The long-awaited $10 bn Melbourne Airport Rail Link has hit more turbulence with Treasurer Tim Pallas expecting a delay of “at least four years” amid a bitter stoush with airport operators.
The Allan Government has instead staked its credibility on cutting the ribbon on the $14bn Metro Tunnel and the $10.2bn West Gate Tunnel project next year, as it also ramps up works on the contentious $34.5bn Suburban Rail Loop East between Cheltenham and Box Hill.
Cost blowouts are still being felt across the budget, worth about 4 per cent across the multi-billion dollar public infrastructure sector – most of which is due to the eye-watering $10bn overrun at the North East Link being built between the Eastern Freeway and the M80 in Greensborough.
The Treasurer said rising prices of materials, labour and transportation have spiked 22 per cent since 2021, battering project budgets.
Treasurer Tim Pallas is expecting a delay of at least four years for Melbourne’s Airport Rail Link. Picture: Melbourne Airport
Mr Pallas said the redirection of funding away from the long-awaited airport rail link was a “sensible decision” given the standoff between the State and the Airport over the location of a station at Tullamarine, which has resulted in a federal mediator being appointed.
This is despite more than $1bn already spent on early works, including shifting utilities and preparing for major construction.
The Treasurer said the airport was locked into building a below ground station but emphatically ruled out the state agreeing to that option, preferring a cheaper and quicker elevated station.
“Were the airport operator to see reason and maybe become a good corporate citizen at some point instead of a really good car park operator, then perhaps we might be able to bring those things forward,” he said.
The announcement of a four-year delay – which matches the forward estimates of the Budget – comes despite the project only being halted last year by former premier Daniel Andrews.
The lengthy delay comes amid a broader shift in Victoria that will see the government tap the brakes on capital spending to a more sustainable long-term infrastructure pipeline.
The Allan government is prioritising other infrastructure projects. Picture: Andrew Henshaw
“That doesn’t mean going from feast to famine,” he said.
“In this Budget we will progressively return the capital program to pre-Covid levels, to better align with the ability of our economy to deliver,” he said.
“A sustainable, ongoing pipeline will provide certainty to the construction industry, and help them to build critical social and economic infrastructure for all Victorians.”
This would see average spending on roads, rail, schools and hospitals to reduce from its peak of $24bn this financial year, to $15.6bn a year over the following four years.
The Budget shows a total of $208bn in new and existing projects underway, but Mr Pallas said a shortage of workers and material price hikes had forced a change to the previous approach.
This has also seen about a quarter of projects delayed since last year’s Budget.
Spending across the transport sector has tightened significantly, with a focus on delivering health and education capital projects.
