Devastating blow to Daniel Andrews’ ‘debt bomb’ Suburban Rail Loop

Daniel Andrews’ Suburban Rail Loop has been deemed “not needed” in a brutal report of the $100bn-plus project.

Daniel Andrews’ Suburban Rail Loop has been called a “debt bomb”, and not needed in a devastating critique of the $100bn-plus project.

A new report said the “super expensive” plan for a 90km metro line between Cheltenham and Werribee was based on faulty population growth and suburban settlement assumptions.

The Australian Population Research Institute study said the SRL fitted with the Labor government’s urban consolidation strategy by intending to link higher-density middle suburbs to jobs in activity centres along the route.

“The SRL would also provide more accessible employment opportunities for the extra people who are expected to live in metropolitan fringe areas,” it said.

Micro tunnelling 'mini-TBM' in Clayton — part of the first stage of construction on SRL. Picture: Suburban Rail Loop Authority

However, report authors Dr Bob Birrell and Ernest Healy questioned the SRL’s business case assumption that Melbourne’s population would reach nine million by 2050, saying seven million was more likely due to the city’s exorbitant house prices.

“There are also doubts about the scale of the presumed higher-density settlement in the suburbs to be served by the SRL,” said their report The Suburban Rail Loop: Not Needed, Not Fit for Purpose and a Debt Bomb.

“Separate housing, and thus development sites in these suburbs already cost $1m-plus. These suburbs are unlikely to provide the affordable housing sought by the younger households who are likely to work or visit the SRL activity centres.”

Daniel Andrews meets workers at the site of the suburban rail loop at Clayton. Picture: Andrew Henshaw

The report, to be released Thursday, said that even if Melbourne got to nine million people, was fixed rail the best public transport option to the proposed activity centres?

“Bus links, in particular, would be a far cheaper option for delivering a dispersed suburban population to these centres,” it said.

“Furthermore, why build an expensive, immovable fixed rail system when there are growing doubts about use of the system. These derive from the increased post-Covid preference for working at home.”

The authors said that at best the SRL was a third-order priority, especially given that Victoria’s net debt was forecast to climb from $60bn in 2019-20 to $182.3bn in 2024-25.

They also claimed Victoria was a mendicant state - it imported annually about $60bn of highly manufactured goods but exported less than $10bn of such goods.

“Victoria is a people-servicing economy, driven by population expansion in Melbourne. The problem is that the costs of providing for these extra people are growing faster than state revenues,” the report said.

“The likely slowdown in Melbourne’s population growth will diminish the state government’s cost and infrastructure burdens. The SRL, in particular, will not be needed.”

The authors said Victoria could then focus on the far more important tasks of the transition to renewable energy and a targeted policy to promote hi-tech and knowledge-intensive industries.

SRL chief executive Frankie Carroll said recently that the pandemic-related migration pause was temporary.

“Victoria will be growing again at breakneck speed before you know it, and the experts are telling us Melbourne will surpass Sydney as the biggest city in Australia in just a couple of years,” he said in an article.

“Despite this government’s record investment in roads, rail and level crossing removals, it’ll be a never-ending cycle of catch-up unless we pursue this major project (SRL) to recalibrate how we grow in the decades ahead.”

A Victorian Government spokesman said: “Victorians voted for this project”.

“Detailed modelling and expert advice show that we need to deliver better transport connections, cutting congestion and planning for the future. It will help deliver more affordable housing.”

Melbourne facing fresh affordability crisis

Melbourne’s housing affordability crisis means the city is losing its attraction for migrants and its capacity to retain residents, says a new report.

The Australian Population Research Institute study said that Melbourne was recently ranked the fifth most expensive city in the “Anglo world”, with its median house price 12 times bigger than median household income.

“The price of separate housing, and of the relatively large units or town houses that households wanting to raise a family might regard as substitutes has shot up,” it said.

“It is now well beyond the financial capacity of young families — unless they are very high earners or have financial support from their families.”

Authors Dr Bob Birrell and Ernest Healy said the causes were the high development costs in established suburbs, and limited housing choice because older households, mainly Baby Boomers, had about half of the stock and didn’t want to move.

“Also, on the supply side, fringe housing used to provide a safety valve, but not any more,” they said.

“The state government’s planning strategy for Melbourne, which prioritises higher-density residential development in established areas and which limits fringe expansion, is biting.”

The median price of “a tiny block”, 50km from the CBD, had risen to $370,000 by early 2022.

The report on the viability of the proposed Suburban Rail Loop said there had been a lot of crocodile tears shed on behalf of Millennials struggling to buy into the market, but there was no sign governments would fix the problems.

“This could be done by opening up the fringe; by curbing the overseas migrant influx; or limiting competition from foreign or local investors, such as removing the negative gearing concessions,” it said.

“Calls for more migrants from business interests have swamped whatever concerns there are for the plight of frustrated home buyers and impoverished renters. Home buyers and renters have been abandoned.”

The report said that migrants and resident Millennials were likely “vote with their feet” and look elsewhere in Australia for more affordable and suitable housing.

In pandemic-affected 2021, Melbourne lost a net 33,501 people to regional areas and interstate, and nearly 55,000 to overseas.

Originally published as Devastating blow to Daniel Andrews’ ‘debt bomb’ Suburban Rail Loop