Airport Rail brawl coming to a head with mediator on track to deliver report

A solution for the Melbourne Airport Rail standoff could be delivered within weeks despite the Victorian government and airport owners not meeting with mediators in the same room to hash out their differences over the $13 billion project.

Victorian Transport Infrastructure Minister Danny Pearson on Tuesday declared there was no guarantee a compromise would be reached before the 2026 election, even though the mediator’s report is imminent.

An artist’s impression of a proposed elevated rail station at Melbourne Airport. The project remains in limbo.

Former Queensland transport department director-general Neil Scales, who was in April appointed by the federal government to mediate the dispute, has met with the airport once and met separately with Victorian government officials.

While the parties have not been in a room together to hash out a solution, Scales’ final report will be delivered within weeks, Commonwealth transport bureaucrats told a Senate estimates hearing on Tuesday.

The report, which is expected to include “options on the ways forward with the project”, would then be provided to federal Transport Minister Catherine King, along with her department’s advice.

“The question is whether it’s affordable, and if so, at what price and at what price does an underground option become prohibitively expensive? That’s the question that everyone’s been grappling with,” department secretary Jim Betts told the estimates hearing.

The state budget this month revealed the rail project would be delayed at least four years until 2033 because of the government’s dispute with the airport, which wants the new station to be built underground.

The Allan government argues an underground station would cost at least $1 billion more, take almost two years longer to deliver and wouldn’t benefit the surrounding businesses the way an above-ground station would.

Pearson said there was no guarantee a resolution would be found by the November 2026 election.

“We are dealing with a rapacious private operator that has shown no interest to date in doing a deal,” he said.

An airport spokesman said the private owners had offered to explore potential funding opportunities with the government in April and again after the May 7 state budget.

The federal and state governments have each promised $5 billion towards the project, which has been estimated to cost up to $13 billion. Neither has outlined how the shortfall would be funded.

While the state said a four-year delay was unavoidable because of the dispute, Deputy Premier Ben Carroll this week put the saga back on the agenda, declaring it was time to get it done.

He said he would not leave parliament until a promised station in his electorate of Niddrie was delivered as part of the project, and that the airport could stump up the money for an underground station to break the impasse.

“It’s time for the obfuscation to stop, and it’s time for this project to get done. And we fully support the mediator in their work in getting this project back on track and delivered for Victoria,” Carroll said.

“Everyone wants it done. The workers, the community, everyone, so let’s get it done.”

Asked whether it should be prioritised over the $34.5 billion first leg of the Suburban Rail Loop in the eastern suburbs, Carroll said that was a matter for the transport infrastructure minister.

“We can do both together,” Carroll said.

In 2019, the airport was part of a conglomerate that offered to deliver the station with $7 billion in funding for an underground station and express tracks from Sunshine to Southern Cross Station.

That project would have provided new tracks and boosted capacity across Metro and V/Line services in the west, but the private consortium would have been able to charge operators for the use of the tunnel.

Pearson said the Victorian government would look at any offer to help fund the project, if it was good for taxpayers and commuters.

“I think the real issue here is that they don’t have any money on the table,” he said.

Pearson said the “dud deal” from 2019 – it was rejected by both the Andrews government and the then Morrison federal government – would have meant “hardworking people of Geelong pay through the odds for decades just to get a train to Melbourne”.

Depuity Premier Ben Carroll at Labor’s state conference this month. Credit: Wayne Taylor

“We both agreed the deal stank, that’s why we didn’t do it,” Pearson said.

The airport spokesman said an underground station would future-proof both the terminal precinct and the rail line.

“We have held positive discussions with the federal government-appointed mediator and remain fully engaged in this process,” he said.

Victorian Transport Infrastructure Minister Danny Pearson.Credit: Gus McCubbing

“Melbourne Airport remains available to discuss potential funding opportunities for an underground station.”

This month, rank and file members of the Victorian Labor Party accused the airport of deliberately sinking the project to protect its tens of millions of dollars in parking revenue. The members agreed they did not care if the station was above or underground and said the government needed to “get serious” to get it done.

A Victorian government spokesman this week said the airport was holding the rail project hostage.

“We look forward to the Commonwealth progressing matters with their appointed mediator to help resolve the unreasonable demands of its tenant, Melbourne Airport,” the spokesman said.

Opposition transport infrastructure spokesman David Southwick said it was “great” that the deputy premier had jumped onboard to support Airport Rail.

“It’s time the premier and minister for transport infrastructure do the same,” he said.

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