Internal fight over Suburban Rail Loop threatens to derail controversial project

Jacinta Allan is facing an internal fight over the government’s controversial $34bn Suburban Rail Loop, with increasing angst from senior ministers threatening the future of the project.

Jacinta Allan is facing an internal fight over the government’s controversial $34bn Suburban Rail Loop with senior ministers, including deputy premier Ben Carroll, opposed to the project.

Sources say increasing angst within the government is now seriously threatening to derail the signature Andrews government project.

A wide range of north and western suburbs ministers and MPs, including Mr Carroll, have raised real concerns about the affordability and viability of the project as the state faces ballooning debt expected to reach $187.8bn by 2026-27.

Labor insiders say those opposed to the project view it as a dead weight hampering the government’s ability to drive down debt and invest in key areas of health and education.

They also fear it is restricting the government’s ability to spend in vulnerable electorates including seats in its traditional heartland areas.

Minister for Education and Deputy Premier Ben Carroll is opposed to the Suburban Rail Loop. Picture: Ian Currie

A meeting of MPs from the west was convened last week with Major Infrastructure Minister Danny Pearson addressing the members.

Many of the members expressed concerns that the SRL had placed too much focus on the southeast, calling for the government to back building the Airport Rail first, which voters would support.

Some members said they left feeling like the message was not getting through to MPs from the party’s Socialist Left faction, which include Jacinta Allan, who are mainly based in the south east.

One MP told the Herald Sun, “we are getting the distinct feeling that they genuinely don’t get it and that the west is being taken for granted.”

“We need better projects and spending to show our constituents.

“If Labor doesn’t focus on the west then Jacinta will be the premier to lose the Labor heartland.”

Mr Carroll, a fierce supporter of an airport rail link, last week opened the door to an underground station at Tullamarine that would end a long-running stalemate between the government and Melbourne Airport.

But Ms Allan on Sunday denied that she was at odds with Mr Carroll over the project.

“I know from conversations with my colleagues that we all share that singular focus on getting on and delivering the projects that the Victorian community voted for,” she said.

The future of the SRL will be a major test of Jacinta Allan’s leadership.

On Monday, senior minister Lily D’Ambrosio, who is the member for Mill Park in Melbourne’s northeast, said she “absolutely” backed the Suburban Rail Loop.

“The government’s commitment to the Suburban Rail Loop is critical,” she said.

“Our population is increasing and the demand for a really robust public transport system is vital.”

Asked whether it was popular with her constituents, she said the project would “unlock opportunities in all parts of Melbourne”.

Consumer Affairs Minister Gabrielle Williams also said she personally supported the mega project.

“I absolutely personally support the project,” she said.

“We can’t sit on our hands with the level of growth projected to be coming to Victoria.”

The future of the SRL will be a major test of Premier Allan’s leadership as she confronts a financial blackhole over the project with some insiders claiming the state government may be forced to consider funding the project itself.

The state government has committed to funding a third of the project, $11.8bn, and had banked on the Commonwealth government stumping up another third with value-capture initiatives to fund the rest.

But so far, only $2.2bn has been promised by Prime Minister Anthony Albanese, bringing total funding to $14bn.

There was no new money in this year’s federal budget, with federal Treasurer Jim Chalmers saying he was yet to get Infrastructure Australia’s advice on whether the project provides “value for money”.

stage alone.

Economist Saul Eslake said based on publicly available information, fully funding the project would drive Victoria’s cash deficits to $45bn over the next four years instead of the $38.5bn foreshadowed in last month’s budget.

Jacinta Allan with local Labor members inspected early works of the Suburban Rail Loop in Clayton. Picture: Wayne Taylor

It could also push the government’s debt stabilisation strategy back by driving net debt to $194bn, or 26 per cent of the economy.

He said the estimates were dependent on the assumption that the profile of construction costs would be evenly spread over the life of the project.

“If the federal government and venture capitalists/private investors are having ‘second thoughts’ about the merits of SRL, then surely that should prompt the Victorian Government to, at the very least, have a rethink themselves as well,” Mr Eslake said.

“Unless the government thinks they know something that the feds and private investors don’t, in which case they should say so.

“Even if they do think that the business case ‘adds up’ – notwithstanding the apparently contrary view of the feds and private investors – then it needs to be acknowledged that the Victorian government, and hence Victorian taxpayers, are now carrying all of the risks associated with the project, including cost blowouts and/or delays, and patronage failing to reach assumed levels.”

Concept designs for Suburban Rail Loop stations have been released.

A Victorian government spokesman said tunnel boring machines would begin work by 2026.

“SRL stations will attract investment to the surrounding neighbourhoods the business case makes clear that we intend to fund this project through a range of funding streams, including Victorian and Commonwealth government contributions and a mix of value capture opportunities,” she said.

“By the 2050s, Melbourne will be the same size as London today and SRL is a key part of how we will manage that growth, providing 70,000 new homes through SRL East closer to jobs, services and great public transport.”