Victoria’s net debt is the worst in the nation, with the state having the lowest credit rating.
The “ruinously expensive” Suburban Loop Project (SRL) risks worsening the debt situation.
The independent Parliamentary Budget Office (PBO) projected that the cost to build and run all three planned stages of the SRL would cost more than $200 billion.
When Jacinta Allan took over as Victorian Premier in late 2023, independent infrastructure experts begged her to abandon the SRL, arguing that the project’s costs outweighed the purported benefits.
The Victorian PBO and the Australian National Audit Office (ANAO) opposed the SRL.
The PBO found that every dollar spent on the first two stages of the SRL (60 km) will result in social benefits ranging from only $0.60 to $0.70.
The ANAO advised that the business case used to request $11.5 billion in federal funding for the SRL’s first stage had information gaps and used spurious methods to quantify the SRL’s benefits.
However, Allan ignored this advice and signed the first major SRL tunnelling contracts, thereby committing Victorian taxpayers to finance the project.
The first stage of the SRL has a $20 billion funding hole. The Victorian Budget expects the federal government to cover one-third of SRL East’s cost, with another third coming from extra state revenue raising — “value capture”.
Source: Victorian Budget 2023-24
However, the federal Albanese Labor government has pushed back on the funding request, whereas the Coalition has flagged that it will oppose funding the project if it wins office.
To add further insult to injury, salary costs for public service workers engaged in the SRL have skyrocketed.
The annual report of Victoria’s Suburban Rail Loop Authority revealed that it paid more than $32.9 million to 102 executives in 2023-24, with an average salary of $332,000.
Last week, the Herald-Sun reported that a new year’s hiring blitz offers massive pay packets and generous work-from-home options to lure recruits to the SRL.
“Five senior vacancies were advertised by the SRLA as part of a recruitment drive to fill key positions including two high-paying director roles”, the Herald-Sun reported.
“A Director, Policy and Innovation role was advertised with a top tied pay rate of $290,600 for a fixed five-year term, while a $248,629 was on offer for an Integrity and Insurance Director, a Deputy Director of Development and Property and a Requirements manager”.
“A package director is also being sought with a pay offer of up to $419,000 a year — one of 13 vacancies to be listed since January 1”.
Premier Jacinta Allan’s pigheaded decision to persist with the SRL will bury Victorian taxpayers deeper in debt and starve existing transport corridors and growth areas of funding.
As a result, Victoria risks further credit rating downgrades and escalating interest payments.
Victorian Premier Jacinta Allan should never have ignored expert advice and signed the contracts to build the SRL.
In doing so, she has sentenced Victorians to decades of debt servitude.
