The cost of building and operating the Allan Government’s new underground rail loop through Melbourne’s city centre, which will take five decades to build, has soared to $216 billion, according to an independent study.
Estimates by the Parliamentary Budget Office (PBO) show the first two stages of the suburban rail loop – between Cheltenham in Melbourne’s southeast and Tullamarine Airport – will cost about $16 billion more than projected in a 2022 estimate.
The updated cost includes a $9 billion increase in construction and maintenance, which is attributed to rising costs and supply chain shortfalls is now expected to cost $134 billion.
The report by the PBO, which advises parliamentary parties on major policies, is an update to the 2022 analysis requested by the opposition before the last state election.
The cost of operating trains in the first two stages of the project over the next 50 years – including payment for rail staff and drivers and all operating costs – is also likely to increase by $7.5 billion to $82.7 billion.
When the project was announced in 2018, the then Andrews government had stated that the total cost for the entire 90-kilometre “loop” could amount to about $50 billion.
The state government has $11.8 billion available for the project which is expected to reshape the city as it will transform several suburbs with the construction of apartment buildings and thousands of new homes around six new stations in the suburbs of Cheltenham, Clayton, Glen Waverley, Monash, Burwood and Box Hill.
The projected $216 billion expenditure is for only the first two phases of the project and does not include the final phase proposed from Melbourne Airport to Werribee.
Premier Jacinta Allan, former minister responsible for the suburban rail loop, said the government “cannot afford not to build” the project, but that it would be up to future governments whether to proceed with all other stages.
The state opposition has promised to stop work on the commuter rail loop if elected to government in 2026. Opposition leader John Pesutto has said he is prepared to abandon the project altogether if it affects other funding priorities.
“Labor can’t manage money, they can’t manage projects and every Victorian citizen pays the price,” he said.
“This is a project that Victoria simply cannot afford. A Pesutto government will pause it and prioritise key infrastructure that is long overdue, in communities that have been neglected by Labor for decades,” he emphasised.
