Ombudsman’s report highlights ‘obvious risks to public funds’ from Suburban Rail Loop secrecy

The $125bn-plus Suburban Rail Loop was initially so secret it was kept from the then-secretary of the Department of Transport.

Daniel Andrews departing parliament on his last day as premier. (Photo by Asanka Ratnayake/Getty Images)

Victoria’s Ombudsman has found the clandestine process under which the $125bn-plus Suburban Rail Loop was conceived exemplifies the “obvious risks to public funds” posed by the state government’s “excessive secrecy”.

In what she has described as “one of the more intensive” investigations conducted in the Ombudsman’s 50-year history, Deborah Glass found the Suburban Rail Loop was initially “so secret” that it was kept from the then-secretary of the Department of Transport, Richard Bolt, and “most of the board” of originating agency Development Victoria.

“The stated reason for the secrecy – to mitigate against land speculation – does not stack up, as no land was acquired by the responsible agency before a public announcement, and in any event would not justify keeping the relevant secretary in the dark,” Ms Glass found.

“It was ‘proved up’ by consultants rather than developed by public servants, and its announcement ‘blindsided’ the agency set up by the same government to remove short-term politics from infrastructure planning.

“The lack of rigorous public sector scrutiny over such projects before they are announced poses obvious risks to public funds.”

Ms Glass said a key finding of her report had been the “marginalisation of the public sector and the erosion of a core Westminster principle: an impartial public service that serves the government of the day while providing it with ‘frank and fearless’ advice”.

“An example of this was the early assessment of the Suburban Rail Loop,” she said.

Ombudsman Deborah Glass. Picture: David Caird

The Ombudsman examined the appointment of former chief of staff to Treasurer Tim Pallas, Tom Considine, who first devised the Suburban Rail Loop, after being appointed to an executive job within Development Victoria.

She also examined the role of then-chair of Development Victoria, James McKenzie, a Labor-aligned businessman.

Ms Glass said some of the submissions she had received on the Suburban Rail Loop noted that the project “was kept unusually secret before its public announcement as an ALP election commitment, and was even concealed from major stakeholders such as Victoria’s top transport bureaucrat”.

“We heard this meant early development of the SRL did not take into account important research promoting a co-ordinated approach to transport planning, and could not be factored into Victoria’s integrated transport plan,” the Ombudsman said.

“Independent reviews by the Victorian Auditor-General’s Office and the Parliamentary Budget Office have since queried key assumptions underpinning the SRL, suggesting its cost will be much greater than originally estimated.”

Ms Glass similarly found that “excessive secrecy and the use of consultants” was also a feature of early planning for the doomed Commonwealth Games. “History has since revealed major flaws in the assumptions underpinning the financial modelling,” she said.

In a 10-page response to the Ombudsman’s findings, published alongside them, Department of Premier and Cabinet secretary Jeremi Moule claimed the report “repeatedly mischaracterises the operation of the Westminster system” in its depiction of how the Suburban Rail Loop was devised.