By Rachel Eddie and Kieran Rooney
Victoria has spent at least $67 million to delay Melbourne’s long-awaited rail link to Tullamarine, paying contractors for standing down until the state resolves its stalemate with the airport.
Melbourne Airport’s owners want an underground station built near its terminal while the Victorian government wants to pursue an above-ground option, which it says would be significantly cheaper. The state has privately pushed to pause the $13 billion project indefinitely.
An artist’s impression of a proposed elevated rail station at Melbourne Airport.
The project was first delayed when it was included in a Commonwealth review of infrastructure projects around the country but federal Transport Minister Catherine King ultimately ruled it should go ahead.
In November, she promised to appoint a mediator to end the stalemate over the station, which has meant there is no official completion date for the project once slated for a 2029 finish. The Age last month revealed a mediator is yet to be appointed.
On Friday, the state Department of Treasury and Finance tabled its mid-year financial report in the Victorian Parliament and listed extra cash spent since the 2023-24 budget was handed down in May last year.
In two separate agreements, in July and November last year, the state ticked off variations to its early works airport rail contract with the Gateway Alliance that together added up to $84 million.
The second variation, valued at $67 million and agreed to in November – the month that King ruled the project should continue – was to “demobilise works” during negotiations with the airport.
“In July 2023, a variation of $17 million was signed with Gateway Alliance for Melbourne Airport Rail (MAR) Early Works program,” the financial document said.
“Due to the Commonwealth government’s infrastructure investment program strategic review, a further variation of $67 million was approved in November 2023 for Gateway Alliance to conduct demobilisation works pending the outcome of negotiations with Australia Pacific Airports (Melbourne). The works under this contract are expected to be completed by December 2024.”
The state government did not clarify when asked whether “demobilise” meant packing up the site or standing staff down.
An artist’s impression of a new bridge, to be 550 metres long, 50 metres high and built alongside the existing heritage- listed rail bridge over the Maribyrnong River, to be built as part of the Melbourne Airport Rail project.
“We’ve been in negotiations with the Airport over this project for several years. As we have previously said, these negotiations have been frustrating and have caused delays,” a state government spokesman said.
“The Commonwealth — who own the land the airport sits on — have previously stated they will appoint an independent negotiator to resolve issues with Melbourne Airport.”
Melbourne Airport Rail staff have been redeployed.
Both the state and federal governments have each committed $5 billion towards the Airport Rail link and the Commonwealth recommitted to its funding when it publicly released the infrastructure review on November 16. It has been estimated to cost $13 billion, but neither side has agreed on who will pay if the $10 billion budget is exceeded.
A spokesman for Melbourne Airport said its work ground to a halt on April 30 last year on advice from the state government.
“Melbourne Airport remains ready and willing to discuss the delivery of airport rail and is currently awaiting the appointment of a mediator,” he said.
The airport has also pushed for financial compensation if the station on their land is built above ground. The disagreement over the station and the compensation has ground progress to a halt.
The financial update released on Friday also showed the expansion to the Thomas Embling Hospital, expected to cost $462.5 million, had also blown out by $334 million and was now delayed by at least six months. The extra beds were a recommendation of the royal commission into Victoria’s mental health system.
The state opposition’s shadow treasurer Brad Rowswell said the figures proved “Labor can’t manage money and Victorians are paying the price”.
“The ongoing mismanagement of major projects is adding to Victoria’s record debt, forcing higher taxes and pushing up prices at a time Victorians can least afford it,” Rowswell said.
Net debt increased by $11.7 billion in the six months between the end of June and December to $126.8 billion. In that period, the state government invested $12 billion in infrastructure alone.
Interest expenses for the entire state of Victoria’s finances, which includes all agencies and financial entities, were forecast to be $6.6 billion in 2023-24, $378 million more than predicted in the May budget.
Victoria’s upcoming May budget is already under strain. The Age this week revealed that eight level crossings that Labor promised to remove by 2027 at the 2022 state election would be delayed.
The Allan government trumpeted the mid-year financial report as showing a strong labour market and growing economy in Victoria. An extra 124,000 Victorians were in work in the 12 months to December 2023, according to the update.
“This year’s budget will continue to deliver the promises we made at the last election and protect the jobs and services that Victorian families rely on,” Treasurer Tim Pallas said in a statement on Friday.
King’s office was contacted on Friday.
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