Fresh budget blowout for West Gate Tunnel

The tunnel has been thrown into chaos amid a new budget blowout on the project that is already more than $4bn over budget and almost three years late.

The West Gate Tunnel is facing a new budget blowout less than two years after taxpayers coughed up almost $2bn to keep the project moving.

Senior figures say the trouble-plagued tunnel – already more than $4bn over budget and running almost three years late – is battling soaring costs likely to add hundreds of millions of dollars to the back-end of the build.

And there is likely to be a dispute over who will pick up the tab for any overruns, after a previous settlement was split between taxpayers and tolling giant Transurban, while builders lost their profit margin.

An Andrews government on Sunday night insisted there would be “no further cost increases to the state”.

The Westgate tunnel project is battling soaring costs likely to add hundreds of millions of dollars to the back-end of the build. Picture: David Caird

The project’s budget woes come as the tunnel’s builders, a joint venture of John Holland and CPB Contractors, brace for a fresh industrial relations battle with the militant union the CFMEU, which has warned of “consequences” for CPB after it refused to cave to demands in South Australia.

A series of union-instigated stop works have plagued the West Gate Tunnel in recent months, largely related to crane use and the construction of bridge structures near Footscray Rd.

The behaviour has ramped up during a massive shutdown of road and rail services required to complete over-road works, which is causing traffic nightmares for residents in the west.

The CFMEU’s state secretary John Setka said union actions were related to safety, but added CPB had been “playing anti-union games” interstate and things would “get very willing” as a result.

The tunnel project has been plagued by a series of union-instigated stop works. Picture: Valeriu Campan

“The time will come when they are going to need our help and guess what, they are going to get the bird,” he said.

“Stupid moves like that cost companies billions of dollars in the end. You do one thing somewhere else, there will be consequences elsewhere, we’re a national union.”

Mr Setka said that as a Footscray resident himself, stuck in traffic that is a “disaster at the moment”, he wanted the tunnel finished, but also quoted a scene from black comedy crime drama Mr Inbetween about how “a---holes” needed to face consequences.

“When the consequences occur, don’t come crying to us,” he said.

Mr Setka reiterated concerns about safety, pointing to when the project was shut down last month as a cross passage tunnel collapsed and soil cascaded into the main structure.

CPB declined to comment.

A government spokesman said tunnel boring had been completed and the Major Transport Infrastructure Authority had advised the “project is on track to be delivered in line with the settlement agreed with Transurban and its builders in 2021, with no further cost increases to the state”.

There is likely to be a dispute over who will pick up the tab for any overruns. Picture: Valeriu Campan

West Gate Tunnel Project Executive Director Peter Lellyett said “work on the West Gate Tunnel Project is on track”.

“We’re working closely with all our project partners to ensure work is completed smoothly, while minimising disruption to communities in Melbourne’s west,” he said.

“The project is on budget, with no further cost increases to government expected.”

The tunnel project was expected to cost $5.5bn when announced in 2015, before scope changes blew out the contract to $6.7bn.

The project is on budget, according to West Gate Tunnel Project Executive Director Peter Lellyett.

It has been a rolling crisis since 2019 when it was temporarily shut down due to concerns about toxic soil.

The government scrambled to approve a landfill site to take contaminated material and tunnelling began early last year. And after years of denying taxpayers would foot the bill for the saga, it handed over $1.94bn in a settlement with builders and Transurban to get the project restarted.

In 2021, Treasurer Tim Pallas said the costs largely “relate to an underbid” by the contractors and said the true nature of problems had been hidden from government.