On 12 December 2023, Victorian Premier Jacinta Allan ignored expert advice and signed the first tunnelling contract to build the $200 billion, 90-kilometre Suburban Rail Loop (SRL) to nowhere.
“We are full steam ahead with the Suburban Rail Loop – by 2026, tunnel boring machines will be in the ground and Victorians will be hard at work delivering a project that will slash travel times and transform our transport system”, Premier Allan said.
The Victorian government has since signed several other contracts.
Almost every infrastructure expert opposed the SRL on the grounds that the price tag was excessive, the project lacked a business case and failed any objective cost-benefit analysis, and user demand would be low.
Still, Premier Allan signed the first tunnelling contract to build the SRL, thus locking Victorians deeper into debt and diverting scarce funding from the state’s growth areas.
Earlier this month, S&P and Moody’s warned that Victoria faces a credit rating downgrade if it doesn’t get its budget under control.
S&P explicitly warned that the SRL could prompt a downgrade if Victoria doesn’t receive matching funding from the federal government.
A credit rating downgrade from AA to AA- could lead to Victoria paying an extra 0.5% in interest on its debt.
On Thursday, the Herald-Sun reported that lawyers have been brought in to explore either rejigging or cancelling the SRL:
Sources familiar with the high level work say the Allan government has engaged lawyers to assess the pros and cons of continuing with the $30-34.5bn project, and the potential cost of pausing works.
Sources inside the Suburban Rail Loop Authority said there was now a realisation internally that change is coming and necessary…
Government sources said calculating the cost of cancelling or significantly amending the contracts could be used to quell a deepening divide within the Premier’s cabinet room over the project, particularly if it showed it would cost too much to back away from the work.
A number of senior ministers are opposed to the project at this time because of its cost.
Thanks to the Premier’s negligence, Victorians are caught between a rock and a hard place on the SRL.
The SRL should be axed. But because Premier Allan ignored expert advice and chose to sign the contracts, Victorians would be on the hook for billions of dollars in compensation.
This is similar to what has just happened with the Commonwealth Games and the cancelled East-West Link.
But if the SRL proceeds, then it will plunge the state deeper into debt, likely see the state’s credit rating cut, and swallow the state’s infrastructure budget for decades, leaving little money for other vital projects.
Residents of Victoria’s growth areas will be the biggest losers as they will be starved of vital infrastructure funding, all so people can catch a train from Cheltenham to Box Hill.
Who is seriously clamouring to catch a train from Cheltenham to Box Hill? Nobody.
Jacinta Allan must fall on her sword and resign for the reckless damage that she has inflicted on the state.
