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

Many of the rail projects being funded in the Budget are of dubious merit, though funding of maintenance and some improvements are clearly justifiable.

The Suburban Rail Loop (SLR), an estimated $34.5 billion project for the initial stages, is under a big cloud. Critics of the project have raised concerns regarding the overall expenditure, and point out that rating agencies have advised the heavily indebted Victorian government to rein in spending.

The business case did not deal with the final stage of the project, between Melbourne Airport and Werribee. An analysis by Victoria's independent parliamentary budget office estimated the cost of constructing the first and second stages of the mega project could reach $125 billion by 2084-85.

Infrastructure Australia has also expressed doubts about the project.

Based on the information provided, we have low confidence in the cost estimate for SRL East, presenting a major risk to the SRL East project and the SRL Program as a whole. The Business and Investment Case (BIC) identifies that SRL North will not be fully complete until 8-18 years after SRL East opens, meaning the full benefits of SRL East, including increased patronage, will not be realised for many years. Industry-wide cost escalation since 2020 presents further risk and uncertainty. Due to the uncertainty in the cost estimate, it is likely the economic case for SRL East and SRL North is overstated, as any further increases to costs without extra benefits will reduce the benefit-cost ratio.

A high-speed rail line between Newcastle and Sydney has moved closer to being a reality, with Transport Minister Catherine King announcing an additional $229.6 million to lock in the design, approvals process, scope and cost for the project. The latest development funding is said to take the total government investment to date to $659.6 million before a single section of track is laid. The Sydney-Newcastle high speed rail is widely viewed as a possible first step to building a broader Brisbane to Melbourne Very Fast Train (VFT) via Sydney and Canberra. The full project would cost more than $150 billion.

The VFT is a proposal that gets trotted out every decade or so (often before an election), and PM Albanese is a long-time advocate. The Sydney to Newcastle stage is quoted as costing $61.2 billion overall, and the bill goes up to $93 billion, if the line goes on to the new Western Sydney International Airport. The government is looking for a private sector investor to pick-up part of the tab but there are widespread doubts that any part of the VFT line will be actually built because nobody will be prepared to fund such a super-expensive project.

The Grattan Institute has rubbished VFT proposals saying that:

Australia should dump the decades-old dream of building a bullet train from Brisbane to Melbourne via Sydney and Canberra, and we should be wary of expensive promises to upgrade regional rail. The east-coast bullet train advocated by the federal ALP would be an expensive folly: Australia's small population and vast distances make it unviable.

A less prominent Budget project is to upgrade the existing Canberra to Sydney rail link at a cost of $50 million from the Commonwealth and $25 million each from the ACT and NSW governments. The initial part of the 320-kilometre-long track to Sydney (until it joins the Sydney - Melbourne line at Goulburn) winds around hills and was built to 19th-century freight train requirements.

The rail trip to Sydney generally takes about 4 ½ hours and costs $29 to $55 for tickets. About 21 three-carriage passenger trains run each week in both directions and have good utilisation rates. The journey can take a lot longer, if the train gets held up behind a slow-moving freight train.

The stated aim is to get the journey time below four hours. A few years ago, Infrastructure Australia estimated that only one per cent of people traveling between the two cities (mostly tourists and retirees) used rail. This because the train is slow and unreliable, and the rail station is inconvenient for many.