Taxpayers to fork out up to $2 billion to cover some of the Metro Tunnel budget blowout
A deal has been struck between the state government and the consortium building the $11 billion Metro Rail Tunnel to share the eye-watering costs of the budget blowout. Here’s how much of the bill taxpayers will foot.
Victoria
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Taxpayers are set to fork out between $1.5 billion and $2 billion for the Andrews Government’s signature rail project after a deal was struck to share the cost of blowouts.
The Herald Sun understands that the consortium building the $11 billion Metro Rail Tunnel, which will create a new underground link from South Yarra to Kensington via the CBD, signed an agreement with the government earlier this year to cover some financial problems faced by the mega project.
As previously reported by the Herald Sun, mediators were called in last year to settle a dispute over early overruns between the builder and the state government, with fears longer-term blowouts would amount to $3 billion.
It is unclear what the government’s overall agreement with the builder is worth, but the Herald Sun has learnt that between $1.5 billion and $2 billion is likely to be the public bailout.
However, negotiations will continue as the builder – a consortium that includes Lendlease, John Holland, Bouygues Construction, John Laing and Capella Capital – can try to put in claims for further costs if they arise under the public-private partnership.
A government spokeswoman said that the team building the project was “making amazing progress in difficult circumstances” and that discussions with contractors were continuing.
“Mega infrastructure projects around the world face challenges that they have to work through with their contractors – this is no different,” she said.
“Discussions with the contractors are continuing, as we get on with this vital project that will deliver more trains, more often.”
The government has refused to outline the size of the taxpayer-funded bailout, and has previously said it was working with the builder to ensure it was delivered on time and on budget.
Members of the consortium have also declined to comment.
It is understood that as part of the deal on costs, a commitment to deliver the massive new rail loop by 2025 has been secured.
Industry sources had long argued the contract for five underground stations and twin 9km tunnels under the heart of Melbourne was undervalued at $6 billion.
While the biggest chunk of the $11 billion project, the scope of the works was altered when the early design of the station boxes was unable to be met.
One source told the Herald Sun last year that scoping had been a “f--k up of global significance”.
The project is aimed at creating more capacity on Melbourne’s rail network, with the 9km underground route including two new CBD stations, a station near the Shrine, and stations at Parkville’s university precinct and North Melbourne’s Arden precinct.
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