Victoria’s push for more federal cash to bankroll the Suburban Rail Loop has been given a boost after Infrastructure Australia’s priority list said the Commonwealth should consider additional investment in the first stage of the project.
The finding is not an endorsement of SRL East’s business case, which the agency previously raised major concerns with, but does provide a platform for Prime Minister Anthony Albanese to deliver on his commitment to put more cash into the project.
SRL East, an underground rail line from Cheltenham to Box Hill, has already received $2.2 billion in Commonwealth funding quarantined for “no regrets” spending, such as land acquisition and utilities upgrades.
But Victoria wants the federal government to pay a third of the project’s $34.5 billion price tag, leaving a shortfall of $9.3 billion. Albanese has pledged more money in the May federal budget, but has not publicly confirmed how much his government will contribute.
On Wednesday, Infrastructure Australia released its priority list to guide the federal government on investing in projects over the short, medium and long term.
The list not only reflects the merits of a project, but whether it is ready for funding.
For SRL East, Infrastructure Australia’s list said that in the short term, the Commonwealth “should consider prioritising this proposal for additional delivery investment” beyond the $2.2 billion already committed.
The report does not necessarily guarantee federal government funding, which must be signed off by federal cabinet’s expenditure review committee.
But it does provide the Commonwealth with greater justification for a cash injection, almost a year after Infrastructure Australia’s last evaluation of the project recommended no further federal funding until SRL East had an updated cost estimate and the state government explained how it planned to fund a third of the project through so-called value capture levies.
“Based on the information provided, we have low confidence in the cost estimate for SRL East, presenting a major risk to the SRL East project, and the SRL Program as a whole,” the agency said at the time.
Since then, the Victorian government has provided the Commonwealth with additional information and released its value capture plan, and the conversation has now moved on to how much funding should be in the budget.
Victorian Suburban Rail Loop Minister Harriet Shing said she was looking forward to the outcome of these discussions.
“Here in Victoria, we’ve only ever had one position on the Suburban Rail Loop, that is that we’re building it,” she said.
Shing said Infrastructure Australia did not make decisions, but rather advised the government, and its report confirmed the project was ready for investment and would deliver on national infrastructure strategies to cater for population growth.
Infrastructure Australia chief executive Adam Copp said the problem the project was trying to solve – the need for greater transport connectivity across Melbourne’s middle and outer suburbs – had been on their priority list since 2022.
“It’s a growing city, it will be as big as New York and connecting, through a high-capacity transport system, those outer suburbs we have recognised for a long time,” he said.
“Strategically, something like it is needed. Tactically, we had some feedback around the costs, the value capture approach and needing more detail, and having that to be more rigorous.
“But we are saying it is a good meritorious investment for the Commonwealth going forward.”
The next stages of the project, proposed in Melbourne’s north and west, also appeared on the priority list for investment consideration five to 10 years from now.
Opposition transport infrastructure spokesman Evan Mulholland said SRL East still had a multi-billion dollar funding black hole and its costings had been discredited.
“Whilst Labor continues to prioritise a new train line for Melbourne’s south-east, communities in our growth areas and regions continue to be starved of the basics they deserve,” he said.
“A future Liberal and Nationals government will pause and review the Cheltenham to Box Hill rail line to ensure the best interests of Victorian taxpayers are prioritised.”
On Monday, The Age revealed a previously undisclosed $1.7 billion contract had been signed with the government to run and maintain the eastern section of the train line – when it opens in 2035.
If the project were abandoned, the full cost of the contract would have to be paid out, unlike other construction contracts, which are tied to how much work has been completed.
Infrastructure Australia also recommended upgrades to rail lines in Melbourne’s north and western suburbs as a funding opportunity over the next two to four years.
“Targeted upgrades to the Wyndham Vale and Melton rail line would enable the existing network to better accommodate growing passenger demand in Melbourne’s west,” the priority report says.
In the north, required upgrades on the Craigieburn, Upfield and Seymour rail lines include the electrification of railways in targeted growth areas, higher-capacity trains, level crossing removals and new stations.
The independent agency also said more desalination plants may be needed to ensure major cities do not run out of drinkable water.
A $22 million water system upgrade in Werribee was recommended.
“One of the biggest barriers to housing is water and having appropriate water and wastewater, we’ve got climate change and we’ve got ageing assets in the ground,” Copp said.
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Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X or email.