Melbourne’s suburban rail loop the next monster white elephant

More details have emerged about the Victorian Government’s signature $50 billion, 90 kilometre suburban rail loop, which is scheduled to start construction in 2022:

Premier Daniel Andrews confirmed the preferred route for the much anticipated 90km rail loop would run from Cheltenham to Werribee and connect every metropolitan train line in-between.

New underground stations will be built in Burwood and Monash University in Clayton, along with four new interchanges at Cheltenham, Glen Waverly, Clayton and Box Hill…

Construction is set to be begin by 2022.

As the project is still in very early stages, Mr Andrews said it was unclear how many properties would have to be acquired to build the new stations…

When the loop is finished, it is expected to be able to carry 400,000 passengers a day, cut congestion across the entire transport network and remove thousands of cars off the roads.

The Government also stated the loop will create more than 20,000 construction jobs, with 2000 apprentices, trainees and cadets to be employed under the Government’s Major Projects Skills Guarantee.

This project was a “thought bubble” devised during the heat of Victoria’s election campaign. It was never subjected for assessment by Infrastructure Australia or Infrastructure Victoria. There is no business case. And Victoria’s transport department wasn’t even told about the plan for fear that it would attempt to block the project within government.

With the history of cost overruns across major infrastructure projects, there is no chance that this project could be built for $50 billion (in today’s value). The proposed project would contain 90 kilometres of track, mostly tunnelled, as well as several underground stations and interchanges. Many properties will also need to be compulsorily acquired by the Government.

Given the 9 kilometre Metro Rail tunnel was budgeted to cost $10.9 billion, and there have already been cost blow-outs, it is more likely th suburban rail loop project – which is 10-times the length – would cost closer to $100 billion.

It is not surprising, then, that a wide variety of transport experts have slammed the suburban rail loop, including: the Grattan Institute; Professor John Stanley – one of the authors of Plan Melbourne; Dr Crystal Legacy – Senior Lecturer in Urban Planning at the University of Melbourne; and Des Grogan – civil and traffic engineer.

The reality is that this project was designed purely to give the Labor Government a shock-and-awe ‘announceable’ in the run-up to the State Election, was aimed at appeasing voters’ concerns about excessive population growth, as well as giving the appearance that the Government has the situation under control.

When added to the wasteful Westgate Tunnel, which was approved after receiving an unsolicited bid from Transurban, it is clear the Victorian Government does not believe in following due process on infrastructure projects.

The end result will be projects that fail to live up to expectations and are riddled with cost overruns, with incumbent residents paying the price through escalating user charges, taxation, and reduced amenity.

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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