U-turn on Airport Rail Link as minister issues clarification on the status of the project

Fears are growing of widespread job losses as construction on Melbourne’s Airport Rail Link slows to a crawl, as future works get set to be put on hold.

Construction on Melbourne’s long awaited Airport Rail Link is set to slow to a crawl, with future works set to be put on hold.

There are fears of wide-scale job losses as a result of the go-slow, after Rail Projects Victoria announced a contract negotiation halt.

A plan to shift the government’s Airport Rail Link project team to Sunshine has also been delayed.

The $10bn mega-project is already under construction, with early works progressing to shift utilities at key construction points, such as where a Keilor East station is planned.

“RPV will be telling everyone that all future airport rail contracts will be paused,” one source said.

“People estimate the project runs out of cash in June. Lots of jobs going.”

Bidders for upcoming contracts were called to a meeting Thursday afternoon to announce the pause on work not yet awarded.

This includes three key packages for work on the project.

The $10bn rail link is under review.

It comes after the Herald Sun revealed on Thursday the future of the project had been thrown into chaos after a backflip by federal infrastructure minister Catherine King to review the project.

Two weeks after insisting the project would not be part of a review of the federal government’s $120bn infrastructure pipeline, Ms King’s office claims she misspoke.

Announcing the review earlier this month, Ms King had said: “It doesn’t include the Airport Rail, but certainly, you know, the money will remain in the budget for that particular project.”

But despite a $5bn federal funding commitment towards the project still being listed in Tuesday’s budget, Ms King’s office on Wednesday clarified that the project was actually under review.

The Andrews government has pushed for a review of timelines for the rail line, which was supposed to open in 2029 but now looks likely to be pushed back to early next decade, in order to defer infrastructure spending in the State Budget.

The U-turn came just hours after Premier Daniel Andrews detailed a conversation with Anthony Albanese in which he said the Prime Minister had told him the Airport Rail was part of the review.

“We can’t build those projects on our own. They are a partnership with the Commonwealth government and the Commonwealth government is reviewing those projects,” Mr Andrews said.

“Despite some reporting today that says those projects are not under review, let me assure you, because I’ve had the conversation with the PM myself, one-on-one, face-to-face, they are all part of this review, and let’s wait and see what this review says.

“But we couldn’t do those projects on our own, so the review is important. It’s a very material matter in terms of whether we can push on, but let’s just wait and see what it says. It’s not for us to prejudge that.”

Deputy Premier Jacinta Allan blamed the Morrison and Turnbull governments for the major project review. Picture: David Crosling

Deputy Premier Jacinta Allan blamed the Morrison and Turnbull governments for the major project review.

Despite both Victoria and the Commonwealth agreeing to contribute $5bn each into the railway line in 2018, Ms Allan on Thursday pushed the future of the project back on to the federal government.

She would not be drawn on whether the state would go it alone on projects if they were scrapped and said it was “pre-emptive” to speculate until the federal 90-day review was finished.

“They’re reviewing projects that were committed to the former Liberal government,” she said.

“They had to do this for a very good reason because many of those projects were not well thought out.

“They weren’t done in consultation with almost anyone, particularly not the Victorian state government when it came to many of the projects here in Victoria.

“As time has gone on, some of them have proven to be challenging, or have had some challenges and so it’s entirely appropriate that the federal government undertake this review.”

When asked if some projects needed to be delayed to ease cost pressures, Ms Allan said the state had been upfront about these issues but had always sought to push on and deliver key projects.

“The approach we’ve taken is to front up to those challenges, sit down and work with our construction partners on addressing those challenges and pushing on and pushing through,” she said.

The $5bn federal funding commitment towards the project was listed in Tuesday’s budget.

Australasian Railway Association chief executive Caroline Wilkie said the Melbourne Airport Rail link was a critical piece of transport infrastructure for Melbourne that had been on the government’s agenda for more than 30 years.

The peak body — which represents almost 200 passenger and freight operators, track owners and managers, suppliers, manufacturers, contractors and consultants — said it “completely supports the project”.

“Melbourne is the only major capital city in Australia without a direct rail link to the airport despite being the fastest growing city,” Ms Wilkie said.

“We accept that this is part of the federal government’s independent infrastructure review but strongly urge it be recognised as a critical piece of transport infrastructure that will benefit Melbourne and regional communities.

“It will not only provide an important public transport link for commuters and business but support the local tourism industry.”

Those involved in the project say there is increasing confusion about the build.

The comments came after Mr Andrews pointed out the controversial $120bn Suburban Rail Loop project was exempt from the review.

The debt-ridden Andrews government had recently flagged the Airport Rail project could be delayed by at least two years – which would allow it to push out some state funding to better balance its forthcoming budget.

That came after the Herald Sun had revealed the rail link would be put on hold and work on the Geelong Fast Rail, which the Commonwealth has also recommitted to funding, would be suspended in a bid to rein in rising state debt.

Senior government sources said the state was prioritising the Suburban Rail Loop.

But they said they didn’t want to be seen to be going cold on the idea of an airport rail, so a federal review could provide perfect cover.

Those involved in the project say there is increasing confusion about the build and that staff-hiring processes have been suspended. The change of track by the state – which had wanted the project open by 2029 – comes after Infrastructure Australia recommended construction be delayed to better realise benefits touted in a business case such as higher rail passenger numbers.

When committing that the airport rail was not under review earlier this month, Ms King said: “We do need to work with the Victorians about what is the time frame for that project, what is the feasibility for that project.

“We know there are delays in getting some planning or some agreement between the state and the airport in relation to that project, and that may see that project delayed as a result of that.

“But we’ll work with the Victorian state government to make sure the money that is there – the $5bn invested from the Commonwealth government – is there on the table.”

On Wednesday, Ms King’s office would not reveal what date the decision to include Airport Rail in the review was made.

Federal opposition infrastructure spokeswoman Bridget McKenzie, accused the government of being “chaotic” and said Victorians wanted clarity about the project’s future.

The government has been accused of being ‘chaotic’ in relation to the Airport Rail Link.

“Not only has the government decided to push more than 400 infrastructure projects into a review to the other side of the budget to make its bottom line look better, now there is supreme confusion about what projects are in the review and which are out,” Senator McKenzie said.

“It seems the Premier of Victoria and the Prime Minister have had a sneaky side deal to enable the Premier’s exorbitant Suburban Rail Loop to be funded at the expense of a much needed rail link connecting Melbourne CBD to the airport – all without involving the Minister for Infrastructure, Catherine King.

“The Victorian government has bungled the consultation as highlighted by Infrastructure Australia’s September 2022 evaluation summary, but this is no excuse to scrap the project.”

Senator McKenzie said the Commonwealth had already spent more than $70m on the Airport Rail business case, adding that procurement for several delivery packages was “already well progressed”.

Labor Senator Murray Watt, spokesman for Infrastructure Minister Catherine King in the Senate, was on Thursday grilled about the review of the airport rail project.

Asked if Ms King “misspoke” as her office claimed, Senator Watt said he had “no reason to disagree”.

He said Labor believed it was “important to deliver on infrastructure projects that are already underway”.

“We don’t operate on the basis of the Coalition, where we have outside political intermediaries dictating what we should do,” Senator Watt said.

“We operate on the basis of delivering projects that have been funded, that have business cases, that can be delivered rather than making announcements.”

State Opposition Deputy Leader David Southwick said: “There is $5bn of federal money sitting on the table to help build Airport Rail so what is Daniel Andrews waiting for? This is an important project for Victoria’s international reputation.”