A new report from the Victorian Auditor-General’s Office (VAGO) has raised serious concerns about the state government’s handling of major infrastructure projects, revealing a staggering $11 billion surge in costs over the past year.
The report, which examined 110 major projects, found that nearly half had experienced increases in their total estimated investment (TEI).
Among the most notable projects affected is the $34.5 billion first stage of the Suburban Rail Loop, a planned 90 kilometre orbital train line that circumvents the inner-city to run from Melbourne’s outer southeast to the airport in the north, and finally to the outer west.
VAGO’s report revealed that the project is undergoing a “pricing reset” with its early works contractor to deal with issues such as previously unknown ground conditions, hazards, and contamination at some sites.
Rising Costs, Delayed Timelines, and Unforeseen Issues
The $26 billion North East Link toll road project, another major infrastructure initiative, is also facing significant setbacks.Tunnel boring on the project has been suspended due to a sinkhole, compounding existing delays.
Meanwhile, the $13.48 billion Metro Tunnel, expected to open in late 2025, will not have the necessary technology to allow commuters to touch on and off with their bank cards or smartphones on time.
Construction Costs Rising
Rising construction sector costs are identified as the primary factor behind the project cost increases.However, VAGO found that these higher costs were not incorporated into early budget estimates.
Despite the increases, no formal reassessment of the economic benefits or viability of the projects was carried out.
Lack of Transparency and Public Reporting
The report also revealed a serious issue with the public reporting of major infrastructure projects.VAGO found a significant lack of reliable and transparent information on the reasons behind the delays and cost overruns.
The report was critical of the government for not undertaking any formal reassessment of the projects’ benefit-cost ratio (BCR) or economic viability despite escalations.
“This means that both Parliament and the public are left in the dark regarding the true value of the project and how the cost and scope changes have impacted its overall benefits,” says the report.
In response to the findings, VAGO made several recommendations aimed at improving transparency, including clearer reporting standards.
Labor Says VAGO Report ‘Flawed’
In response to the release of the report, Labor Transport Infrastructure Minister Gabrielle Williams voiced concerns about the report’s accuracy and integrity, accusing VAGO of failing to meet professional standards.“VAGO has a responsibility to be accurate and uphold integrity, but in this instance, they’ve failed,” she said.
Williams argued that the report failed to account for the expansion of certain projects, such as level crossing removals, which she claimed were wrongly categorised as cost escalations.
She dismissed the report’s calculations as “incorrect” and the methodology as “flawed.”
Opposition Calls for Accountability
Opposition Leader Brad Battin criticised the government’s response to the report, calling on Premier Jacinta Allan and her team to stop deflecting responsibility.“This chaos cannot continue,” he said, accusing the government of mismanaging taxpayer money and failing to take responsibility for its track record on major infrastructure projects.
Battin’s call for accountability comes as the government dismisses multiple independent reports criticising the handling of major projects, including those from the Ombudsman and the Independent Broad-based Anti-corruption Commission.
