John Pesutto threatens to scrap Suburban Rail Loop under new policy dividing Liberal Party

Opposition Leader John Pesutto is threatening to scrap the Suburban Rail Loop if elected in 2026, but some in the Liberal Party believe his plan is “insane” for one reason.

Opposition Leader John Pesutto is threatening to scrap the Suburban Rail Loop in a move that’s split the party.

Under a policy to be put to a shadow cabinet meeting on Monday, the Opposition would reserve the right to not complete the project if elected in 2026.

Under the plan, billions of dollars of contracts would be fulfilled before the project was effectively mothballed.

The Herald Sun can reveal a similar policy was put to a shadow cabinet meeting before Christmas but “laughed out of the room”.

The idea was floated by shadow transport infrastructure minister David Southwick and supported by Mr Pesutto.

“It was quite possibly the most insane policy position that has been brought to shadow cabinet,” one MP said.

“The idea that we would simply stop the project, irrespective of how far along it was, is just madness.”

Opposition leader John Pesutto will scrap the SRL if elected in 2026. Picture: NCA NewsWire / Ian Currie

It is understood there is mounting anger over a lack of consultation with MPs over major policies.

Unlike the original policy, the revised position would honour all existing contracts.

Sources said the revised position would call for the SRL to be paused to ensure that the infrastructure pipeline remained stable.

“The right not to complete the entire $200bn is reserved, but we won’t be tearing up any contracts,” a senior Liberal source said.

However Liberal MPs remain split over whether or not to back the plan.

Some said a rejection of the policy could spell political suicide for Mr Pesutto who is facing increasing tensions over his leadership.

“The policy approach was resoundingly rejected by shadow cabinet before Christmas,” one senior Liberal said.

“Discussions last year made it clear to John, it is a bad idea and should not proceed.”

Mr Pesutto on Sunday would not be drawn on whether the Coalition would tear up contracts, saying his party would “pause and review” the project if elected.

“There’s only one party in town that tears up contracts and exposes Victorians to compensation payouts, that’s Jacinta Allan,” he said.

Asked about internal division over the project, Mr Pesutto said he was confident a unified position would be reached at a Shadow Cabinet meeting on Monday.

The opposition leader said lots of “internal work” had taken place since the policy was rejected last month.

Mr Pesutto would not address comments made by some MPs describing pulling out of the SRL as “insane” and “madness”.

A Victorian Government spokesperson said the SRL was crucial to support the future growth of the city.

“With Melbourne’s population set to be the size of London’s by the 2050s, we can’t afford not to build the Suburban Rail Loop,” they said.

“The Liberal Party is completely irrelevant to delivering the transport system Victorians need – it has opposed every single major transport project that’s currently being delivered in this state.”

“If John Pesutto’s Liberal Party wants to continue to pursue a position on SRL that has been twice rejected by the Victorian public and labelled as “insane” by their own party room, that’s a matter for them.”

In the lead up to the 2022 election the Opposition, under former leader Matthew Guy, vowed to pause the Suburban Rail Loop project if elected.

No contracts had been signed at that point.

Some MPs think stopping the project, irrespective of how far along it is, is madness. Supplied

It comes as Treasurer Tim Pallas has played down concerns that up to 1 million cubic tonnes of contaminated soil will be need to be dealt with during the construction of the Suburban Rail Loop.

On Sunday, Mr Pallas confirmed there would be contaminated soil including earth from the former gasworks in Cheltenham, but he admitted “we don’t know exactly how much contaminated soil we’re talking about.”

“Nonetheless, It’s something that we have to take seriously and we will dispose of it responsibly,” he said.

Mr Pallas said sufficient funding had been built into the cost of the 26km project to pay for processing the contaminated earth and that the government had “learned the lessons” from the expensive West Gate Tunnel contaminated soil saga, where PFAS soil caused a three-year delay on construction and a lengthy legal battle with partner Transurban and its contractors.

Mr Pesutto said concerns about the removal of toxic soil showed the state government was unprepared to carry out works.

“We’re now seeing the issue of toxic soil is something that the government has not turned its mind to in any way whatsoever. It’s going to add to the already exploding cost of the Suburban Rail Loop project,” he said.

“This is clear evidence that the project is being mismanaged.”

The first major works contract for the $35bn rail line was signed in December, locking Victoria into its most expensive infrastructure project ever.

The deal, worth $3.6bn, is to tunnel the initial 16km of the 26km Suburban Rail Loop East, which will connect Cheltenham to Box Hill.

Construction giants CPB Contractors, Ghella and Acciona Construction were awarded the contract, which will pave the way for tunnel boring machines to begin digging within three years.

A separate contract, for tunnelling between Glen Waverley and Box Hill, is expected to be inked this year; a further deal to build SRL trains and a signalling system, as well as operate and maintain the SRL East network, will be signed next year.

The Allan government has committed to completing the first stage of the SRL, despite Victoria’s debt on tract to hit a record $178bn by 2027 _ or 25 per cent of the state’s total economy.

The state’s tax burden will be double that of NSW, with net debt to grow to $68,300 per household or $26,600 per person.

Ratings agencies have warned cost blowouts will be unavoidable on the SRL.