Taxpayers face multimillion dollar bill to buy businesses badly affected by building of SRL East

Secret documents reveal a Victorian-first “voluntary purchase scheme” for businesses badly affected by major works for the $34.5bn Suburban Rail Loop East could cost taxpayers millions.

Taxpayers face a multimillion dollar bill to buy businesses severely impacted by construction of the $34.5bn Suburban Rail Loop East.

The Sunday Herald Sun can reveal a Victorian-first “voluntary purchase scheme” for businesses near major works is a condition of the controversial rail tunnel’s planning and environment approvals.

Secret documents of meetings between key bureaucrats involved in the mega project show there was a discussion about the risks of this untrialled scheme on the project’s already bulging bottom line.

“The government has not implemented a VPS for businesses before,” minutes of meetings say.

“The Committee recommended the scheme should be monitored closely, given the potentially very high costs associated with destructing businesses.”

Whitehorse Rd in Box Hill in 2021. Picture: Andrew Henshaw

The heavily redacted documents show details of meetings between the government’s secretive SRL Interdepartmental Committee in 2022 and 2023, and only emerged after a long-running Freedom of Information battle waged by the state opposition.

There is little information on how a VPS would work for the SRL East, which is a 26km underground rail line between Cheltenham and Box Hill, due to open in 2035.

Six stations would be built as part of the project, including at Cheltenham, Clayton, Monash, Glen Waverley, Burwood and Box Hill.

Hundreds of homes and businesses have been forcibly acquired as part of the planning, most of which are where station boxes will be built, but it is unclear how widely a voluntary acquisition scheme would apply.

The meeting that discussed the VPS did not reveal how it would work, but did note that the SRL Authority was “not obligated to publish the Business VPS”.

It also discussed looking at the successful compulsory relocation of more than 100 businesses around the site of the $26bn North East Link toll road and “suggested SRLA investigate lessons learned through this process”, while being mindful that public purchasing processes “may undermine SRLA’s ability to keep its VPSs cost neutral”.

Southern metropolitan Liberal MP and shadow minister, David Davis, said the meetings occurred after a project budget was set and indicated “these are early cost blowouts in a project that has hardly started”.

Micro tunnelling at Clayton as part of construction on SRL East. Picture: Suburban Rail Loop Authority

He said building and operating for five decades the entire 90km Suburban Rail Loop, proposed by Labor in 2018 as an orbital link between every radial rail line between Cheltenham and Werribee, was already estimated to cost more than $200bn.

“The government should come clean and publish details about the number and type of business purchases and how much they are paid,” he said.

A spokeswoman for the SRLA said there had been voluntary purchase schemes used for properties affected by other recent transport infrastructure projects, but did not provide details of how a business scheme could work.

“We’ll work closely with businesses to make sure they have all the support they need as the project continues,” she said.

The SRL said a VPS for business and commercial entities is being considered “for future years when main works are underway”.

Premier Jacinta Allan inspects early works of the Suburban rail loop. Picture: Wayne Taylor

This would “provide options as a last resort for businesses experiencing significant construction impacts that cannot be mitigated over an extended period”.

Debate over the SRL has raged due to its eye-watering cost, with concerns raised by Labor MPs about it would swallow funding for other road and rail projects.

Senior ministers also have been briefed by the Treasury on what would happen to the state’s finances if extra Commonwealth funding — currently worth $2.2bn — was not forthcoming.

The government insists the project is full steam ahead, and is about to ink a second major SRL contract, after an initial contract worth $3.6bn was struck late last year to build the first 16km of the tunnel.

It argues the project is integral to reshaping Melbourne as the city grows to be the size of modern-day London by mid-century.