Watchdog’s Suburban Rail Loop fears date back more than two years

Infrastructure Australia raised serious concerns about the cost and benefits of the Suburban Rail Loop with the Victorian Labor government in 2022, warning it needed ‘more transparency on the economic outcomes’ and details about the $125bn project.

Works under way on the Suburban Rail Loop (SRL) site at Burwood. Picture: Mark Stewart

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Australia’s infrastructure watchdog raised serious concerns about the cost and benefits of the Suburban Rail Loop with the Victorian Labor government more than two years ago, warning it needed “more transparency on the economic outcomes” and details about the $125bn project.

The Australian has obtained a log of requests Infrastructure Australia served on Victoria’s Big Build chiefs in September 2022, revealing the independent federal government body was already questioning a lack of critical financial and planning information about the SRL.

A document summarising the watchdog’s concerns following a series of meetings in 2022 was attached to a letter sent to SRL and Department of Transport executives in 2024.

Department of Transport and Planning secretary Paul Younis.

Waiting for answers

The letter, dated May 28, 2024, to Victorian Department of Transport and Planning secretary Paul Younis was written by Infrastructure Australia chief executive Adam Copp and suggests the watchdog was still waiting for answers to some of the questions it asked in 2022.

“I write to clarify Infrastructure Australia’s involvement in assessing the Victorian government’s Suburban Rail Loop project,” Mr Copp wrote.

“On 7 September 2022, I met with you and Frankie Carroll, CEO of the SRLA. Following that meeting, Infrastructure Australia provided feedback in writing to Frankie on the ‘Business and Investment Case’.

“That feedback explained that further information was required so we could conduct a full assessment of the project. For your awareness, I have appended an overview of the advice we gave to SRLA in September 2022 on the further information we require.”

A map of the planned Suburban Rail Loop in Melbourne.

Allan under pressure

Premier Jacinta Allan is under intense pressure over the SRL after Infrastructure Australia’s damning evaluation report released on Friday into the controversial underground rail link.

The report flagged major concerns about the cost and benefits and called on the government to develop “exit” strategies if it could not be delivered and also warned projected benefits were “overstated”.

The SRL’s first stage linking Cheltenham to Box Hill will cost $35bn. The Allan government wants the federal government to pick up a third of the cost, but so far Anthony Albanese has only committed $2bn.

A summary of Infrastructure Australia’s 2022 SRL advice attached to its 2024 letter flags concerns about the overall project.

“The overarching strategic rationale for the SRL program in the Business and Investment Case focuses on SRL East and SRL North, with less information on SRL West,” the document states.

“More information is needed on the entire program and the contribution of each of the three stages to the overall outcomes. More detail is needed on how metro rail was selected as the preferred mode compared to other options.

“The cost-benefit analysis results do not allow an assessment of the merits of the whole program as they only present the SRL East and SRL North sections.”

Then Victorian Minister for the Suburban Rail Loop, Jacinta Allan inspects early works of the SRL at Clayton in November 2022. Picture: Wayne Taylor

Cost-benefit details missing

The summary document reveals the watchdog was pressing the government for more cost-benefit details before supporting the case for federal investment.

“The range of CBA results is appropriate for a strategic-level assessment. However, for individual stages that are seeking investment, we would require a ‘most likely’ result … to be identified and reported to provide more transparency on the economic outcomes.

“To assist our assessment, quantitative analysis on the social, economic and environmental impacts of the program is needed to demonstrate the identified outcomes.”

The summary document shows Infrastructure Australia was also grilling the government about a lack of financial detail about the cost of building each section.

“To inform a detailed assessment of the program, and individual sections, we would need actual cost numbers for each segment of the SRL, including the cost breakdowns for the rail infrastructure and the stations/precincts,” the summary document states.

“Option and non-use values are shown to deliver significant benefits, and a more detailed assessment would be required to substantiate this.”

SRL Minister Harriet Shing says the project is on time and budget. Picture: Ian Currie

‘On time and budget’

The watchdog was also seeking access to cost estimation reports, design documentation, peer review reports and a detailed risk register.

“A more detailed assessment would also require a better understanding of the work conducted on design and cost development,” the summary document states.

Ms Allan, who was the minister responsible for the project under former premier Daniel Andrews, has continued to back it.

After the release of the damning report last week, SRL Minister Harriet Shing said the project was on time and on budget.

“Tunnel-boring machines are in the ground next year, and trains will be running between Cheltenham and Box Hill in 2035,” she said.

“SRL is Australia’s largest housing project and will deliver 70,000 more homes closer to where people grew up, while cutting travel times to jobs, healthcare, and Australia’s biggest universities.”

Opposition major projects spokesman Evan Mulholland has blasted the SRL as a “reckless vanity project” and called for the government to pause the project.