes on Tuesday announced passengers on those services would have their fares halved to $1.90 each way.
"I understand regular passengers on the inner west light rail are really frustrated by this situation," he said.
Mr Stokes said Transport for NSW was also looking at other ways to supplement the replacement bus services, including shuttles to heavy rail and reinstating Blackwattle Bay ferry services.
The refund system will be set up within a fortnight, when passengers will automatically be reimbursed their 50 per cent discount.
Refunds will also be backdated to November 8.
However, Inner West Mayor Rochelle Porteous and NSW Labor have demanded the government provide free alternative transport.
"This is a half price refund for a broken service," said Labor's transport spokesperson Jo Haylen, who is also the MP for Summer Hill.
"Passengers shouldn't have to pay for the inconvenience caused by the government's light rail fail."
It comes as the government is also under fire over a new state-owned corporation established to own and run the state's rail infrastructure - the Transport Asset Holding Entity (TAHE).
A former partner at accounting firm KPMG on Monday told a parliamentary public accountability committee he lost his job after a senior NSW public servant pressured him to change a report.
Brendan Lyon found TAHE would cost $5.3 billion over the forward estimates, but Treasury had estimated it would earn the state more than $4.7 billion.
In other words: "the budget (was) some $10 billion or more worse off than Treasury has claimed."
Labor has accused the government of "cooking the books on a grand scale", saying their creative accounting risks the state's economic recovery from the pandemic.
"The transport department in NSW would have to be one of the most dysfunctional government departments in the entire country," Opposition Leader Chris Minns said.