Opposition walks back from $8 billion regional health pitch

The state opposition is walking back from a promise to spend $8 billion on regional hospitals, with less than half that amount likely to be offered up ahead of the November 26 state election.

After last month announcing plans to shelve the $35 billion first stage of Labor’s suburban rail loop and redirect every cent available into health, the Coalition was adamant that $8 billion of the money would go to hospitals in Victoria’s regions.

Victorian Nationals leader Peter Walsh.Credit: Supplied

The pitch was widely publicised in regional media outlets following the August 17 announcement. A Coalition media release promising “$8 billion for Victoria’s regional hospitals” was still live on Opposition Leader Matthew Guy’s personal website on Tuesday afternoon.

But Nationals leader Peter Walsh said this week the $8 billion promise for the regions assumed the full $35 billion cost of the rail line would be available to the Coalition to spend on health, under a deal between the Liberal Party and the Nationals to direct one-quarter of infrastructure spending promises to regional Victoria.

Walsh said the promise was made when Labor had provided few details about how the link would be funded.

“The $8 billion was 25 per cent of what the government was saying at the time the Cheltenham to Box Hill line would cost,” he told The Age. “Until we made our announcement [about shelving the first stage of the project], Labor never said anything about other sources of funding. So they need to come clean with the people of Victoria about how their funding model works.”

The Victorian government’s planned Suburban Rail Loop. The first stage, from Cheltenham to Box Hill, is expected to cost up to $35 billion.Credit: The Age

The state budget, announced in May this year, detailed $11.8 billion for the rail project, some of which has already been spent.

Budget papers also made it clear the government was banking on one-third of the suburban rail loop being funded by the federal government, which has so far only stumped up $2.2 billion, and one-third coming from as-yet unspecified “value capture” provisions, potentially involving profits from commercial development opportunities around the new line.

The $11.8 billion in the state budget for the loop suggests only between $2 billion and $3 billion – not $8 billion – would be available for regional health upgrades under the Coalition’s 25 per cent regional infrastructure guarantee.

In the August 17 Liberal Party-branded media release, the Coalition said shelving the rail line from Cheltenham to Box Hill “means $8 billion injected into regional healthcare”. An identical commitment was also made in a Nationals press release.

Victorian Health Minister Mary-Anne Thomas.Credit: Penny Stephens

“There was $35 billion locked into one city project but under a Liberal and Nationals government, $8 billion of this will be redirected to our regional hospitals to address our health crisis,” the media release says.

When asked about the $8 billion figure at a September 16 media conference, Guy said the promise for the regions was to provide “up to” $8 billion.

When challenged over this, he said: “I’m sorry, we’ve all got a fundamental different point of view. I’m not factoring $8 billion in anything. I’m factoring in what I’ve already announced.”

He said about $5 billion to $6 billion had so far been “allocated” to specific health projects.

Health Minister Mary-Anne Thomas said the opposition needed to “explain their cruel hoax”.

“They have dug a funding black hole for themselves and can’t get out,” Thomas said.

As reported in The Age this week, both sides of politics have engaged in a health funding arms race ahead of the election.

Labor has so far made election promises worth between $2.14 billion and $2.52 billion for hospitals, including up to $290 million for stage two of Wonthaggi Hospital, up to $1.05 billion to redevelop and expand the Maroondah Hospital (to be renamed the Queen Elizabeth II Hospital) in East Ringwood, up to $300 million to redevelop the Austin Hospital and up to $855 million for a new Northern Hospital emergency department.

The Coalition is dramatically outspending Labor, promising billions of dollars it has forecast will be available by shelving the first stage of the rail loop.

Its pledges include new hospitals in Mildura, West Gippsland and Wodonga, and extensively redeveloped hospitals in Daylesford, Mansfield and St Arnaud, plus a new cancer centre and health school in Shepparton.

It has also announced $900 million for a new hospital for Melbourne’s booming west in Melton, $900 million for a new 275-bed Werribee Royal Children’s Hospital, $550 million to rebuild the Caulfield Hospital, $400 million for a new infectious disease hospital and $400 million to upgrade the Maroondah Hospital.

Questions have emerged about Victoria’s capacity to deliver billions of dollars to upgrade and build hospitals, with the regions already facing severe shortages of skilled workers and materials as the state ramps up preparations for the 2026 Commonwealth Games, which will be held in regional Victoria.

Infrastructure Australia, the federal government’s chief major projects adviser, has warned that demand for labour needed to deliver infrastructure will hit “unprecedented levels” over the next three years.

In a recent report, it said national labour shortages would be three times greater than in 2017-18, peaking at 105,000 roles by mid-2023, with Victoria at the epicentre of the national skills crunch.

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