Suburban Rail Loop benefits overstated, costs underestimated Infrastructure Australia assessment finds

The nation’s peak infrastructure body has savaged the Suburban Rail Loop, saying its benefits have been “overstated” and the cost of building the first stage is all but sure to surge past a budgeted $34.5bn.

• Scathing SRL review raises massive questions

The Suburban Rail Loop has been thrown into turmoil after a plea for more federal funding was torpedoed by the nation’s top infrastructure advisers.

An assessment of the $34.5bn SRL East by Infrastructure Australia found it is likely to soar above its gargantuan price tag, and that benefits in the project business case were “overstated”.

It recommended the Victorian government develop “exit strategies” in case the risky project, which would link Cheltenham to Box Hill, goes off the rails and needs to be abandoned.

The Allan government is seeking $11.5bn for its signature rail loop from the federal government, and on Friday insisted the “on time and on budget” project would “transform the ways the people live, work, and move all over the city”.

Works underway on the Suburban Rail Loop at Burwood. Picture: Mark Stewart

But Opposition major projects spokesman Evan Mulholland said: “If there was ever a case for this project to be paused, this is it.

“Uncertainty around costs, unverified benefits, and unrealistic value capture projections make the Suburban Rail Loop completely unviable in its current form. It must be paused before more damage is done.”

The scathing evaluation found the business case did not include stand-alone analysis of SRL East – the first 26km stage of the 90km loop being planned and built. It was instead lumped together with SRL North, which won’t be completed for up to 18 years after the first stage, prompting Infrastructure Australia to consider “the results to be overstated”.

It also raised concerns that cost hikes that have smashed the industry recently are above the cost escalation rates used in the 2021 business case, meaning the $34.5bn estimate to build the first stage of the SRL would be undercooked.

Infrastructure Australia says the first stage of the SRL is unlikely to be delivered on budget. Picture: Supplied

“Based on the information provided, we have low confidence in the cost estimate for SRL East, presenting a major risk to the SRL East project, and the SRL Program as a whole,” it states.

The report cast doubt over how a third of the rail line’s budget – $11.5bn – would be raised by value capture, saying it posed a significant risk to the project, and questioned whether the benefits would exceed the costs, saying there was “insufficient justification” that it was the most appropriate response to fix transport and housing issues identified in the business case.

“We recommend the proponent develops the exit strategies discussed in the Business and Investment Case in detail, in consultation with the Australian government, to provide a clear pathway to successfully conclude or transition out of the project in the event it cannot be delivered at this stage or in the future,” it states.

But Minister for the Suburban Rail Loop Harriet Shing dismissed Infrastructure Australia’s criticism, saying assessing SRL East in isolation would provide an “incomplete picture of its economic impact”.

“As infrastructure and housing projects deliver benefits over decades – the benefits will become even greater with the delivery of SRL North, Airport and West,” Ms Shing said.

The Albanese government in February released $2.2bn in funding it promised for the Suburban Rail Loop at the last federal election based on strict conditions for the early works.