Infrastructure Australia (IA) has repeatedly stated that it had “low confidence” in Victoria’s Suburban Rail Loop (SRL) East, which was forecast to cost $34.5 billion in 2021, based on 2019–20 assumptions.
Adjusting only for inflation brings the estimate to around $42.3 billion, and that does not account for the post‑pandemic surge in construction costs.
Several economists quoted in The Australian argue that the original cost estimate for the SRL is no longer credible:
Stephen Anthony, head of research at Macroeconomics Advisory, says major project construction costs have risen by 65% since 2019. On that basis alone, SRL East would cost $56.9 billion.
He adds that risks such as contaminated soil, difficult ground conditions, and CFMEU‑related cost inflation could push the final cost to $75–100 billion in 2026 dollars.
Michael Brennan, former Productivity Commission chair, notes that SRL East is more complex than any existing Big Build project and therefore especially vulnerable to cost blowouts.
Independent economist Saul Eslake says it is impossible to produce a reliable updated estimate because the Victorian government withholds key data under “spurious commercial‑in‑confidence reasons”.
These warnings stand in sharp contrast to the Victorian government’s refusal to release updated figures.
SRL tunnel workers secure $175,000-plus entry‑level pay and extensive entitlements:
The Herald-Sun reports that tunnel workers on the SRL have secured some of the highest baseline construction wages in Australia, along with an unusually broad suite of leave and wellbeing entitlements.
The new agreement with tunnelling company SBS Group Australia includes a baseline salary package of $190,000 a year for experienced tunnel workers, plus overtime of $143 per hour.
The baseline package for entry-level tunnel workers will be about $175,000 a year, plus overtime.
Tunnellers will also receive a range of benefits, including 10 days of paid reproductive and menstrual leave, access to an on-site wellness room and a paid day off each year for Mental Health Awareness Day.
Victorians will drown in debt:
The SRL project may already be two to three times more expensive than the official figure. Yet governments are proceeding without releasing updated numbers.
The SRL will drive Victorians deeper into debt, even with federal government support, and will likely lead to a further downgrade of the state’s credit rating.
Additionally, the SRL will devour the state’s infrastructure budget for decades, leaving little money for other crucial projects needed to serve Victoria’s fast-growing population.
Indeed, the Herald-Sun reported a few weeks back that the Allan Labor government will allocate $15.1 billion to SRL East between 2025–26 and 2029–30, meaning about 18% of all state capital spending on roads, rail, schools and hospitals each year will go to this single project.
Residents of Melbourne’s growth regions in the north and west will suffer the most, as the SRL will deprive them of funding for essential infrastructure.
For example, residents in Melton, one of the fastest-growing regions in the country, will have to endure catching diesel trains while they wait forever for electrification.
In short, the SRL fails the pub test. It is a giant white elephant that fails any thorough cost-benefit analysis.
Unfortunately, there is no practical way to avoid the project now that the contracts are signed.
