Cost of Suburban Rail Loop could soar as high as $120 billion

The Suburban Rail Loop is being planned to reshape Melbourne, but the cost of building it underground would be mind-boggling.

A new 90km rail line for Melbourne being planned by the Andrews Government would cost up to $120 billion if the whole project was built underground.

The unprecedented price tag, based on the government’s own rail tunnel costs, led one transport expert to call for a pause on the Suburban Rail Loop’s construction until the impact of the pandemic on population growth was better understood.

But the government is ploughing ahead, promising construction would begin next year — the same year a state election is due.

And it hasn’t ruled out running parts of the project above ground, despite not identifying land suitable for new at-grade rail tracks.
The SRL, which is designed like a “wheel” that connects to existing “spoke” rail lines, would reshape Melbourne and densify middle suburbs near new station precincts.

The first 26km section will be built as a tunnel between Cheltenham and Box Hill, and a recently-released government investment case says it would cost $30-34.5bn and open by 2035.

How Monash Station could look once completed. Picture: Supplied

A second stage would be built from Box Hill to Tullamarine Airport via Heidelberg and Broadmeadows, while a third and final stage would connect the airport to Werribee.

The investment case, which spruiks a positive economic return on every dollar spent on the first two stages, only released detailed route information for Cheltenham-Box Hill.

Using rail tunnel prices of $1.15-$1.33bn per km used in the government investment case for stage one — which are similar to industry figures published by Infrastructure Victoria in 2019 — the second stage would cost $39-45bn to build underground.

The government has said the north and west SRL sections could “include a mix of both underground and above ground infrastructure, depending on the availability and suitability of space”.

But is has yet to identify any land that would be available for at-grade rail tracks.

One of the key aims of the SRL project, and an important funding mechanism, is to increase density in middle suburbs and drive jobs growth near to where people live.

Modelling for the project’s investment case suggests there could be as many as 550,000 jobs around station precincts by the middle of the century, and that 55 per cent of people currently living in the “middle ring” of Melbourne travel to work within that same ring.

A map of the complete rail loop.

Transport expert at the Grattan Institute, Marion Terrill, said the current pandemic could wreak havoc on population assumptions, and that the government should consider pausing major construction.

“Maybe we will get back to public transport like we did before, or maybe we won’t. Being a bit more flexible or cautious on this, when you are spending a generation’s worth of public transport (investment) during such a high time of uncertainty … strikes me as very prudent,” she said.

“They have sunk some money into it but it’s very early days, the opportunity to pull back is still there.”

The government’s investment case says migration has been halted by the pandemic and “the outlook remains highly uncertain”.
“Modelling undertaken in relation to the impacts of COVID-19 by DoT shows that population growth may be delayed by two to four years, but will still reach similar levels in the longer term,” it says.
“For example, the growth originally forecast for 2020 is expected to be realised by 2022, while 2052 growth levels are expected to be realised by 2056.”

Ms Allan dismissed the notion of a project pause until the impacts of the pandemic were further assessed, saying it was a rail line Victorians voted for “and we’re getting on with it”.

“Suburban Rail Loop won’t just change the way our city travels – it will transform Melbourne into a city of multiple employment centres, ensuring more Victorians have good access to jobs, affordable housing, and education, and it will deliver thousands of new jobs.”

Transport Infrastructure Minister Jacinta Allan. Picture: NCA NewsWire/ Luis Ascui

Ms Allan reiterated that major construction of SRL East would begin next year.

Shadow treasurer David Davis said given multi-billion dollar blowouts on Melbourne Metro and West Gate Tunnel projects it was likely Labor had underestimated costs of the SRL.

He said the investment case also assumed a raft of other expensive projects would be built by the time the second stage of the SRL opened – including a $20bn second metro tunnel.

“There are real questions about whether the government can fund all of these projects and the SRL, while it continues to mismanage so many projects,” he said.

Further complication the project is the massive shortage of skills and materials set to hit Australia this decade.

Federal government advisory body Infrastructure Australia warned that this would necessitate a national pipeline of projects properly sequenced to avoid cost and schedule blowouts.

Originally published as Cost of Suburban Rail Loop could soar as high as $120 billion