Victorian taxpayers hit with $800m blowout for Melbourne’s Metro Tunnel

Victorian taxpayers will stump up at least another $800m to fund cost blowouts in Melbourne’s Metro Tunnel train project, which will now come in at more than $15bn.

Melbourne’s Metro Tunnel will cost Victorian taxpayer’s $800m more than anticipated.

Victorian taxpayers will stump up at least another $800m to fund cost blowouts in Melbourne’s Metro Tunnel train project, which will now come in at more than $15bn.

Transport Infrastructure Minister Danny Pearson on Thursday said the state had agreed to a deal with the project’s builders to cover the additional project costs.

The deal will see the Victorian government put another $837m into the project, with Cross Yarra Partnerships putting in a comparable amount.

Before Mr Pearson’s announcement on Thursday, the total estimated cost of the Metro Tunnel project was $14bn, but that is now around $15.6bn.

Victoria’s contribution will now be about $13.5bn, with Mr Pearson blaming a range of factors for the extra costs, including Covid-19 and a volatile international climate.

“Since 2017, nobody could have predicted a one in 100 year global pandemic. Nobody could have predicted conflict in Gaza and in Ukraine, and nobody could have predicted interest rate spikes,” Mr Pearson said.

Victorian Transport Infrastructure Minister Danny Pearson. Picture: NewsWire / David Crosling

“Nobody could have foreseen these events,” he said. “We’ve seen a 22 per cent increase in building and material and labour costs since 2021. It’s just costing more to build anything anywhere.”

Mr Pearson said the Allan government was tying finalisation of the project next year to the additional funding, saying CYP would face financial penalties if this didn’t happen.

He wouldn’t guarantee the final bill for the Metro Tunnel project would end there, and while he said it would open next year, he wouldn’t say when the first passengers would travel through the tunnel.

Victoria’s opposition transport infrastructure spokesman David Southwick said the state’s taxpayers were being slugged for more money for the project, with no clarity that this was the end.

“Where is the almost $1bn worth of taxpayer money coming from?” he asked. “Who knows how much this project is going to cost by the time the ribbon is cut.”

Problems with the Metro Tunnel’s progress surfaced in May when the government noted changes had to be made following electromagnetic interference affecting hospital equipment in buildings above the underground construction.

Cross Yarra Partnerships is a consortium that includes John Holland and Lendlease.