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Yahoo
22-03-2025
- Business
- Yahoo
'Exit strategy' call amid doubt over rail loop benefits
Fresh doubt has been cast on the cost of a major infrastructure project that will take decades to complete as an assessment found its benefits had been "overstated". An Infrastructure Australia report on Melbourne's Suburban Rail Loop (SRL) urged the state government create an "exit strategy" in case the orbital train line cannot be delivered. It called on the Victoria government to release up-to-date costings as the $34.5 billion price tag for the first section of the line from Cheltenham to Box Hill, known as SRL East, was calculated in 2020 before construction costs soared. "Based on the information provided, we have low confidence in the cost estimate for SRL East, presenting a major risk to the SRL East project and the SRL Program as a whole," the report says. The proposed 90km orbital rail loop is intended to run from Cheltenham in Melbourne's southeast to Werribee in the outer west via the airport at Tullamarine. It's due to be completed in four stages over several decades. The Victorian government is relying on the Commonwealth to fund one third of SRL East and so far it has handed over $2.2 billion. The report found the economic benefits of the first two sections had been "overstated" and calls for more rigorous assessment to justify why the rail line is a priority for the state. The independent statutory body also urged the federal government to hold off committing more money until Victoria hands over further analysis, updated costings and financial documents including its funding strategy. Suburban Rail Loop Minister Harriet Shing said the state government was working with Infrastructure Australia but did not expressly commit to providing the requested information. She said the project was within the expected price band and the government stood by the loop after taking it to two state elections. "To be really clear, the Infrastructure Australia report is the basis upon which the recommendation occurred to release $2.2 billion (from the federal government)," Ms Shing told reporters. "As we deliver long-term projects an orbital rail loop around the city, we will see benefit, not just for the people who immediately access the benefits of living and working closer to rail." Opposition major projects spokesman Evan Mulholland described it as a "damning assessment" and urged the government to halt construction and review contracts immediately. "This is sobering reading, it's a blistering assessment of (Premier) Jacinta Allan's vanity project," he told reporters. "It obliterates the SRL business and investment case that was cooked up back in 2020."
The Guardian
21-03-2025
- Business
- The Guardian
Victorian government urged to prepare ‘exit strategy' for Suburban Rail Loop as report finds benefits ‘overstated'
The Victorian government has 'overstated' the benefits of sections of its contentious Suburban Rail Loop project, Australia's peak infrastructure body has determined, as it warns blowouts to the $34.5bn price tag of the first section are likely. In its evaluation of the Suburban Rail Loop (SRL) East section, Infrastructure Australia – the commonwealth-funded independent infrastructure adviser – has recommended the federal government halt further funding to the project until an updated estimate and cost-benefit analysis is produced. Even if an updated business case stacks up, the body has urged governments to prepare an 'exit strategy' should delivery prove unfeasible. Sign up for Guardian Australia's breaking news email The report was publicly released on Friday, but is understood to have been delivered to the Albanese government before it committed $2.2bn to the project in February. The SRL project, a vision for an orbital rail track from Cheltenham to Werribee that connects to Melbourne's existing rail network, has been mired in controversy over its high cost and completion date. The first stage of the project, SRL East – 26km of twin underground tunnels from Cheltenham to Box Hill – is expected to be completed by 2035. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion Infrastructure Australia's evaluation of SRL East appears to back several of the cost blowout concerns, and was scathing of the rigour of the submitted business case. 'The economic appraisal … considers the SRL East and SRL North components of the SRL Program, and based on our analysis, we consider the results to be overstated. The analysis is not sufficiently detailed to allow us to understand the economic impacts of SRL East,' it said. Costs blowouts to the $34.5bn price tag for SRL East are likely, Infrastructure Australia found, due to initial estimates being made in 2020, before industry-wide cost escalations increased the price of most construction projects. 'Based on the information provided, we have low confidence in the cost estimate for SRL East, presenting a major risk to the SRL East project, and the SRL Program as a whole,' it said. The Victorian government plans to fund one-third of the project's total cost, with the federal government also funding one-third of the total. The Victorian government is planning for the remaining third to be generated by value capture – a tax on the future sale of land and homes in the vicinity of stations where the value has soared due to the new infrastructure. For the federal government to continue funding the SRL project, the evaluation recommends an updated cost benefit analysis as well as more detail on how value capture will be used to source funding. Infrastructure Australia has called for an 'exit strategy' to be developed even if federal funding continues, 'to provide a clear pathway to successfully conclude or transition out of the project in the event it cannot be delivered at this stage or in the future'.
