Taxpayers and motorists dudded out of billions by West Gate Tunnel

Victorian Premier Daniel Andrews in Melbourne on Monday. Picture: David Geraghty

The West Gate Tunnel was supposed to be completed next year, enabling Daniel Andrews to cut the ribbon on one of his signature “big build” projects as he asked the people of Victoria to grant him a third term at the November 2022 election.

Instead, costs on the $6.7bn project have blown out by a further $3.3bn and Transurban chief executive Scott Charlton says there is “no reliable timeframe” for the tunnel’s completion – with no end in sight to a more than two-year stalemate between the company, its builders and the state government in a dispute over toxic soil.

From its inception, the West Gate Tunnel has been a dud deal for Victorian taxpayers. It started as Labor’s “shovel-ready” $500m “West Gate Distributor” ahead of the 2014 state election – but quickly morphed into Transurban’s ‘bigger and better’ West Gate Tunnel project. At the time, former Bracks and Brumby government advisers were working for the toll road giant and Daniel Andrews embraced it as an alternative to Denis Napthine’s East West Link.

Andrews ripped up the East West contract at a cost to Victorians of $1bn, and by 2015, the West Gate project had been rejigged, as had its then $5.5bn price tag.

But Victorians aren’t just paying for the as-yet unbuilt tunnel through their taxes. Courtesy of legislation that passed the Victorian parliament in early 2019, motorists using the Kennett-era CityLink toll road from Melbourne’s east to the airport are being charged extra to pay for a tunnel to the western suburbs that some of them may never use.

Around the time the legislation passed, Parliamentary Budget Office analysis found Transurban would reap a nominal $37.3bn in extra tolls over the next 25 years in return for investing $4bn to build the tunnel, with tolls allowed to increase by 4.25 per cent each year over a decade.

As the government threatens to legislate, it remains to be seen how the impasse with Transurban will be resolved.

Whatever the outcome, the situation does not bode well for taxpayers who’ll be forced to stump up tens, if not hundreds, of billions of dollars for other major projects on the horizon, including North East Link and the fabled Suburban Rail Loop.