Webuild the common thread in infrastructure cost blowouts

Underground work at the Snowy Hydro 2.0 project.

Snowy Hydro 2.0 might be capturing headlines as Australia’s biggest infrastructure disaster, with a tenfold cost blowout on the cards, but there’s a smaller version of it playing out in the Northern Territory.

The Darwin ship lift facility – tipped to bring in maintenance and contracting work into the Territory – is also staring at a ten-bagger on the cost front, with recent reports suggesting the total bill will soon lift above $1bn.

It was $100m when first conceived in 2015; $400m by 2019; $515m in 2023; then $820m this year. And now likely over $1bn, if recent reports are true.

Not much in common between a pumped-hydro project in NSW and a wharf facility in Darwin, you’d think. Except big pots of government money, and the contractor. In both cases it’s Italian giant Webuild.

Venerable Perth engineering firm Clough was appointed as the main contractor to the Darwin facility in 2022, and promptly went bust, to be bought out by Webuild – then Clough’s partner at Snowy Hydro.

Webuild triumphantly emerged with a $420m revised contract in 2023, in a joint venture with BMD. Since then the cost of building the ship maintenance hub has more than doubled.

Then there’s the second stage of Beach and Mitsui’s Waitsia gas plant in Western Australia, another former Clough project taken over by Webuild after it bought out Clough. It was supposed to cost $700m when work began in 2020, with first gas due in 2023.

Last we heard, it would cost more than $1.3bn, and first gas is still to be delivered.

Long-suffering Victorian taxpayers might take issue with Margin Call’s assertion that Snowy Hydro is the biggest infrastructure disaster in the country, because they’ll be paying for Labor’s North East Link road and tunnel, where blowouts have added more than $10bn to its cost, now forecast at $26.2bn.

And look! Here’s Webuild, as a key tunnelling contractor.

Or the new train station at the new Western Sydney International airport, facing a $2bn blowout on its $11bn target.

Guess who has that contract?

Now, Margin Call is no engineer or quantity surveyor, and we’re happy to admit we’re far from qualified to assign blame to Webuild in every case – and Webuild didn’t respond to our request for comment. Undoubtedly, though, some very fine and competent people work there. And there’s been global cost escalation after Covid-19, wage inflation and blah blah blah.

It’s surely just a curious coincidence that the same company’s name keeps coming up.

And here’s the kicker. Webuild is also a key contractor on Victorian Labor’s $34bn Suburban Rail Loop project, already so big it’s threatening the state’s credit rating.

We reckon any self-respecting ratings agency would drop it a couple of extra notches as soon as they noticed Webuild’s name on the contracts.

Kanga’s departure leaves allies in the lurch

The light that burns twice as bright burns half as long. And John Kanga’s reign as Melbourne Racing Club chairman burned so very brightly, as they say.

In the year since sweeping to an election victory at MRC, Kanga had five CEOs (including two interim bosses and his own, brief, stint as executive chairman). Another six executives walked in an almost total cleanout of the top ranks at the club, and dozens of other long-serving staff took redundancies.

The club lurched to a $15m loss last financial year, with debt and spending up, despite Kanga’s claims he’d saved the club through a long-planned sale of land to Mount Scopus Memorial College – which is still to be realised.

And now he’s gone, in a shock resignation only a week before the MRC’s biggest event, the Caulfield Cup.

Melbourne Racing Club chairman John Kanga at the Caulfield Guineas barrier draw only days before his shock resignation. Picture: Getty Images

And the reason, according to an email to MRC members from acting chief executive Tanya Fullarton? Pesky journalists.

“In recent weeks, there has been increased public commentary directed at Mr Kanga personally. While he firmly rejects the nature of that commentary, John has chosen to step aside to ensure the focus remains on the Club, its members, and the excitement of the Caulfield Cup Carnival,” she said.

Rumours abound and, asked whether he’d put any pressure on Kanga to resign, Victorian Racing Minister Anthony Carbines didn’t quite deny it.

“The reasons behind Mr Kanga’s resignation are a matter for him,” said a spokesperson.

But, whatever happened, Kanga’s not the only loser in the affair. Billionaire horse breeder Jonathan Munz has also taken a hit – not for the first time.

He’s been Kanga’s biggest backer and most vocal supporter, and happy to let people know – in no uncertain terms – that anyone who messes with Kanga messes with him.

It was Munz who hosted a meeting between Kanga and Victorian Racing Club chairman Neil Wilson aimed at merging the two clubs.

And Fullarton joined MRC from the Thoroughbred Racehorse Owners Association, which is chaired by Munz, in a move seen by many in the industry as a sign of his influence at the club.

Whatever the reason, Kanga’s sudden exit undoubtedly puts a dent in Munz’s ambitions for the struggling sport in Victoria.