Construction of the Eastern section,from Cheltenham to Box Hill,is expected to cost $30 to $35 billion,according to the business and investment case. Intriguingly,that same case also claims that construction from Cheltenham to the airport plus 50 years of operations will cost $31 to $51 billion.
The costs are hotly disputed,with the independent Parliamentary Budget Office estimating the East and North,plus 50 years operations,would cost a whopping $200 billion.
The federal government promised $2.2 billion towards the Suburban Rail Loop during the federal election campaign,and made good on that promise in its October 2022 budget. But that’s it. Infrastructure Minister Catherine King is fixing a gimlet eye on the overstuffed infrastructure pipeline,and has made it clear she won’t look favourably on projects that haven’t been through a proper costing process.
The federal government’s spending discipline reflects that it carries a debt equivalent to 22 per cent of GDP,and that it is operating in an environment of higher inflation and interest rates,with upside risks. Moreover,just last week,the International Monetary Fund recommended a more measured and co-ordinated approach to building public infrastructure to alleviate inflationary pressures.
It’s no secret that now is a particularly expensive time build:transport infrastructure costs have spiked since 2021,due to shortages in labour,equipment and materials.
It’s not as though Victoria has much fiscal headroom either. Victoria’s debt is $116 billion and heading towards 25 per cent of GDP – a ratio that means we can’t afford for anything too major to go wrong. That’s why this year the Victorian government has announced that it was cancelling the Commonwealth Games and delaying the Melbourne Airport Rail and Geelong Fast Rail indefinitely. Hard choices perhaps,but at a combined cost of about $24 billion,these projects are nowhere near as expensive as even the first stage of Suburban Rail Loop.