Blown-out North East Link’s extra $3.25 billion gets Albanese’s thumbs up

Pouring an extra $3.25 billion worth of federal funds into Melbourne’s North East Link is a good use of taxpayer money, Prime Minister Anthony Albanese has insisted, despite the project’s cost doubling just a few months ago.

But the prime minister has remained tight-lipped about how the latest investment will affect the investment pipeline for Victoria’s other major infrastructure projects, including the Allan government’s controversial Suburban Rail Loop and the long-touted Airport Rail.

Prime Minister Anthony Albanese and Premier Jacinta Allan touring the North East Link site on Thursday. Credit: Joe Armao

Albanese visited the North East Link’s two huge tunnel-boring machines for Thursday’s announcement, which will bring the Commonwealth’s total contribution to $5 billion. The project, which will link major arterial roads, is expected to take 15,000 trucks off suburban streets and slash some travel times by half an hour.

However, the North East Link blew out by more than $10 billion in December, taking its total estimated cost to $26 billion. Asked why his government was tipping more money into the project, instead of putting it into settling the Airport Rail dispute, Albanese said it was because the North East Link was “here, it’s real and it’s now”.

“You can’t drive on a media release,” the prime minister said. “What you can do is drive on a road that’s properly funded. We believe this $5 billion is an appropriate contribution by the Commonwealth to what is a vital nation-building project.”

The North East Link will stretch from Bulleen to Greensborough.Credit: North East Link Authority

Premier Jacinta Allan’s first budget, handed down on Tuesday, confirmed that more than 100 transport, school and health projects were being pushed back to help the state’s bottom line. Airport Rail has now been delayed by at least four years amid a dispute between the state government and Melbourne Airport over whether the rail line should be above or below ground.

“The airport should get serious about actually getting things done,” Albanese said. “I’m familiar with airports. From time to time, they think they operate in a way that forgets their social licence.”

Albanese also batted away questions about whether his latest investment meant there was no money in next week’s federal budget for the Suburban Rail Loop (SRL). He said Victorians would have to wait until the budget was handed down on Tuesday.

The state opposition’s major transport infrastructure spokesman, David Southwick, said this stance all but confirmed a vote of no confidence in the SRL.

“The Allan Labor government has lost control of the North East Link’s price tag and had to go cap in hand to the federal government for a bailout,” Southwick said.

“When funding a project blowout is a more attractive prospect than contributing to the Suburban Rail Loop, it’s clear the Albanese Labor government has no confidence in Jacinta Allan’s $216 billion pet project.”

Victoria hopes to secure two-thirds of the money needed for the $34.5 billion first stage of the project – Suburban Rail Loop East – from the Commonwealth. The federal government has so far committed just $2.2 billion. Tunnel boring machines are due to start work in 2026.

The 90-kilometre orbital rail loop was announced on the eve of the 2018 election. Then premier Daniel Andrews sold the project as a city-changing initiative that would eventually link Cheltenham, in Melbourne’s southeast, to Werribee in the west.

The Commonwealth’s latest funds are for the non-tolled components of the North East Link, including the M80 Ring Road upgrades, North East Link connections and the Eastern Freeway upgrades.

The projects will create new lanes, implement smart technology and improve the connection to the North East Link tunnels, the state and federal governments said in a joint statement.

Federal Infrastructure Minister Catherine King on Thursday said the project would improve traffic flows between Watsonia and Bulleen.

“There’s huge traffic snarls at the moment,” King said.

Albanese said the funding boost, which will be included in next week’s federal budget, would contribute to 12,000 construction jobs.

The link will be built between the Eastern Freeway and the M80 Ring Road in Greensborough and is expected to open in 2028. There will be 6½ kilometres of tunnels and the Eastern Freeway will be widened by up to 20 lanes.

Allan revealed in December that the 10-kilometre toll road had more than doubled in cost since it was first announced.

The toll road was initially budgeted at $10 billion and reassessed in 2019 at $15 billion. But the government revealed last year that the updated cost estimate was $26 billion.

Interest repayments are expected to hit $8.8 billion a year by 2027, leaving taxpayers on the hook for $16,700 every minute in interest costs alone.

Allan, who oversaw the development of the North East Link as the responsible minister, blamed global economic circumstances, including the pandemic and the war in Ukraine, for the project’s surging cost.

Victoria is already the most indebted state in the nation. The state’s debt pile is projected to hit $156.2 billion next financial year, rising to $187.7 billion by June 2028.

Treasurer Tim Pallas on Thursday thanked the prime minister for calling on Melbourne Airport to be a better corporate citizen.

“As soon as they get out of the way, we’ll get going,” Pallas said of airport rail.

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

Melbourne Airport has said the government rejected a $7 billion offer to build the airport station underground and express tracks from Sunshine.

With Kieran Rooney and Alex Crowe

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