The 36km Southern Sydney Freight Line will allow extra freight trains to run between Macarthur and Chullora in the city's south west and will increase rail freight capacity along the entire Australian east coast.

But the project ended up being vastly more expensive to build than when it was first promised by the federal Transport Minister, Anthony Albanese, in 2009.

At a press conference in Birrong to mark the start of operations on the line, Mr Albanese and the chief executive of the Australian Rail Track Corporation, which built the line, defended the blow-out.

The final cost was about $1 billion. When Mr Albanese announced the start of construction in February 2009, he put a figure of $309 million on the project and a completion date of early 2010.

"This is a pretty complex piece of work," Mr Albanese said on Monday.

He attributed the delays and cost blow-outs to the necessity of moving utilities such as water and energy lines during construction.

Mr Albanese also said that the difficulty of operating on a live rail line – both freight trains and passenger trains on the adjoining East Hills line stayed running while the new line was being built – added to the challenge of the project.

"We wanted to make sure we got it right," the Transport Minister said. "No corners have been cut. This has been got right."

The Australian Rail Track Corporation is owned by the federal government. As with the NBN Co. it receives money from the federal government in the form of investments which do not come off the government's budget bottom line.

Mr Albanese declined to criticise the ARTC for the more than three-fold increase in the cost of the project. According to figures provided to Senate Estimates, the ARTC spent almost $12 million in planning the line before construction even started in 2009.

"This is an investment," he said. "This is an investment that's been got right. This isn't a loss to taxpayers. This is an investment that produces a return on that investment by getting it right."

Mr Fullerton said the new train line, which will allow capacity for up to 48 freight trains a day to pass through the area and potentially to Port Botany, was the largest project the ARTC had undertaken.

"The original budget made some assumptions on how we could build a line over 36 kilometres adjacent to a metropolitan line but when we got into the project we realised that lot of the services covering off Sydney Water, a lot of the RailCorp services to do with signalling, electricity lines, all those sorts of things had to be relocated and that comes at a significant cost over 36 kilometres," Mr Fullerton said.

The ARTC stopped work on the freight line in late 2009 and 2010. The benefit of the line is in allowing passenger trains and freight trains to run separately from each other.

This means that an existing eight-hour curfew on freight trains running during the morning and afternoon peak periods can now be lifted.

Mr Albanese defended the record of the federal Labor government in relation to transport in Sydney.

As transport minister, he has promised to build the Epping to Parramatta train line, though that pledge has been scuppered by the O'Farrell government which ranks it a lower priority. He has also agreed to fund a new freight terminal at Moorebank and another freight train line through Sydney's northern suburbs, though both are still at the planning stage.

"What Sydney needs is a little bit of positive when it comes to infrastructure, because for too long its been just negative and what's that led to is governments to not make decisions that should have been made a long time beforehand," he said.

"This should have been a separate line, not years ago, not decades ago, but maybe a hundred years ago, in terms of the port having dedicated rail freight lines."

The project also included a mix of new access lifts, pedestrian bridges and ramps to Leumeah, Minto, Cabramatta, Sefton, Warwick Farm and Casula stations.