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Matt Johnston: As parties vie for power, major project pain builds

Victorian taxpayers are ploughing $21.3bn a year, on average, into infrastructure and we’re now at a point where we can’t build any quicker or bigger. Something’s got to give.

Premier Daniel Andrews crafted an election-winning strategy by building big. Picture: David Crosling
Premier Daniel Andrews crafted an election-winning strategy by building big. Picture: David Crosling

Dan Andrews crafted an election-winning strategy by building big.

In 2014 he promised to kick-start a big new rail line, a big new road, and the removal of 50 level crossings.

What seemed like an ambitious agenda at the time was then turbocharged, to the point where Victorian taxpayers are ploughing $21.3bn a year, on average, into infrastructure. That is almost one in four state budget dollars.

We are now at a point where we can’t build any quicker or bigger.

On Tuesday, Tim Pallas handed down his eighth budget and spoke forthrightly about there being a limit to the amount of taxpayer cash that can be shovelled out the door. He said advice to him had been that the “cap” was about $18-20bn a year. Previously, he has used a lower figure.

Given this cap is expected to be reached for most years this decade, it suggests a government may struggle to add much to the spendathon.

Victorian taxpayers are ploughing $21.3bn a year, on average, into infrastructure. Picture: David Crosling
Victorian taxpayers are ploughing $21.3bn a year, on average, into infrastructure. Picture: David Crosling

Perhaps a future government would even have to tap the brakes?

“There are two choices for us: we could wind back in substantial terms our ambitions to deliver on infrastructure or we could set more realistic expectations about how long projects take to deliver,” Pallas said.

“We will have to, over time, make a value judgment about exactly how quickly we can deliver on projects going forward.”

This all makes sense, and is stating the bleeding obvious to an infrastructure sector that is aware an east coast building blitz in Australia has caused congestion.

Ordinarily the Andrews government prefers to skirt around the topic.

Especially when there’s a $34.5bn Suburban Rail Loop coming down the track, threatening to swallow other spending priorities in its path.

What the budget also spelt out was how the government would soon transition from builder to ribbon cutter.

This shift should have started this year for its mega projects, with the opening of the West Gate Tunnel.

Pallas described that project, which he championed, as best not named in “polite company” given the pain it had caused – including a blowout in costs from $6.7bn to $10.8bn. Other Labor figures are less polite, with one saying this week the entire saga has been a “f---ing disgrace”.

The Metro Tunnel will now open before the West Gate Tunnel in 2024 or 2025. Picture: Andrew Henshaw
The Metro Tunnel will now open before the West Gate Tunnel in 2024 or 2025. Picture: Andrew Henshaw

The Metro Tunnel will now open before the West Gate Tunnel in 2024 or 2025, while the North East Link is due to start tolling motorists from 2028, about the same time as a Melbourne Airport Rail Link wraps up.

What is often underrated in the building blitz is the smaller projects. There will be 100 schools built by the time the attention-grabbing mega projects open.

Extra hospitals have been promised or are being built – some of which are already way over budget – and will one day open in growth suburbs and regions.

Given governments will lack space to jam in more projects to the bursting pipeline in Victoria and NSW, infrastructure hardheads are now focusing on productivity.

In the current environment where costs are going through the roof, the alternative would be to spend the same and get less value.

As Pallas admits, there will also need to be an honest assessment of when major new infrastructure can realistically be delivered.

The Suburban Rail Loop is Labor’s centrepiece policy for shifting Melbourne’s planning and transport system long-term.

It aims to create more housing and jobs in middle suburbs.

At the moment, Labor wants to start major construction in 2026 – another election year.

This would give it a fresh infrastructure anchor, with the premier of the day able to trumpet 20,000 jobs. They are well-paying jobs.

Labor wants to keep owning the infrastructure agenda and not give an opposition a chance to usurp it.

Tim Pallas admits there will also need to be an honest assessment of when major new infrastructure can realistically be delivered. Andrew Henshaw
Tim Pallas admits there will also need to be an honest assessment of when major new infrastructure can realistically be delivered. Andrew Henshaw

Filling the next decade with a pipeline of tunnels is one way to do that, even if it leaves other projects championed by independent experts out in the cold.

The state opposition has promised to audit all major projects if it wins government.

The audit would give it cover to ditch anything it perceives as an expensive dud – which some coalition MPs quietly say could include the Suburban Rail Loop.

The coalition has also discovered a strong attack point on infrastructure waste, with billions of dollars on road and rail blowouts starting to get more attention and to stick.

If Labor wins this state election, Andrews, Pallas and Transport Infrastructure Minister Jacinta Allan will ensure the Suburban Rail Loop gets started, setting in train the most expensive railway line ever built and soaking up taxpayer cash and market capacity into the early 2030s.

If the state opposition wins, it will have to try to wedge in another giant road – the East West Link – to a jam-packed infrastructure agenda in Victoria that is already humming along beyond capacity.

The East West Link is a complex project, and will be jostling with the North East Link – which is scheduled to open in 2028 – for skills and materials.

Both sides of politics have some tricky decisions to make.

Neither would want to slam the brakes on smaller but jobs-dense projects, such as school and hospital building.

But if we’re at capacity with what’s already locked in, then a re-ordering – or reprioritisation – of our biggest projects must be required.

Something’s got to give.

Matt Johnston is the Herald Sun’s major projects editor

Read related topics:Daniel Andrews

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Original URL: https://www.heraldsun.com.au/news/opinion/matt-johnston-as-parties-vie-for-power-major-project-pain-builds/news-story/ffa7ac2d7ef2ba4146097b36a504f9d0