Victoria Awards Major Contract for $3.6 Billion Suburban Rail Loop

Former Premier of Victoria Daniel Andrews (Left) with Victorian Premier Jacinta Allan (right), who was previously Minister for Transport Infrastructure and Minister for Suburban Rail Loop, inspecting the Metro Tunnel on Nov. 6, 2020 in Melbourne, Australia. Asanka Ratnayake/Getty Images

The Victorian state Labor government has awarded a $3.6 billion (US$2.3 billion) contract on tunnelling for part of the Suburban Rail Loop East.

Tunnelling on the eastern section of the major project is now earmarked to start in 2026, which will be the year of the next state election in Victoria.

Four tunnel boring machines used in construction will be powered by 100 percent renewable electricity as well.

Premier Jacinta Allan and Minister for Transport and Infrastructure Danny Pearson visited a construction site in Burwood, Melbourne, to announce the contract.

A consortium of renowned global companies CPB Contractors, Ghella, and Acciona Construction were granted the deal to construct 16 kilometres of the twin tunnels between Cheltenham and Glen Waverley.

The major rail project was hailed the “biggest transformation of public transport in Australian history” when it was unveiled by the Andrews government ahead of the election in 2018.

The entire project will provide a 90-kilometre rail line that links every major train service, including a stop at Melbourne Airport.

However, a recent report by the Victorian ombudsman found there was a “fog of cabinet secrecy” in the early development of the project.

A report by the state parliamentary budget office, released in 2022 at the request of former Liberal Leader Matthew Guy, also found the cost to build and operate Suburban Rail Loop East and North could blow out to more than $200 billion (US$132 billion).

‘Renewable’ Construction

The Suburban Rail Link East will be “one of the most sustainable infrastructure projects” in Australia’s history, the government said.

With the tunnelling machines powered by renewable electricity, total “emissions” from construction will be 20 percent lower than the industry standard.

The project is set to create 8,000 direct jobs and provide six new underground stations between Cheltenham and Box Hill, reducing travel times.

The cost for the eastern section of the project is estimated to be between $30 billion (US$19.7 billion) and $34.5 billion (US$22.7 billion) according to a a government fact page.

Victorian Premier Allan said the government is 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,” she said.

Suburban Rail Loop minister Danny Pearson added, “Suburban Rail Link East equals 8,000 direct jobs and thousands more across the supply chain.”

Local member for Burwood Matt Fregon said, “We’re getting on with the project Victorians voted for—making it easier to move around Melbourne and connecting people to the great jobs, education, and housing our area has to offer.”

The government said at least 12 percent of the total hours on the project will be completed by trainees, apprentices, and cadets.

The two unsuccessful bidders for the Cheltenham to Glen Waverley tunnels are now set to compete for a second tunnelling stage between Glen Waverley and Box Hill.

The contract for this second stage is due to be awarded in 2024.

Also, two consortia have been shortlisted for a contract to build a fleet of high-tech trains and the signalling system to maintain the network. A contract for this work will be awarded in 2025, the government said.

Premier Should Wait for Independent Assessment: Opposition

In a report last week, Victorian Ombudsman Deborah Glass said there was “ongoing marginalisation of the traditional public sector” in the early development of the Suburban Rail Loop.

Ms. Glass wrote the project was “shrouded in excessive secrecy” until it was announced as an election promise in 2018.

“It was so secret it was kept from the secretary of the relevant department, and most of the board of the originating agency,” the ombudsman said.

“The stated reason for the secrecy—to mitigate against land speculation—does not stack up, as no land was acquired by the responsible agency before a public announcement, and in any event would not justify keeping the relevant Secretary in the dark.”

The report also found the construction of the Suburban Rail Loop was “directly tied to the ALP’s electoral prospects at the 2018 Victorian election, held less than three months after the project was announced.”

In response to this report, Shadow Minister for Transport David Southwick said the premier should not sign any deals on the project before an independent assessment.

“With reports indicating the government is set to sign multi-billion-dollar tunnel contracts before Christmas, the ombudsman’s report has cast further doubt over the value of the project,” he said in a statement, on Dec. 5.

“While Victorians are doing it tough in a cost-of-living crisis, Labor is spending up to $200 billion on a project that a number of independent experts believe doesn’t stack up,” he added.

“The premier should not sign a single contract and lock Victorians in for a decade’s worth of infrastructure funding until the [Suburban Rail Loop] is independently assessed by Infrastructure Victoria.”