Melbourne Metro Tunnel project grinds to a halt amid costs dispute

Tunnel digging on Melbourne’s $11 billion Metro rail project grinds to a halt, amid cost blowouts dispute.

Tunnel boring work halted on Melbourne’s metro Rail over a dispute about cost blowouts Picture: Supplied

Tunnel boring machines working on the Andrews government’s $11bn Melbourne Metro rail project have ground to a halt, amid a dispute over cost blowouts.

The two machines stopped work on Monday after operating over the weekend.

Mediation is ongoing over a disagreement between the state government and the consortium building the project, about who should foot the bill for delays and cost overruns.

Workers are reportedly still being paid, despite the machines being switched off — in a move seen as a negotiating tactic being used by the Cross Yarra Partnership consortium.

A June Auditor-General’s report found early works for the $11bn twin tunnels — which will run nine kilometres under the CBD between Kensington and South Yarra — were already $150m over budget.

Cross Yarra Partnership, which includes companies such as Lendlease, John Holland Group and Bouygues Construction, is yet to respond to a request for comment.

A government spokeswoman said “operational matters” on the project were a decision for Cross Yarra Partnership and government agency Rail Projects Victoria.

“There is a contract in place to build the Metro Tunnel by 2025 — and we expect them to deliver that,” the spokeswoman said.

A Rail Projects Victoria spokesman said the agency was committed to delivering the tunnel by 2025.

The spokesman said the first tunnel boring machine, named after former premier Joan Kirner, had so far bored 540 metres, while a second machine, named after cricketer Meg Lanning, had travelled 281m.

“Both machines have progressed well since launching earlier this year,” the spokesman said.

“Rail Projects Victoria (RPV) is in ongoing discussions with Cross Yarra Partnership (CYP) on all aspects of the project and is focused on achieving the best outcomes as works progress.

“To date, CYP has not provided RPV with any specific detail of proposed changes to its tunnelling program.”

Opposition Leader Michael O’Brien said the government had lost control of the state’s major projects.

“Now you’ve got a boring machine that’s literally stopped in its tracks,” he told reporters.

“This is a government which is so keen to get the headline it never meets a deadline.”

Militant construction union boss John Setka said that if the CFMEU shut down a project “for no reason” they would be “fined tens of thousands of dollars, canned by the government, and have even more laws against us.”

“There are one set of rules for big business & another for unions,” the CFMEU Victorian secretary said.

“Who is going to hold the Chinese Communist Govt owned John Holland accountable?”

Lendlease shares fell by 1.52 per cent to close at $18.73.

Stockbroking analysts said the cost blowouts meant that there would be higher exit costs than the $450m-$550m that Lendlease has forecast it will cost to exit its engineering and services business.

“This does not look good and it’s already late and over budget and history shows that the first issue is not the last. Things happen in threes,” said the analyst.

Additional repoting: Ben Wilmot, AAP