Upfield line level crossings in the gun as budget pressure squeezes projects

Major projects including expensive level crossing removals on the Upfield train line face being delayed, while other planned works are also being pushed back, as the state government seeks to slow ballooning debt before its budget.

The commitment to remove another eight level crossings along the Upfield line by 2027 is under a cloud, with the state yet to release designs or begin consultation, scheduled for last year, on the complex project. The Labor government did not answer when asked whether the removals would be delivered on time.

A former level crossing on Bell St, Coburg.Credit: Chris Hopkins

Victoria’s net debt is expected to hit $177.8 billion by 2027, and by then the state is forecast to be paying $8.8 billion to meet its interest bill on the debt.

As Treasurer Tim Pallas prepares his 10th budget, five sources inside the government and construction industry, speaking anonymously to detail confidential discussions, said the economic conditions were forcing a rethink on projects that were still in planning stages.

One government source said funding for anything outside urgent election commitments and normal operations was tighter than last year, with local projects across the state probably going another year with billboards and signs but no major works. They expected some announcements to come through the state’s pool of infrastructure contributions.

The squeeze has been compounded by the fact the federal government has not committed to fund a third of the $34.5 billion Suburban Rail Loop East project, which the Allan government had originally been counting on. Another source said the government could fund the loop, alongside the $26.1 billion North East Link, on its own over the next four to six years, but it would take up the money available for new projects.

Victorian projects in planning but not approved include a tram connection to Fishermans Bend, a rapid-transit route to Rowville, a rail plan for Melbourne’s west and the outer Metropolitan Ring Road, which is undergoing a detailed business case.

“They want the Commonwealth to either contribute to the rail loop or pay up for the smaller projects federal MPs are pushing for,” a government source said.

Community groups have also warned that one of Labor’s major infrastructure announcements, the removal of eight level crossings on the Upfield line between Royal Park and Moreland stations, could be among those delayed.

The project, which includes elevated rail through a built-up area, was estimated to be finished by 2027, but the Level Crossing Removal Authority is yet to begin community consultation or provide public designs. A press release from November 2022 said this would occur from early 2023.

The Brunswick sky rail was estimated to cost $1.36 billion before the last election in Parliamentary Budget Office costings commissioned by the Greens and seen by The Age. Since then, the price of concrete, steel and asphalt has surged 19 per cent annually. The level crossing removal program was former premier Daniel Andrews’ signature transport policy at the 2014 election.

Merri-bek Bicycle User Group convenor Faith Hunter said the state government was yet to consult her group about the Brunswick sky rail.

“Initially, consultation was planned for over a year ago. That was definitely the expectation,” Hunter said.

“The website was updated and those dates removed. But [there was] no update on when it will happen.”

Local bike riders are hoping elevated rail will create a wider bike path underneath the train line, as was done in Coburg, but are concerned about the possibility of the current bike path shutting down due to future construction works.

They are concerned about cyclists being temporarily funnelled down Sydney Road, which, as The Age has previously reported, is one of Melbourne’s most dangerous thoroughfares for cyclists. The complexity of the project’s local traffic has prompted Merri-bek council to do its own consultation and planning, which was meant to assist the state government’s process.

Upfield Urban Forest convenor Jo Connellan said all community groups she was aware of had not yet been consulted, a year after discussions were originally flagged.

“We had our annual planting day yesterday,” she said. “Are they going to rip it up at the end of the year, or not?”

Brunswick Greens MP Tim Read said he feared Labor had given up on delivering elevated rail by 2027 as originally promised.

“Their reluctance to say so makes it harder for local residents and those of us wanting to fix the area’s most pressing infrastructure problems such as Sydney Road and the Upfield path,” Read said.

The state has previously maintained that its level crossing removal project is under budget, but one construction source said blowouts were occurring on builds in complex areas.

They said the works around the new Union Station in Mont Albert had gone over budget because of the challenge in merging two railway stations and building a public area. They said the use of “nondestructive excavation”, in which water is added to soil and then vacuumed up to avoid damage to trees and utilities, was also a strain on projects.

Another construction industry figure said it had become more likely the Western Intermodal Freight Terminal could be delayed or even shelved in favour of a private sector proposal at Little River, saving taxpayer expense.

A state government spokesman said the level crossing program would remove 110 crossings by 2030. They did not provide an answer on whether the Brunswick project would be delivered by 2027.

“Victorian Big Build projects have been deliberately set up as a pipeline of work – as some projects are winding down, others are powering up, creating thousands of jobs and delivering economic growth,” he said.

“The Commonwealth has already committed $2.2 billion to SRL – that’s more than enough to start main works and have tunnel boring machines in the ground in 2026 – but we’ll continue to fight for Victoria’s fair share of federal infrastructure funding.”

AMP chief economist Dr Shane Oliver there were still a lot of construction projects around Australia driving up the cost of labour and materials, and governments should probably delay those that could be pushed back.

“The economy is certainly slowing down, but it’s coming down from a higher level. Maybe in a year’s time it won’t be as big an issue,” he said.

“The problem for Victoria would be to continue with a lot of those projects as they currently are, and then face more cost overruns.

“It is a fairly challenging environment, and the danger for Victoria is that various ratings agencies have effectively put it on notice that it might see downgrades to the rating, particularly if there are further costs blowouts for these projects.”

Opposition transport infrastructure spokesman David Southwick said spending on the rail loop was taking money from other projects.

“By putting all its eggs in one basket, communities in Melbourne’s north, west and outer south-east and regional Victoria are being denied the basic road, rail and transport infrastructure they deserve,” he said.