Allan has time to abandon Melbourne’s gargantuan folly. But it’s about to run out

A six-month window remains open for the Victorian Labor Party to abandon the Suburban Rail Loop.

Between now and December, the government can walk away from this gargantuan folly at a justified cost. Beyond that, the state will have no choice but to sink good money after bad, irrespective of who is premier or which party forms the next government.

Let me explain.

It’s not too late for Victorian Premier Jacinta Allan to pull the plug on the costly SRL East. Credit: Joe Armao

Sources with a close understanding of SRL East – a $34.5 proposed billion rail tunnel between Cheltenham and Box Hill – estimate that so far, about $3 billion has been spent on the project.

Most of this is for early works to prepare the 26-kilometre rail corridor for tunnelling and construction of new stations. This work, which involved acquisition of land and removal of gas, electrical and water utilities, is all but complete.

If the SRL was abandoned tomorrow, not all this public expense would be money wasted. Land could be sold and the work done to ready it for tunnelling would increase its value to prospective residential and commercial developers.

A map of the Suburban Rail Loop.Credit: Victoria’s Big Build

The SRL would still represent an obscene waste of money but splashing $3 billion against the wall would, in the upside down fiscal reality of Victoria, be a responsible thing to do if it saved the state another $30 billion to $50 billion over the next decade, depending on your best guess of the final cost of this project.

By December, when the first of four tunnel boring machines is due to arrive in Melbourne from Herrenknecht’s manufacturing plant in southern China, that won’t be a viable option any more.

The way the SRL East contracts are structured, construction and engineering companies working on the project bill the state on a monthly basis. Under this pay-as-you-dig arrangement, consortia are paid profits only on costs they have incurred and work they have done.

This means that if the government quit the SRL now, it could break the main works contracts it has already signed for a fraction of their nominal, $5.3 billion value. There are no hidden nasties like there were in the East West Link contract the former Coalition government booby-trapped for Labor on the eve of the 2014 state election.

Once the tunnel boring machine is loaded onto freight transport in Guangzhou, the costs incurred by the main works consortia – this first to get its hands dirty is the Suburban Connect consortia comprising of Acciona, CPB Contractors and Ghella – will escalate quickly.

By Christmas, the Victorian government will be standing deep in a hole at Clarinda with a choice only to keep digging.

This calculus should be front-of-mind for anyone reading revelations by my colleagues Patrick Hatch and Kieran Rooney about the North West Strategic Assessment, a wafty title given to a secret government document detailing urgent rail projects needed in parts of Melbourne far removed from the proposed route of SRL East.

In the eight years since a room full of PwC consultants started dreaming up plans for an orbital rail loop around Melbourne, the public transport needs of the city’s fast-growing western and northern suburbs has gone from pressing to dire.

As premier, Daniel Andrews promised to electrify the Melton and Wyndham lines within weeks of unveiling his plans for the SRL. While nothing has been done on the former, the latter is ploughing ahead despite Infrastructure Australia warning about the business case and funding model and the federal government privately urging the state to change tracks.

Premier Jacinta Allan and many of her ministers remain convinced of the electoral popularity of the SRL. Two days after the federal election wiped out the last two Liberal-held seats in Melbourne’s eastern suburbs and silenced murmurings around her leadership, Allan went so far as to suggest it’s the SRL wot won it.

Yet how can a Labor government, in good conscience, prioritise another rail line for a part of Melbourne already well serviced by public transport above the provision of basic transport services for communities living in neglected parts of the city?

As one Labor MP who represents a Melbourne growth area explained, access to reliable public transport isn’t just about moving people around or enabling townhouse and high-rise developments. Fundamentally, it is about opportunity to study, to work and to prosper.

That opportunity should not be equal only for people living east of the Maribyrnong River or inside Melbourne’s ring road.

The state and federal government’s combined $4 billion investment to rebuild Sunshine station and untangle the knot of metro, regional and freight lines that run past its existing platforms is the first significant step towards modern rail transport for people living in Caroline Springs, Melton, Tarneit and Wyndham Vale.

It should be the start of a more substantial pivot away from giving Melbourne’s east what it wants and providing the west and north what they need.

SRL East is a project which, in the unlikely event it is completed on time, will run its first service in 2035. Its opportunity cost is being counted now, on a daily basis, across health, mental health, education and other essential services, where jobs are being cut and agencies defunded.

In the new currency of Victoria’s public sector, every 100 metres of SRL tunnel equates to $130 million that could otherwise be spent on teachers or nurses or preventive healthcare or government schools.

Before the last state election, when then-opposition leader Matthew Guy promised to axe the SRL and redirect the money into hospitals, Andrews delivered a pithy retort. “Not rail or hospitals,” he tweeted. “Both.”

It was a brilliant line and, as it turns out, complete bollocks.

Politics is always about choices. Between now and December the Victorian Labor Party still has a chance to make the right one.

Chip Le Grand is state political editor.

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