By Rachel Eddie
Victoria’s transport infrastructure minister says the independent budget watchdog’s estimate for how much it will cost to build the second stage of the Suburban Rail Loop is wrong – but he refused to reveal how much the government thinks the project will cost.
Instead, Danny Pearson says the government probably won’t even calculate the costs of the most expensive infrastructure project in Victoria’s history until after voters go to the ballot box at the 2026 election.
The Parliamentary Budget Office (PBO) on Wednesday released updated estimates for the total cost of the first two stages of the underground rail line, and found construction for the first stage – SRL East, which will connect Cheltenham to Box Hill by 2035 – was on course to stay within its stated budget of between $30 billion and $34.5 billion.
But it was the budget office’s $63.7 billion estimate for the cost of stage two – SRL North, to run from Box Hill to Melbourne Airport by 2053 – that triggered Pearson’s ire.
“I don’t know where the PBO got those numbers from,” Pearson said on Wednesday.
“If I was going to have a guess, I reckon they got out the tape measure, they looked at the distance of SRL East, then the looked at the distance of SRL North and said, ‘It’s basically double the size, therefore it’s double the cost’.
Transport Infrastructure Minister Danny Pearson and Premier Jacinta Allan.Credit: Joe Armao
“The reality is, you’ve got to go off and do the work.”
Opposition transport infrastructure spokesman David Southwick said that if the government believed the estimates were wrong, it should release whatever figures it relied on.
But Pearson said that cost was unlikely to be calculated and disclosed until after the 2026 election, even though Labor had put the price tag for the entire 90-kilometre rail line at $50 billion when it was announced before the 2018 election campaign.
RMIT Emeritus Professor David Hayward said it was “nonsense” to estimate the cost of the second stage of the SRL at this point because the northern leg was decades away.
The Parliamentary Budget Office estimates stage one of the Suburban Rail Loop will cost between $30 billion and $34.5 billion.Credit: Jason South
“It’s so far into the future that it would be ridiculous to even do an estimated cost of it. Things change so dramatically,” Hayward said. “By then we may be flying mini airplanes instead of cars.”
The PBO put the total cost of running the first two stages at $216.7 billion by 2084, if 50 years of operating costs were considered.
“[Premier] Jacinta Allan and her government are putting all of our eggs in one basket, seeking over $216 billion,” said Opposition Leader John Pesutto, who requested the PBO costing.
“It will cost a bomb, and it will come at the expense of urgent projects right across our state. We’re calling on Jacinta Allan and her Labor government to press the pause button on this project. We can’t afford it.”
Hayward said tallying operational costs for 50 years was misleading, particularly without discounting inflation.
He said doing so would be like taking the $3.3 million in annual state government funding for the Parliamentary Budget Office and claiming the office cost taxpayers $450 million over 50 years.
Pearson said no government would factor in running costs into the 2080s.
“It’s like being asked, ‘What’s the cost of a house?’, and you have to include 50 years of bills, three major renos and a lifetime of expenditure at Bunnings. It’s just laughable.”
Labor put the total price tag of $50 billion on the SRL when its flagship project was announced during the 2018 election campaign after a secretive planning process that has been criticised by the Victorian Ombudsman, the state’s auditor-general and the Grattan Institute.
While the opposition has vowed to pause, or dump the project if necessary, Labor has taken it to two thumping election victories and picked up seats in the first electorates set to benefit.
Southwick said the investment meant Melbourne’s outer west and northern suburbs would suffer along with the state’s regions.
The opposition initially requested the cost analysis during the 2022 election campaign but the PBO updated the numbers at Pesutto’s request.
The government has committed $11.8 billion, or one-third of the projected cost for SRL East and wants the federal government to stump up an equal share.
The Commonwealth has so far only pledged $2.2 billion and Pearson refused to deal in “hypotheticals” if extra funding was not allocated in the May federal budget.
The first major works contract, locking Victoria into the eastern leg, was signed in December for $3.6 billion for tunnelling.
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