Outer Metropolitan Ring Road compensation payments budget blow out

Compensation payments for residents near the future Outer Metropolitan Ring Road has blown out by almost $100m in a year its been revealed.

David Southwick has criticised the government for the blowout. Picture: NCA NewsWire / Andrew Henshaw

Compensation payments for Victorians living along the path of the future Outer Metropolitan Ring Road blew out by nearly $100m in a single year, with the state urged by bureaucrats to find new ways to cut the rising costs.

New documents released under Freedom of Information show that the Department of Transport had to seek a significant Treasurer’s advance to match an unexpected surge in government compensation along the outer ring road corridor.

The department had budgeted to spend $47.3m in 2019-20 but instead was forced to provide $143.4m in payments.

Since then claims have continued, with $150m paid out by the department across multiple projects in 2020-21.

The Outer Metropolitan Ring Road is a proposed 100km of road and rail to provide a new backbone for travel and freight in Melbourne’s north and west.

It would run through the Werribee, Melton, Tullamarine, Craigieburn and Epping areas and is not expected to begin construction until 2030 at the earliest.

Residents living along its path with homes that may be acquired fall under strict planning guidelines that prevent them from building these areas up.

But they are also entitled to seek compensation from the government for financial loss created by these rules, such as lower sale prices or refused development permits.

The issue has created a headache for the department because the cost of these claims have surged and are well over their typical $20m budget, with documents showing concerns about further blowouts over the decade before the road begins.

In a briefing note to the Treasurer, officials suggested extending the length of time claims would take to “reduce financial exposure”, potentially stretching the costs over multiple years.

They also suggested reviewing interest rates applied to claims, requiring homeowners to provide more evidence or using rent from DoT properties to pay the compensation.

“All three options have the potential to reduce the state’s financial risk and exposure but require further development and consultation between DoT, other affected departments and ministers,” the document reads.

Deputy Opposition leader, David Southwick, said the state couldn’t afford further blowouts across projects.

“Only the Andrews Labor government could blow out a project by $100 million before a sod is even turned,” Mr Southwick said.

“The days of major projects costing what they cost cannot continue and the Andrews Labor Government must refocus on delivering value for money across all our major projects.”

Mr Southwick also criticised the government for exploring options to make it harder for Victorians to access their compensation.

“Instead of making it harder for Victorians to access the compensation they deserve, the state government needs to manage these projects properly and deliver them on time and on budget,” he said.

Although construction is not expected until 2030, it is expected the ring road could tie together with the Commonwealth’s Inland Rail project, which is currently being reviewed.

A state government spokeswoman said:

We’re preserving the Outer Metropolitan Ring corridor now to ensure it’s there in future, as we continue to work closely with the Commonwealth to plan this future freight link.”

Originally published as Outer Metropolitan Ring Road compensation payments budget blow out