The cost of the SRL will be huge. Not building it would cost us so much more

Concerns are mounting about the long-term debt involved in the Victorian government’s Big Build projects including the Suburban Rail Loop and an airport rail line.

While I understand the reservations, the question in my mind is, if not now, when?

The Suburban Rail Loop has been one of Victoria’s most controversial infrastructure projects.Credit: Penny Stephens

In 1994, as federal member for Burke, I had on the table in Canberra a fully funded “low-cost” rail line linking Melbourne airport to the city. Assessed by experts, the project was to cost $100 million and was estimated to take just 18 months.

Though Vicroads made provision for it when building the Western Ring Road by including a gap in the foundations for the train link to pass underneath, the proposal was fiercely resisted by the then premier, Jeff Kennett, who was pitching CityLink as Victoria’s first private sector toll road. His investors were nervous that an airport rail link could divert revenue and affect the viability of the project.

Eventually, Kennett won the battle and I was put back in my box. His government went so far as to legislate that any future airport rail link would have to pay a royalty per passenger to the CityLink consortium. That deal lasted until the contract ran out in 2019, which is the only real reason the airport rail link is back on the agenda now.

The Suburban Rail Loop, though already ballooning in cost, speaks to the real issue our state is facing: if we are settled on the plan to double Victoria’s population by 2050 while simultaneously ending urban sprawl in Melbourne (good luck with that), we need more infrastructure, and rail in particular, to do so. Without that, it’s just more roads to nowhere, endless car parks and drivers spending hundreds of dollars on toll roads. Bottom line – the SRL has to be built.

Stage 1 is costed at $35 billion now. If we back away and see a re-run of the airport train fiasco, it too could be 10 times that figure down the track.

The argument that we are saddling future generations with debt doesn’t wash. In the postwar years, massive expansions in all forms of public provision of housing, energy, education, transport, health, recreation and other vital community assets such as universities were funded by long-term, low-interest loans that governments took out to expand Australia’s population.

We have paid off those loans as taxpayers over the past 60 years and I, along with the families of every other Baby Boomer, have enjoyed the opportunities that have come from these efforts. It will be the same for future generations.

Unless we adopt a different growth model, we remain stuck with having to increase our population – mainly by immigration – to avoid a fall in living standards. Just as in 1950, there is no alternative but to begin building the facilities that these growing communities will need, before it is too late.

I am not uncritical about some of the cost blowouts we have seen. Today, the public whipping boy has become the CFMEU construction division. But when it comes to the increasing costs of projects like the SRL, the union is only a small part of the story. A lot of it is legitimate (the increasing costs of materials, skills shortages and an overheated building industry are just a few reasons).

The state and federal governments also have a lot to answer for. They have entered into contracts with large, experienced private sector operators who have taken them to the cleaners. These players fully understand that once the project is committed to, the risk of failure shifts completely to the politicians who promised the project in the first place and away from them. Government is on a hiding to nothing once the pin is pulled, because in the end, it is always the public who pays.

In the past, governments had capacity to develop and manage large projects from the initial planning phase right through to completion – on time and on budget. Just look back to what the old Housing Commission, Gas & Fuel Corporation, Board of Works and the State Electricity Commission achieved under immense pressure to house huge numbers of new families as the postwar baby boom ramped up.

But we no longer have that capacity. It has all been sold off or outsourced as “public-private partnerships”; doublespeak for governments bluffed into being terrified of debt and letting the private sector fund projects in return for healthy profits that would otherwise have been public sector savings.

Recently, I returned to Melbourne from a trip to Europe. In Istanbul and Bordeaux, the airport trains cost $2. In Milan, it was $8. Yet, when I landed back in Australia, my choices were a bus trip costing $23.90, or a cab or Uber fare starting at $50.

My god, we are a rail backwater. We have to get on with both the SRL and the airport train.

Neil O’Keefe was the federal member for Burke from 1984 to 2001. He was the parliamentary secretary for transport in the Keating government.