Suburban Rail Loop bosses plotted to hide monster project’s real cost

A bombshell document that the state government fought to bury for three years reveals Suburban Rail Loop bosses wanted to hide details of how much the monster project would cost.

A top-secret document reveals that Suburban Rail Loop bosses plotted to hide from the public details of how much the monster project would cost, due to concerns about how it would be funded.

The bombshell 2020 document, obtained recently after the government fought for three years to bury it, lays out significant – and unsolved – funding risks for the SRL, which was designed to run from Cheltenham in Melbourne’s southeast bayside to Werribee in the city’s southwest. 

The document warns of the risk of getting “no funding or reduced funding” to build the first section, a 26km tunnel called SRL East now being built between Cheltenham to Box Hill, leaving them exposed and unable to deliver the Andrews government’s 2018 election commitment.

The then SRL Authority chief executive Nick Foa, who sent the document to chair James Mackenzie, outlined a key tactic to “maintain strict control over the dissemination of cost figures, ensuring that assumptions, conditions are included in messaging”.

Suburban Rail Loop Authority chair James MacKenzie was sent the document by then SRL Authority chief executive Nick Foa. Picture: Supplied

The document, which was so secret that only a handful of senior bureaucrats and the project’s hand-picked board would have had access, also recommends Treasury officials be asked to “produce funding and financing options for the government” – 18 months after former premier Daniel Andrews announced plans to build the project.

Concerns were also raised about funding through value capture, which is cash generated through taxes on developments or improved land values around project precincts, and is supposed to deliver a third of the $34.5bn SRL East’s budget.

The government has repeatedly assured Victorians of a cash bonanza from high-rises and 70,000 homes being built around station precincts, but Mr Foa warned of a potential “inability to obtain sufficient/expected funding from the value creation and capture” that was a “critical” risk.

Again, he suggested executives “control … release of information” as well as try “engagement with developers relating to the acceptability of development mechanisms”.

The project is unusual because it was promised in 2018 well before a proper assessment or business case was done by bureaucrats, which has since hampered the state’s bid to solicit extra commonwealth funding.

An investment case was eventually created and published in 2021, but did not consider alternative transport and housing solutions to problems the orbital rail loop was supposed to fix.

Prime Minister Anthony Albanese has committed $2.2bn, but the money won’t be available until after the next federal election – meaning it could be dumped by a new government.

Anthony Albanese has committed $2.2bn to the project but the money won’t be available until after the next federal election Picture: NewsWire

The state’s bid to block the release of Mr Foa’s strategic risks document also began in 2021, when the then shadow transport minister David Davis lodged a freedom of information request.

The state’s independent information commissioner backed its release in late 2022, but the government dug in and appealed the decision for a further two years, arguing it could create “confusion” and upset stakeholders.

After rejecting the government appeal late last year, VCAT member Reynah Tang said greater public scrutiny of major infrastructure projects was a positive thing and the release would “reduce (rather than increase) confusion”.

Emeritus Professor of Environment and Planning at RMIT University, Michael Buxton, said the secret document exposed the project’s “appalling” planning, and that risks identified by Mr Foa “have been magnified” since 2020.

“What sane government would proceed on a hope and a prayer without a proper risk assessment, or not knowing where the money was coming from, and without considering what other possible priorities were?” he said.

The planning of the rail loop has been ‘appalling’, Professor Michael Buxton says. Picture: Mark Stewart

Some of the risks identified in the 2020 document were covered in the government’s 2021 investment case, including about infrastructure market congestion.

But Mr Davis said many other issues were still live, because the $34.5bn SRL East only had $11.5bn in funding from the state, and $2.2bn pledged by the commonwealth.

“The secret risks document reveals the black hole at the heart of Labor’s Suburban Rail Loop project,” he said.

Despite lingering funding woes, the Allan government has signed two SRL East contracts with global infrastructure giants, worth $5.3bn, to start tunnelling next year.

Premier Jacinta Allan has said she still expects the commonwealth to provide more money, arguing the SRL creates 70,000 new homes.

A government spokesman said the risks spreadsheet was a “preliminary draft document and is standard practice in the planning of major projects”.

“In the five years since it was created, a business case has been released, legislation passed and billions in investment secured,” he said.

Originally published as Suburban Rail Loop bosses plotted to hide monster project’s real cost