Transport minister rubbishes ‘dodgy’ Suburban Rail Loop costings

An independent analysis that found the costs of the Suburban Rail Loop outweigh the benefits is “dodgy” and the Victorian government’s plan still stacks up, the transport infrastructure minister says. The Parliamentary Budget Office (PBO) said in a report the rail project would cost Melburnians more than it benefits them, with its east and north sections set to make between 60 and 70 cents on the dollar. An early works site for the Suburban Rail Loop, which Transport Minister Danny Pearson says still “stacks up”.

Credit: Paul Jeffers The total net value would be a loss of between $7.4 billion and $10.6 billion, the PBO found.



The PBO noted its analysis had limitations and was based on a 7 per cent social discount rate – a figure Transport Minister Danny Pearson noted was different to the “global rate” of 4 per cent. The PBO said the rail loop’s east and north sections “would definitively realise a net cost to society” unless a social discount rate of 4 per cent was used and it included all expected benefits. The 4 per cent rate was the lower rate in Infrastructure Australia’s Assessment Framework, the office said.

Opposition Leader John Pesutto requested the analysis from the PBO. “Whenever John Pesutto is in trouble, he cuddles up to the PBO and asks the same dodgy questions, and gets the same dodgy answers,” Pearson told reporters on Thursday morning. “With major infrastructure projects, you never factor in operating costs.

“It’s like saying we’re going to buy a house, but we’ve got to factor in 50 years of running costs, a lifetime of trips to Bunnings in order to work out what the cost is like. It is just a nonsense.” Pearson, who is also the minister for the Suburban Rail Loop, rubbished the office’s findings, saying the project stacked up at $1.

70 for every dollar invested. Deputy opposition leader David Southwick said the cost-benefit analysis painted a clear picture of the “financial disaster” unfolding under the Allan government. “The Allan Labor government is throwing taxpayer dollars into a project that simply doesn’t stack up and does not provide a financial benefit for Victorians,” Southwick said in a statement.

“To saddle future generations with hundreds of billions of dollars of debt to pay for it is financially reckless.” The project’s east and north sections are set to run from Cheltenham to Box Hill, and then Box Hill to Melbourne Airport, respectively. The ultimate plan of the 90-kilometre Suburban Rail Loop is to connect Cheltenham in Melbourne’s south to Werribee in the west.

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