Melbourne’s Metro Tunnel Project to Blow Out by $2.7B

Melbourne’s Metro Tunnel Project to Blow Out by $2.7B
A general view underground from the site of the currently being built, State Library station, as part of the Metro Tunnel metropolitan rail infrastructure project on November 06, 2020 in Melbourne, Australia. (Asanka Ratnayake/Getty Images)

The cost of Melbourne’s metro tunnel has blown out by $2.74 billion, with the Victorian government relying on half to come from taxpayers.

The extra money adds to the $11 billion the state government has already committed for the major inner-city rail project.

Transport Minister Jacinta Allan on December 11 revealed the metro tunnel building consortium sent a letter on Thursday night agreeing in principle to equally share the cost to finish the project by 2025.

Rail Projects Victoria received a letter from the group of contractors comprised of construction giants John Holland, Lendlease and Bouygues, bringing to an end a dispute with the government over deadlines and cost which has been threatening to delay completion.

Allan said the government and the consortium had agreed to invest $1.37 billion each, giving certainty to completion in 2025 - maybe even 2024 if all goes well.

“Yes, there is additional investment required ... we’re doing this because this is such an important project for the Victorian community,” she said.

The new city rail links are the precursor to further planned rail projects including a CBD to Melbourne Airport train line, which Victorians have wanted for decades and past governments have failed to deliver.

“As we got more into the detail of the design it became obvious it was going to cost more than originally thought,” Rail Projects chief executive Evan Tattersall told reporters alongside Allan.

There was no one source of the cost blowout, he said, but extra funds were needed to cover additional concrete, building materials and labour.

Digging tunnels under the Melbourne CBD right near existing rail infrastructure was extremely complex, he said.

Tattersall said the tunnel-boring process was currently about 60 percent complete and that the four tunnel-boring machines currently digging under Melbourne were expected to join up at the new Town Hall station by late 2021.

The excavation for new train stations Arden, Parkville, State Library, Town Hall and Anzac - are close to completion and building work has begun on concourses, lifts and escalators.

Tattersall said the cost dispute could have been fought out in courtrooms for years so the latest agreement was the “best of an overall situation”.

Allan said the extra $1.37 billion from taxpayers would be reflected in the state government’s budget papers to be handed down in May 2021.

Opposition transport spokesman David Davis said the state government had failed to properly scope the project and put cost control measures in place, laying most of the blame at the feet of Allan.

Tattersall rejected this criticism, saying the cost blowout was not due to design changes by the government, but was because of unforeseen construction challenges.

By Andi Yu in Melbourne