Victorian airport rail link project paused to rein in rising debt

The state government has paused construction on the long awaited airport rail link, just months after works began. Here’s why.

The long awaited airport rail link has been suspended due to combat the state’s crippling debt. Source: Melbourne Airport

Melbourne’s long awaited airport rail link is set to be put on hold.

Just months after construction of the mega-project got underway, the Saturday Herald Sun can reveal the state government will suspend work on the $8-13bn project in a desperate bid to rein in Victoria’s rising debt.

It can also be revealed that work on the Geelong Fast Rail will also be suspended.

It comes amid fears Victoria is hurtling towards a record $200bn debt unless it takes drastic action to cut spending.

Senior bureaucrats say they have been warned that without serious funding cuts state debt will blow out well beyond current forecasts.

Victoria’s debt level is currently on track to hit $165bn by 2025-26, with that figure expected to increase in the budget despite efforts to drive down costs.

Almost $700m was allocated to the project in last year’s state budget for early works as part of a $5bn commitment that was matched by the federal government.

A further $123m was allocated to the Geelong Fast Rail.

The suspensions are expected to save the federal government hundreds of millions of dollars with Jim Chalmers having held talks with state governments about pressure on state and federal infrastructure projects.

Construction has been paused in a desperate bid to rein in the state’s crippling debt.

The airport rail link, dubbed SRL Airport, is currently scheduled to be completed by 2029, two years earlier than planned.

Multiple insiders said the project’s planned completion date was already unlikely, making it an ideal project to have its timeline altered.

The main work contracts are yet to be awarded and Melbourne Airport is working through its own master plan which involves complex approvals that need to be completed before work begins.

The project is one of several Big Build projects expected to be shelved including the Geelong Fast Rail which is also understood to be under a cloud.

“We can’t keep delivering this amount of major projects without it being a shambles,” one senior transport source said.

However the first part of the government’s signature Suburban Rail Loop, SRL East, is understood to be quarantined from any funding cuts.

Over the last nine years, Daniel Andrews has talked up the government’s busy construction market.

Almost $700m was allocated to the project in last year’s state budget for early works, as part of a $5b commitment that was matched by the federal government.

But this week he made a rare concession that the market might now be too hot, flagging the upcoming state budget would account for this.

Federal treasurer Jim Chalmers told the Saturday Herald Sun he had been in talks with state treasurers about infrastructure spending.

“There’s definitely pressure on infrastructure budgets at the Commonwealth and at the state level,” he said.

“At a time where we have seen inflation when it comes to building costs, where we have seen skills and labour shortages, obviously that puts timelines and infrastructure budgets under extreme pressure.

“We have had a number of conversations with state treasurers about these pressures on their budgets and our budget,” he said.

Worker shortages are being felt throughout the building industry, including on residential homes and in flood-hit regions still waiting to rebuild.

But the war in Ukraine has also contributed to massive increases in the cost of materials. such as timber, at a time when work along Australia’s eastern seaboard was already pushing up pr

Deputy Leader of the Opposition, David Southwick, criticised the potential suspension of the projects.

“Victorians stuck in traffic with little or poor public transport options deserve better than an incompetent Labor government that has been forced to press pause on critical projects because they can’t manage money,” he said.

“These projects are already more than $30 billion over budget. Labor’s go-slow will mean more costs, fewer jobs and further damage Victoria’s international reputation.

“Daniel Andrews must tell Victorians what projects will be delayed, for how long and how much more Victorians struggling with cost of living pressures will be forced to pay.”

Originally published as Victorian airport rail link project paused to rein in rising debt