Allan government set to ink most expensive SRL contract despite facing funding ‘blackhole’

The state government is preparing to sign the most expensive contract of the Suburban Rail Loop East within months, despite Peter Dutton threatening to scrap the mega project and a potential $11.5bn funding black hole.

The Allan government is preparing to ink the most expensive contract of the Suburban Rail Loop East within months, despite new federal funding threats and a potential $11.5bn black hole.

Opposition Leader Peter Dutton on Tuesday revealed the Commonwealth would not help build the first stage of the SRL if he was prime minister, promising to redirect cash in the federal budget to other road and rail projects in the southeast and north of Melbourne.

Mr Dutton said the SRL, an 90km loop connecting Melbourne’s existing rail lines, was a “$200 billion pipedream” that would lose $2.2bn in Commonwealth cash for its first stage if the Coalition won the May 3 federal election.

He also pledged to strip back a “gold plated” upgrade of the Sunshine station precinct that is part of the Airport Rail Link, build new roads in Donnybrook in Melbourne’s north, and resurrect a rail line extension to Baxter on the Mornington Peninsula.

Mark Knight's take on Jacinta Allan’s pet Suburban Rail Loop project.

Peter Dutton has promised to scrap the SRL if elected. Picture: Thomas Lisson

The Coalition says it is keeping $4.2bn earmarked for SRL and the Airport Link by Labor in Victoria, but is yet to reveal how $1.6bn in funding would be spent.

Labor hit back at Mr Dutton’s plan, saying it would short-change residents in the southeast where the SRL East would run, as well as in the west where the Sunshine upgrade would pave the way for a Melton line electrification.

Asked if the SRL was “dead” if he won government, Mr Dutton said he didn’t believe it would be built.

“It won’t happen because it is a $200 billion pipe dream that is going to stop the Melbourne rail link from happening,” he said. Mr Dutton repeatedly targeted Premier Jacinta Allan, saying she was “obsessed” with the SRL and was joined at the hip with Anthony Albanese.

Anthony Albanese said Mr Dutton’s decision to divert funding from the Sunshine station upgrade showed the Coalition was “not ready for government”.

The Prime Minister warned that Victorian infrastructure projects had been “neglected” under former Coalition governments, saying he had ensured the state was now “getting their fair share” of investment.

A map of the planned SRL. Picture: Supplied

Ms Allan said the Coalition announcement was on April Fool’s Day but “Peter Dutton’s cuts are no laughing matter” because it would be “cruelling the future of our state”.

“I am determined to see the Suburban Rail Loop delivered,” she said.

“These are big projects, they are important projects, they are complex projects. They take determination, they take commitment, they take a will to back these projects”

Victoria has signed contracts for $7.5bn of work on the SRL East, which would link Cheltenham to Box Hill via a 26km tunnel with six stations at Cheltenham, Clayton, Monash, Glen Waverley, Burwood and Box Hill.

This includes $2.2bn for early works, and $5.3bn across two contracts for tunnelling between Cheltenham and Box Hill.

Suburban Rail Loop Minister Harriet Shing declined to say if more contracts would be signed prior to the May 3 election, but suggested the timing of the federal poll wouldn’t impact ongoing negotiations.

The next contract for the mega project is set to be inked in the coming months.

But the Herald Sun can reveal that the next contract for the mega project is due to be inked within months.

The multi-billion dollar contract is to build and operate trains on the line for 15 years, as well as fit out tunnels with tracks and signalling and build complex communications systems for the new network.

Bids for the package were finalised in November for the two global consortia vying for the deal, with the preferred bidder due to be announced as early as this week and by the end of May at the latest — putting it right in the middle of the federal election campaign.

Mr Dutton’s pledge to tear up a funding agreement with Victoria for the SRL East may also spark claims for compensation from Victoria, because contracts have already been signed.

The $2.2bn in federal funding is in budget legislation, but isn’t due to flow until after July 1.

However, infrastructure department officials told a Senate Estimates hearing last week that a renegotiation of a federal-state funding agreement would be required to alter the flow and that this could “come with penalties”.

Premier Jacinta Allan says she is determined to see the SRL delivered. Picture: Wayne Taylor

Federal Infrastructure Minister Catherine King said the election would be a referendum on Peter Dutton’s “treatment of Victoria”, warning that Victorian taxpayers would be on the hook for the $2.2bn funding gap for SRL East.

Victorian Opposition Leader Brad Battin backed Mr Dutton’s plan and said his first major policy since taking over as Liberal leader was to tip an extra $1.5bn into airport rail to get it built — although also backed scaling back the Sunshine station redevelopment that Mr Dutton said was “gold plated”.

He said Labor should heed warnings about the SRL and that “it is about time that they cancel the project”.

Chief executive of Infrastructure Partnerships Australia, Adrian Dwyer, said the federal leaders should be having a deeper discussion “about the declining overall transport investment in the context of population growth”.

“The discussion we should be having is about how we invest in the right levels, in the right projects, to support the population growth that is one of the highest in the developed world,” he said.

“The real debate to be had, is how the federal government moves to replace the retreating tide of state investment.”

Originally published as Allan government set to ink most expensive SRL contract despite facing funding ‘blackhole’