Call to pull federal funding from Suburban Rail Loop has Liberals in a twist

A federal Coalition push to withdraw funding from the Suburban Rail Loop (SRL) has exposed policy differences within the state and federal Liberals about how to proceed with the $35 billion project.

Liberal frontbencher Dan Tehan sparked internal ructions on Monday when he said he would introduce a petition in federal parliament urging the Albanese government to abandon its support for the rail loop and instead put the money towards fixing regional and rural road networks.

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

However, Opposition Leader Peter Dutton appeared to then walk back the position, telling Sky News reports that he would make the SRL a central issue at the upcoming federal election, and calls for it to be ditched were “inaccurate”.

“We’re happy to provide support to projects, but not if the state government has no hope of putting their own money in,” he said.

Tehan’s move also exposed inconsistencies within the state opposition’s policy. Leader John Pesutto struggled to explain whether he wanted to scrap it completely or pause it while contracts were examined.

On Monday, Pesutto said that while the state opposition agreed with Tehan’s calls to scrap the project “in principle”, the Coalition would instead “pause the project”.

Victorian Liberal frontbencher Dan Tehan and Opposition Leader Peter Dutton.Credit: Alex Ellinghausen

“Our priority is that the suburban railroad should not proceed, and the best way to do that is for Premier Jacinta Allan not to sign any further contracts,” Pesutto said.

Privately, several frontbench state MPs said the opposition would try to keep its options open over the next two years, so that any future Coalition government could assess how much progress had been made on the tunnelling by the next election.

They also complained that scrapping the project – which the state government has successfully taken to two state elections – would risk marginal federal seats in Melbourne’s east, including Deakin, Menzies and Higgins, by giving Labor the chance to run a narrative that electing a Liberal government would result in a cut to rail funding in their areas.

There are also concerns that scrapping already committed funding after the signing of contracts will open the Coalition up to criticism after it spent years attacking former premier Daniel Andrews for spending more than $1 billion cancelling the East West Link.

In 2015, the newly elected state Labor government abandoned contracts to build the link, signed by its predecessor before the election, prompting criticism from the Coalition as well as diplomatic complaints from the ambassadors from France and Spain – the home countries of the companies awarded the contracts.

Premier Jacinta Allan seized on the indecision to accuse the federal Liberals of being hostile to Victorian infrastructure projects during the Coalition’s time in office.

“Peter Dutton is sending a very, very clear message to all Victorians that he is going to be just the same as Tony Abbott, Malcolm Turnbull, Scott Morrison when it comes to gutting Victorians of the federal infrastructure funding they deserve and need,” she said.

Infrastructure Minister Catherine King.Credit: Alex Ellinghausen

Tehan told ABC radio that Victorian Labor “may have won two elections” spruiking the rail loop, but argued that members of the parliamentary party knew it was unaffordable.

“They know that the responsible thing to do for Victoria is to take that money and put it into the roads,” he said.

Tehan, who represents the federal seat of Wannon, around Warrnambool and Hamilton in Victoria’s far south-west, told The Age on Monday his position was consistent with that of Pesutto, who had recently written to Prime Minister Anthony Albanese asking him to clarify whether the federal government would contribute more funding to the SRL.

Liberal MPs said Dutton had been caught off guard by Tehan’s petition, and party insiders told The Age he had asked the frontbencher for an explanation about the move.

Federal Minister for Infrastructure Catherine King said Tehan’s threat was confirmation of the Coalition playing “politics with critical projects” and cutting “funding when it suits their political agenda”.

“The Albanese government has put in the work to ensure projects are properly planned and costed, and is delivering the roads and public transport Victorians need,” King said.

The federal government has committed $2.2 billion to SRL East, running from Box Hill to Cheltenham, but the state is expecting the Commonwealth to cover a third of the price tag for the $35 billion first stage.

No further federal money has been promised and the national auditor-general in September warned that Victoria’s failure to submit a credible business case was holding back the release of the $2.2 billion.

Former premier Jeff Kennett said existing contracts should be honoured, but backed calls to dump the project, particularly its later stages.

“You can’t have government walking away from legitimately signed contracts,” he said.

“I have no doubt, if you put to the Victorian public today whether they want to proceed with this project or not, they would say no, overwhelmingly.”

Earlier this month, the Allan government announced it had signed a second tunnelling contract for the first stage of the SRL, effectively locking the Coalition in to completing stage one after Pesutto previously vowed to honour any existing contracts should he win the election in 2026.

King has said any further funding is contingent on Infrastructure Australia’s assessment of the project. The Allan government provided the agency with further information for this process last month, months after it was first requested.

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