Inland Rail axed, but Labor's pet railway projects are set to squander billions more

Do Australian politicians ever learn? You would think that with so much money already down the drain on dud rail projects, our politicians would have learnt their lesson and become responsible with their infrastructure spending. The reality is that, when politicians talk about "nation-building" infrastructure projects, taxpayers should watch out.

The decision to stop building the Inland Rail line from Melbourne to Brisbane was announced before the Budget. Essentially, after spending over $30 billion, the Commonwealth Government is going to stop the project a little over halfway (north of Parkes), resulting in a super-expensive railway to nowhere.

That won't be the end of the matter. The line will now generate minimal revenue and suffer tens of millions in annual operating losses. Railway operator, Australian Rail Track Corporation (ARTC) will almost certainly need a Commonwealth bail-out, and many private businesses and local councils will also have wasted a lot of money. It is a financial disaster of similar order to Snowy 2.0.

Inland Rail had been Australia's largest freight rail infrastructure project, designed as a 1,700 km freight corridor connecting Melbourne and Brisbane through regional Victoria, NSW, and Queensland. It had been supported by all Commonwealth Governments over the past 25 years but was mainly regarded as a pork-barrel project for National Party electorates in Central-Western NSW. It had been championed by now One Nation figure, Barnaby Joyce.

The price tag to completion had blown out from about $10 billion to more than $45 billion, so the Albanese Government (rightly) decided to pull the plug. Infrastructure Minister Catherine King quoted cost assurance work completed by ACIL Allen , confirming that "the cost estimate now exceeds $45 billion to deliver the full inland rail project from Melbourne to Brisbane." The government will now focus on completing the southern section between Beveridge, north of Melbourne, and Parkes by 2027, with the Parkes-to-Brisbane stretch stopped indefinitely. The line now won't reach a major port at either end, which was its main justification.

The most challenging and expensive part of the line was always going to be from Gowrie (northwest of Toowoomba) onwards, where areas of floodplain and steep terrain (requiring extensive tunnelling) would be encountered. Some advocates even suggested extending the line to the port of Gladstone as an easier-built alternative to the Brisbane route. In recent years even the most ardent supporters of the scheme had become resigned to the fact that the section from Gowrie to Brisbane was unlikely to be ever built.

The Minister now claims that the truncated line "will enable double-stacked freight trains to travel between Melbourne and Perth, via Parkes". Even this claim is imaginary. A simple glance at a map shows the folly of running freight trains from Melbourne to Perth via a line initially going in almost the opposite direction, firstly north-east towards Albury and Sydney, then turning more northerly for Parkes (meeting the existing Sydney to Perth line). It would then follow that line west to Broken Hill and then south-west to Crystal Brook (near Port Pirie SA, where it joins the main line from Adelaide to Perth). This all more than doubles the journey length compared with the direct route to this point from Melbourne via Adelaide. Sending heavy freight along such a roundabout route simply won't be economic.

To date, Inland Rail has been funded off budget through loans to ARTC. Interest on these loans will continue to build, especially in the absence of significant revenue from the line. It is said that ARTC will need a big bailout to avoid bankruptcy, which will then impact the federal budget deficit. According to the company's annual reports for 2025 and 2024, ARTC has already been experiencing big annual operating losses ($560 million and $760 million respectively ).

Governments had been pre-warned multiple times that the Inland Rail project was uneconomic but went ahead anyway.

Infrastructure Australia gave the project an equivocal cost-benefit assessment . It said that:

...the proponent's stated benefit-cost ratio is 1.1 using a 7 per cent discount rate" but also identified "a number of risks which could impact on the economic viability of the project".

The Bureau of Transport and Communications Economics in an analysis published in 1996 concluded that: