More than 100 projects delayed as blowouts hit bottom line

More than 100 Victorian projects will be delayed as the government tries to protect its bottom line from rising costs by pushing back completion dates on schools, health and water infrastructure, and even the state’s Big Housing Build.

The protracted stoush over a rail line to Melbourne Airport will also drag on, with Victoria now forecasting a four-year delay to the project.

The latest infrastructure projects in the Victorian budget 2024.Credit: Kathleen Adele

On Tuesday, Treasurer Tim Pallas confirmed the state would tinker with its infrastructure program to “better reflect workforce capacity”, citing a 22 per cent increase in construction costs since 2021 from the rising price of materials, labour and transportation.

The budget documents added up how many months it would take to complete all of the state’s 632 budget-funded projects, revealing the total timeline for completion had increased by 26 per cent compared with last year’s budget. There was also a 3.9 per cent increase in costs across this group.

Across 131 projects valued above $100 million, there has been an increase of 24 per cent on the total combined timelines and a 4 per cent rise in costs.

Completion dates of two dozen school upgrade projects will be affected, as well upgrades to tourist destinations and sewerage works.

The Big Housing Build, a commitment to build 12,000 social and affordable homes, was last year scheduled to be completed in 2027, but is now expected before the final quarter of 2027-28.

An emergency department upgrade at Swan Hill District Hospital, scheduled for the last quarter of 2024-25, is now forecast to be finished by the second quarter of 2026-27.

Some level-crossing removal projects will also be delayed, but individual changes have not been outlined in the budget papers and the government will still aim to meet its deadline of removing 110 by 2030. This masthead revealed in March that a $1 billion upgrade of the Upfield line was among those likely to be affected.

Early works on the Suburban Rail Loop East will be completed nine months later than expected, in the first three months of 2026. No delays have officially been announced for the full $35 billion project or the North East Link, which last year blew out by $10 billion from its original cost.

An early works site for the Suburban Rail Loop in Burwood. Credit: Paul Jeffers

Pallas, in his speech introducing the budget, said now was the time for the government to “recalibrate” and make sure its investments were suited for the current conditions.

“With high global inflation, the International Monetary Fund, in its recent report on Australia, says now is the time for governments to adapt infrastructure investment to economic capacity,” he said.

“We’re recalibrating with a clear path forward, backed by disciplined decisions.”

Infrastructure spending will fall from $24 billion in 2023-24 to just over $15 billion by 2027-28.

Pallas said the government now expected Melbourne Airport Rail to be four years behind schedule, despite a mediator recently being appointed to negotiate a dispute over the project.

The airport wants a station at Tullamarine built underground, but the Allan government is refusing because it says it will be too expensive. Victoria and the Commonwealth have committed $5 billion each to the project.

The treasurer said the airport wanted the government to accept an underground station or provide compensation.

“Believe me, we are doing neither of those things, so we’re at a stand-off,” he said.

“Of course, were the airport operator to see reason and maybe become a good corporate citizen at some point, instead of a really good car park operator, then perhaps we might be able to move those things forward.”

A Melbourne Airport spokesman said the timing of the project was a matter for government.

“Melbourne Airport was part of a consortium that offered up to $7 billion towards an underground airport station and express tracks from Sunshine,” the spokesman said. “The state government rejected this.”

Opposition transport infrastructure spokesman David Southwick said Labor could not manage money and major projects.

“Premier Jacinta Allan continues to put all our eggs in one basket, and communities across western Melbourne, growth corridors and regional Victoria continue to pay the price.”

The budget also included $752 million to operate and maintain rail assets delivered as part of the Big Build. Another $233 million was announced to continue preparing for the opening of the Metro Tunnel by 2025, but an almost identical amount was announced for a similar initiative the year before.

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