Delays, ditched designs and hospital damage: Leaked report reveals Metro Tunnel woes

A leaked government report on the new $14 billion Metro Tunnel rail line under central Melbourne reveals delays, potential compensation claims, unresolved issues with cancer treatment equipment in an inner suburb, and plans to dump elements of the mega-project to cut costs.

The report – written last month for the state government’s infrastructure development committee, which includes several senior MPs – says that while the Cross Yarra Partnership is contracted to finish the project on April 29 next year, “late 2025 is more likely”.

The site of the Town Hall station and the neighbouring Westin Hotel this month.Credit: Wayne Taylor

It warns that delivery of two new rail stations, State Library and Town Hall, are “behind schedule” and that the relationship with the companies delivering the project could become a problem.

“Productivity rates at [these] CBD stations have been lower than forecast due to a range of factors, including industrial relations, and delays to completion of building works is putting pressure on testing and commissioning activities,” the report says.

The report adds that while the government is “working collaboratively” with Cross Yarra Partnership and another consortium the government has contracted, “there is a material risk that the level of collaboration and coordination required to successfully complete the project deteriorates”.

News of the fresh delays come as the $21.6 billion Metro Rail line under central Sydney opened on Monday. NSW Premier Chris Minns hailed that project as “a new era of public transport”.

Melbourne’s project was originally budgeted at $10.9 billion and is now expected to cost about $14 billion.

So long as the new subway is finished by the end of next year, it will not be greatly delayed on its predicted completion date of 2025 – but the leaked report warns new costs and delays may arise.

“Further funding may be required to complete the project to the extent that these challenges and risks crystallise time and cost impacts on the project,” the report says.

The document follows a separate high-level financial analysis of the Metro Tunnel by the Victorian auditor-general in June. The auditor-general also found there had been cost blowouts and delays, but did not detail specific issues – other than the medical centres – causing cost overruns and delays.

December 2022: Then-premier Daniel Andrews and Jacinta Allan, the then transport infrastructure minister, tour the Town Hall station site.

The new leaked report warns that the “City of Melbourne [may] seek further compensation from the state”, with “progress being frustrated” by planning approvals and other issues taking too long to resolve.

“While some issues have been escalated or unlocked in meetings with the City of Melbourne chief executive officer, the level of engagement remains challenging. There remains a risk that City of Melbourne seek further compensation from the state as the project nears completion.”

A spokesman for the council said the city was working closely with the Metro Tunnel project to resolve issues.

The Westin Hotel has already received compensation from the state government because it adjoins City Square, which has been occupied as a worksite since 2018. But with Town Hall station taking longer than expected to finish, “delay to the completion of the project will extend the term that the Westin Hotel is entitled to support for longer than anticipated, which may have further cost implications”, the report says.

The report does not say how much more money the hotel may get. A request for comment from the Westin went unanswered.

The report confirms that new rail station Arden, in North Melbourne, was finished in January, while another new station in Parkville was completed in May. But both are running months behind their original schedule due to rail testing that must be completed before they can open to the public.

“It is anticipated that Arden station will take about nine months to be accepted for operations,” the report says.

The leaked report details a long-running and still unresolved issue with cancer scanning and treatment equipment at Parkville’s Peter MacCallum Cancer Centre. The equipment is affected by electromagnetic interference from the underground rail line, which passes nearby.

The Peter MacCallum Cancer Centre has had an issue with the nearby underground rail line.Credit: Justin McManus

The issues have already cost $128 million in capital works and $36 million in extra operating costs to relocate sensitive scanning equipment from Peter MacCallum, the Royal Women’s Hospital and the Royal Melbourne Hospital to East Melbourne.

“There is no provision for additional relocations or significant infrastructure upgrades in the Metro Tunnel” budget, the leaked report says.

A Peter MacCallum spokesman said the centre was working with “global experts to understand the potential impact of electromagnetic interference and determine what mitigation strategies may be required”. He said patient safety remained the top priority, and that all testing was carefully planned to ensure care was not affected.

The rail project has also affected an electron microscope that sits in the basement of Parkville’s Peter Doherty Institute, which performs infectious disease research.

The high-tech microscope is less than 20 metres from the underground rail line. It is one of only “a few dozen” such microscopes “in the world and [the institute] is the only facility in the southern hemisphere with access to a [microscope of its type] … allowed to handle viruses such as Ebola and Hendra”, the report says.

Because these viruses are so contagious, the report says the microscope “must be located in the same building as the laboratory”.

The report says “shielding” from electromagnetic interference might not protect the microscope and “no agreement has been reached” on what happens if that does not work.

It notes $5 million has already been set aside to try to put in place mitigation. Peter Doherty Institute did not respond to questions by deadline.

The report says one significant cut will almost certainly be made to save money as part of the project: the Park Street Link, a tram extension that was to be built near the new Anzac station on St Kilda Road.

Port Phillip Council has long requested the tram extension to improve getting around the bayside area.

“Government has approved in-principle descoping [of] the Park Street Link from Metro Tunnel Project to support the budget on the basis that insufficient funding was provided,” the report says.

Port Phillip Mayor Heather Cunsolo.Credit: Simon Schluter

Port Phillip Mayor Heather Cunsolo said the council had not been told of any “descoping” plans for the Park Street tram link.

“We will be writing to the premier to seek urgent clarification as further delay, or ultimately not proceeding with installing 300 metres of ‘missing’ tram track, has concerning implications,” Cunsolo said.

Asked on Monday whether her government had cut elements of the project to try to rein in the budget, Premier Jacinta Allan said the project was “on track to be opened by the end of next year, 2025, and it’s absolutely going to transform the way our city and state moves”.

Allan, who was the minister for public transport and major projects when the Metro Tunnel began, said the state had challenges with the project, but that this was to be expected because of its “scale and the complexity … This is a project that’s just too big and important not to deliver.

“We’ve recognised in a growing city and state the need to add more train services.”

Allan agreed the Arden and Parkville sites were finished quicker than the city stations.

“The ones in the city are just incredibly complex worksites. We have these huge caverns excavated beneath the heart of the city of Melbourne, whilst the city has continued to move above ground pretty seamlessly,” she said.

She said the government was working with medical research and cancer centres “in a really positive way” to resolve the issues around their equipment.

Opposition Leader John Pesutto said Labor had let a “litany of problems” hit the Metro Tunnel project “that will only add further costs and delays”.

He said Allan’s mismanagement was “fuelling debt, starving funds from other priorities and now even threatening Victoria’s financial position”.

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