Federal MPs furious over Allan’s Suburban Rail Loop ‘blackmail’

Anthony Albanese’s government is feuding with Premier Jacinta Allan over billions in infrastructure spending for big ticket projects to sway voters who are switching off Labor, as the cash-strapped state holds out for extra Suburban Rail Loop funding.

The stand-off over project funding has prompted Victorian federal MPs alarmed by the 17 per cent swing against Allan in the Werribee byelection to demand she cease “blackmailing” the prime minister for extra money for her flagship project.

Premier Jacinta Allan with Prime Minister Anthony Albanese last May.Credit: Joe Armao

Victorian federal MPs and ministers who fear the Allan government’s unpopularity will fuel a federal election rout in Melbourne are pushing for the state to agree to different transport projects to counter Opposition Leader Peter Dutton.

Buoyed by the byelection results, Dutton said on Monday that he is determined to reverse Coalition fortunes in a state where about six seats could prove decisive in a deadlocked contest between the major parties.

Four sources briefed on tense negotiations between the prime minister, Infrastructure Minister Catherine King and Allan said the Victorians were refusing to sign on to a broader package of projects unless the federal money included a top-up for the $35 billion first stage of the contentious rail loop.

The sources – from the state and federal governments, none of whom could speak publicly about confidential talks – said Allan was standing firm on the SRL in the face of federal reluctance.

It is expected that a previous $2.2 billion SRL allocation from federal Labor will soon flow into state coffers, but federal officials are resistant to Allan’s demands for billions more. The stand-off is delaying a broader deal that could free up funds for more immediate projects such as an airport rail and upgrades to the Western Highway and other roads, which federal Labor MPs view as crucial in a tightening contest with Liberals.

King’s office declined to comment and Allan’s office released a statement saying only: “The premier is continuing to discuss Victoria getting its fair share of infrastructure funding for all projects – including the Suburban Rail Loop – with the Prime Minister.”

Allan’s cabinet is fractured on the future of the rail loop, but she denied on Monday that any of her MPs wanted to scrap the project, which has become totemic in the debate over the government’s big-spending agenda.

“My colleagues and I are fully supportive of getting on and delivering the Suburban Rail Loop,” Allan said on ABC Radio.

Deputy Premier Ben Carroll, asked if he supported the project, told 3AW he supported investment in public transport but emphasised a rail connection to the airport rather than the Suburban Rail Loop’s first leg through Melbourne’s east.

“It’s no secret that I am a big fan of making sure, making sure that Melbourne’s western suburbs and northern suburbs are connected to a suburban rail loop by the Melbourne Airport,” Carroll said.

In September, this masthead was first to report Dutton’s ambitions in Victoria, revealing the opposition believed it was ahead in the seats of Aston, Chisholm, Goldstein and McEwen, currently held by Labor and teal independents.

The opposition has grown in confidence since that time and Dutton’s team, which launched its election year in Melbourne, is hopeful of tight contests in Dunkley, Kooyong, Bruce, Hawke and Holt, the latter of which shares similar demographics to Werribee. However, strategists concede that state byelection results do not easily translate to a federal election.

Melbourne’s Suburban Rail Loop is part of the state’s huge infrastructure program.Credit: Joe Armao

The Liberals picked up only 3.7 per cent in Werribee, reflecting the party’s lack of presence in traditional Labor areas and serving as a warning against federal Coalition overconfidence. Liberals believe Dutton’s hardman image is not proving to be the drag Labor had hoped, but the government is confident its negative campaign against the opposition leader will ultimately yield results.

“On cost of living, on infrastructure, on community safety, Jacinta Allan and Anthony Albanese just don’t have the answers,” Dutton said. His party is working on billboards and ads displaying Albanese alongside Allan.

The performance of the state government, which will not face another election until 2026, is a hot topic in Canberra, where dozens of Labor MPs are worried their state colleagues are dragging down the federal party.

State Labor’s primary vote is 22 per cent and the federal vote is at 25 per cent, according to this masthead’s Resolve Political Monitor, both of which represent historic lows. Other polls have Labor slightly higher in Victoria.

One MP described Allan’s position on the Suburban Rail Loop as a form of political “blackmail”, while two others said Albanese and King should go it alone and announce infrastructure pledges in Victoria without Allan.

The proposed Suburban Rail Loop route.Credit: Supplied

The schism on infrastructure spending – following recent spats on health, education, the NDIS and a renewable energy project near Hastings – demonstrates the prickly relationship between the two Labor governments.

Victorian Labor MPs are often critical of the Albanese government in private, and at a recent caucus getaway some MPs were heard attacking the federal government’s level of ambition, according to sources at the retreat. At a federal level, ministers chastise the state government over what they claim is its fiscal profligacy and ridicule its alleged excesses.

A federal Labor source said: “There is no relationship and no goodwill to speak of. Jacinta, like Dan [Andrews], would find governing easier with a Liberal in power in Canberra, particularly a controversial leader like Dutton. She would not give a f--- if we lost.”

Highlighting the stand-off is the paucity of federal funds recently committed to Victoria. The only recent project announced jointly by the federal and state governments was a $333 million road project linked to the Werribee byelection in January. In the same month, $7.2 billion of federal funding was allocated to Queensland and about $1.6 billion was given to NSW.

Victoria has not factored into electoral calculations to this level since 1990, when Bob Hawke lost nine seats. Labor losing its dominance has brought into play new Labor versus Liberal contests while newer Labor versus Greens and Liberal versus teal contests mean more electorates are up for grabs. The Liberals lost Kooyong, Goldstein, Higgins and Chisholm in 2022, leaving the party with only a handful of Melbourne seats.

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