Victoria’s major projects cost increases $11.6 billion in a year

Williams called the integrity of VAGO into question, saying changes to scope had not been taken into account. But she was unable to say what she believes the true cost should be when scoping increases were removed.

“I have some serious concerns about the content of that report. In short, it is misleading and out of date,” Williams said on Wednesday.

She pointed to the 10 extra level crossings set to be removed, increasing that project by $2.28 billion. But that was in the 2022-23 budget, not the 2023-24 financial year.

“The point remains,” Williams said when pressed on that detail. “What we have seen is a misrepresentation of the information. I gave other examples, and there’s many of them in this report, where there’s a description or a claim of cost escalation, which is, in fact, when you lift the lid, about scope increases.”

VAGO found in its 2022-23 report that the total estimated investment for 101 projects had grown by $11 billion (11 per cent) to $123 billion.

Last year’s state budget forecast that Victoria would spend an average $19.6 billion a year on capital works over the four years of the forward estimates. This is four times the long-term average from a decade ago.

Premier Jacinta Allan is battling a narrative that the $34.5 billion first leg of the Suburban Rail Loop (SRL) has chewed up her government’s ability to service the basics in the west after Labor survived a 17 per cent collapse in its primary vote in the Werribee byelection.

The VAGO report said the early works package for SRL East was going through a pricing reset in June 2024, to factor in issues “that were unknown or uncertain at the time the contract was awarded”.

“This includes unknown ground conditions and hazards and contamination at some sites, such as properties that were not comprehensively inspected due to access restrictions.”

Williams did not confirm whether that pricing reset had now concluded, but said the package remained on time and on budget.

Federal Infrastructure Minister Catherine King last week released a previously committed $2.2 billion for SRL East.

The state government wants another $9 billion from the federal government and plans to raise another $12 billion to fund the project from unspecified “value capture” property charges.

King told the ABC last week that Victoria had to overcome further “hurdles”, particularly around value capture, before the project got any more Commonwealth support.

Treasurer Jaclyn Symes on Tuesday said “transformational projects” such as the West Gate Tunnel, Metro Tunnel and SRL created jobs and grew the economy.

She said the perception that the western suburbs had lost out to the SRL East rail project, connecting Cheltenham to Box Hill, was wrong.

“I would point to the fact that we continually invest in the west. This narrative that the west is neglected is completely false. Go out there and look at the health expenditure, the numerous new schools, the school expansions and maintenance and new facilities out there, the road improvements,” Symes said.

Symes confirmed she had directed departments to find “efficiencies” and did not rule anything in or out for the budget, including new or expanded taxes. But she said the cost of living was front-of-mind while she prepared the Victorian budget, to be handed down on May 20.

“The Victorian economy is going from strength to strength,” Symes said. “Having said that, I am very conscious that that is not necessarily translating to households and family pressures. That is why, as the treasurer and as a government, we are solely focused on cost-of-living pressures on Victorian families.”

Work on the North East Link, which has more than doubled in cost to $26.1 billion, was paused last week when a sinkhole emerged near the two boring machines. The government said the sinkhole had not affected its delivery timeline for 2028.

Williams said that work was expected to resume in the coming days and did not believe it would cause project delays or add costs.

The government in September confirmed the cost to taxpayers for the Metro Tunnel project had blown out by another $837 million, blaming inflation caused by COVID-19 and the war in Ukraine.

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