Victoria forges ahead with $50b rail megaponzi

The Victorian government has announced that the proposed Suburban Rail Loop will start at Southland Shopping Centre. The preferred sites for six underground stations for the first leg of the loop from Cheltenham to Box Hill have also been announced, while the upcoming state budget will include $2.2 billion for early works on the first stage of the project.

When the project was first announced at the 2018 election, the cost of the entire project was estimated at around $50 billion, while Victorian Premier Daniel Andrews says it will take many decades to complete:

The full project aims to eventually link every major train line between Frankston and Werribee, via Melbourne Airport.

Next week’s budget will include $2.2 billion for early works for the first 26 kilometres of the project.

No date has been set for completion, but the money announced today will allow early works to begin in 2022…

Despite the eye-watering bill for the early works, the Government has not revealed how much the total project will cost, saying a full cost analysis is still underway.

When the project was first announced at the 2018 election, the estimates for the entire loop exceeded $50 billion.

By comparison, the 9-kilometre Metro Tunnel project is budgeted to cost $11 billion, but is facing cost blowouts…

Mr Andrews said the project would create 800 direct jobs and, at the peak of construction, the project would support 20,000 jobs…

The Grattan Institute has slammed the lack of transparency and due process surrounding the project:

The Grattan Institute’s transport and cities program director Marion Terrill said she had concerns about the Government’s lack of transparency.

“We still don’t have a business case, we still don’t know what the costs will be, we don’t know what the benefits are going to be,” Ms Terrill said.

“This is locking us into a generations’ worth of spending all on one mega project where we hope this is what is going to be needed, but in fact there a lot of things you can get for that kind of money.”

She also warned that mega projects like the Suburban Rail Loop had a greater risk of cost blow outs.

The suburban rail loop is a classic example of everything that is wrong with infrastructure provision in this country.

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.

It was never subjected for assessment by Infrastructure Australia or Infrastructure Victoria. There was no business case conducted before its announcement. And Victoria’s transport department wasn’t even told about the plan for fear that it would attempt to block the project from within government.

Now generations of Victorians will be required to foot the bill of a massive vanity project whose costs and benefits are unknown, and which could very likely turn into another infrastructure white elephant.

With the history of cost overruns across major infrastructure projects, there is little chance this project could be built for initially purported $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 the suburban rail loop project – which is 10-times the length – would cost closer to $100 billion. In any event, the necessary scoping work should have been completed before the project was committed to.

Little wonder 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.

A coalition of transport groups, councils and planning academics also claimed that the money would be far better spent on the Metro 2 tunnel connecting Melbourne’s North and Western suburbs.

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 as they are crushed under the endless immigration deluge.

Unconventional Economist

Comments

  1. This is a truly insane project. Why do we need such an expensive rail system to get from Cheltenham to Clayton and beyond. These areas do not have the highest population density. Unless that’s the point and they want to turn Oakleigh in Honk Kong.

    • It’s so Dan can spend time on the treadmill in his jocks listening to Starship’s “We Built This City’ during the next pandemic. The progress paradigm is fuelled by debt and Dan is filled with the spirit of holy development and the power of tilt-up concrete. That he is making people miserable and destroying Melbourne is the furtherest thing from his mind. Dan’s a man of progress and progress means that heavy machinery must break dirt in yet another grand scheme to get people faster to places where they don’t really want to go where they can be affected by the psychological illnesses and emptiness that comes with just another overcrowded city and government hell bent on social engineering married with civil engineering.

      We are witnessing the madness that results from a city that’s soul has been sold to a Soviet-era preoccupation with concrete and a dim witted idea of what social progress is about. This from a party of Labour that is eating itself and everything in its path with Ponzi economics that fills its black heart.

    • kierans777MEMBER

      As other comments have summarised, it’s terribly difficult to travel north-south between Box Hill and Dandenong on PT with the only real option being the train in and out of Richmond.

      An idea I’ve tried to get floated with no success is to have buses run down East Link between say Ringwood and Dandenong. Or variations. Maybe Box Hill to Frankston down East Link.

    • dull and uninformed commentator

      Recall that they intend to turn Melbourne into an 8-10 million population Asian Megacity. Suburbanites who tried to escape the population growth must share the burden.

  2. Clarke KentMEMBER

    Was the original bullet train from MLB, via SYD to BNE not estimated at about $100bn? Spur lines to Canberra 2.0, West Gong, East Albury, for new cities from ground up for the 19 million new people by 2060. Maybe building the infrastructure then bringing in the people will prove a better model, doff the hat to China! Nah this is OZ bigger shoe horn to fit the people into infrastructure never designed for the capacity.

  3. So it is a massive infrastructure project that will employ lots of people and take a long time whilst leaving a legacy for many generations. It is being started when the cost of funds is bugger all. They don’t seem to be cutting corners either (hello FTTC, non track trams, etc).
    I get that it may not “pay back” but isn’t it a better use of taxpayer money than the many privatised freeways we seem to love in this country.
    Sometimes I think we need to lose the obsession with “payback” and “ROI” for public assets.
    I’m not from Melb so don’t understand this that well so maybe my points don’t apply for this project but I am yet to see any other major project across the country being floated.

    • C3PO, for all their many virtues, this website just hates rail. They even hate Canberra light rail, where you could build out the entire network, for rather less than $10b.

      If we could just stop population growth for 15-20 years, this project might actually “bust” some congestion. But we all know that Dan and Scotty just can’t wait to reboot Big Australia. Fake congestion busting is so much more gratifying.

    • C3PO, I’m not from Melbourne either, but I do suggest you grab a copy of the fascinating book ‘The Land Boomers’ by Michael Cannon about the economic collapse in Melbourne at the end of the 1880’s, that was an economic collapse far greater to whit they in Melbourne are going to experience.

      One interesting feature was the ‘Octopus Act’ in 1890 authorising the construction of 65 rail lines, 1170 miles, one such line was a ludicrous enterprise known as the Outer Circle Railway, for 19 miles it ran, in an arc through North Melbourne, Brunswick, Fairfield and Kew ending in Oakleigh and joining the Gippsland Railway. At the time it cost 292,000 pounds a significant sum. (p.84-85)

      This great piece of James Services’ government was closed after three years due to the lack of customers, I dare say history is repeating itself here, in a number of ways, government corruption being one.

      When the great history books are written at the end of the 21st Century they will look back on the Andrews’ governemt as one that lacked integrity, was corrupt to the core, lacked sound judgement, lack any knowledge of management and the only thing that will save Melbourne when compared to 1890 is welfare.

      If you want to spend money on rail and create a lasting economic impact, spend it on High Speed Rail to Shepparton/Albury/Mildura/Warrnabool not on projects that have previously proven to fail.

      Leith van Onselen, I see your cousin is causing trouble again : https://www.spectator.com.au/2020/11/professor-pvo-no-parler/

    • ErmingtonPlumbingMEMBER

      I’m with C3PO too on public transport infrastructure largess.
      But Dan’s Purchase of Chinese built rolling stock is a betrayal of both Australia AND the ALP .
      For this alone I would he deserves to be kicked out of the Labor Party and Banished from Australia,…for ever!

    • ignoratio elenchiMEMBER

      The business case will never stack up. Public infrastructure business cases often assume a commercial cost of capital. The last one that I read assumed a WACC of 10%. Contrast this with the current 10 year Treasury bond rate of 1.48%.

      Agree with borrowing now.

      I think that the first great conceit of this website is that although the world population has doubled in the last 50 years, Australias need not have. And although we are a nation of economic immigrants (my earliest Australian Ancestor came here in 1850), we should have restricted this in the last 20 years.

  4. I was amused to see a Labor MPs website with an aerial drawing of the project, which featured a few low rise three storey apartments and a lovely park. Lol. In your dreams. Each suburb unfortunate to receive a station, will be seeing numbers of high rise towers around the station. Thats how it will be paid for. By constructing pandemic friendly apartment towers and levying the property developers and or purchasers for a contribution. So many people think, oh good idea, Melbourne will be much improved by this project, what a good idea that we can travel between suburbs without needing to go into Flinders Street and change. But not at all. Each station will be saturated with high rise and its not mean to improve Melbourne at all. Any improvement from the project will be traded off for high rise towers and more people. Absolute con job.

    • darklydrawlMEMBER

      To be fair, Box Hill already has many high rise towers (some CBD sized tall!) and all of the inner SE suburbs with proposed (or existing stations) are fairly densely infilled – especially around the Unis.

      • Densely in filled at two stories, not four twenty storey pandemic friendly towers. Please talk sense. There are no towers at Burwood, Cheltenham and Clayton. Box Hill has enough towers

        • darklydrawlMEMBER

          There are plenty of big apartments complex buildings in Cheltenham and Mentone now. No CBD tall, but certainly 5-10 stories high with hundreds of apartments per complex. More are going up every year.

          • Interesting about Cheltenham, that may be so but a tower is a completely different matter, look at Box Hill. Mentone does not have a station on the proposed line. That still leaves Burwood and Clayton at much lower densities than what the miraculous suburban rail loop is set to deliver

    • I like the idea. I think the project is valid. Yes there will be high rise surrounding each train station, that’s the idea! Some will be offices and others residential. They are supposed to replicate suburban CBDs! Suburban mini CBDs that are interconnected and accessible from each other and the airport. I wonder how car parking is going to be integrated though?

  5. Arthur Schopenhauer

    It’s an excellent idea and well overdue.

    Had you MB guys been around at the time, I’m sure you would have been writing pamphlets against investment in:
    – financing Captian Cook’s journeys
    – financing the establishment of a penal colony in New South Wales
    – interstate rail
    – the electricity system
    – the freeway system
    – Tullamarine Airport
    – the Melbourne City rail loop
    – early research into wind power
    – initial solar research
    – interstate fast trains
    – giga scale battery factories
    – etc, etc
    πŸ™‚

    You might be good at near term market modelling, but thank goodness nobody has put you in charge of the future.

    Edit: The Brisbane and Sydney Airport rail links had similar objections to the ones you have raised above David.

    • Yep, better this with potentially hundreds of years of use and countless cars off the road – than virtual signalling, which is their greatest love presently.

    • ignoratio elenchiMEMBER

      Building new roads will lead to new traffic jams. Once built, this line will be in service for a century.

      It seems to me a lot of the thinking here thinks that the perfect way to live is on a quarter acre block with a brand new Kingswood in the driveway. You can drive to work in 15 minutes on an uncongested road and leave your missus at home to look after the kids.

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