Victoria is considering using a public-private partnership to cover the cost of building the Suburban Rail Loop East, as the government faces a multibillion-dollar funding hole in its flagship infrastructure project.
If used, it would be for the Suburban Rail Loop’s “linewide” contract to install tracks and signalling, provide trains and eventually operate the 26-kilometre tunnel for an initial 15 years, which is not expected to be finalised until 2025.“The Victorian and Commonwealth governments have already committed $14 billion to East – that’s more than enough to start main works and have tunnel boring machines in the ground in 2026,” the spokesperson said.
Although controversial, public-private partnership contracts can provide greater flexibility if labour and material prices rise, with the government and builders typically agreeing to a “pain share and gain share” where they open their books and agree to split unexpected cost blowouts or savings. Albanese and federal Infrastructure Minister Catherine King are trying to trim $33 billion from their own 10-year infrastructure pipeline, and a review into its spending commitments launched in May appears set to delay the long-awaited Melbourne Airport Rail Link.on Tuesday it is close to signing the first major tunnelling contract for the project – expected to be worth $3 billion to $4 billion.
“The majority of the Suburban Rail Loop is not likely to be fixed-price contracting. There’s likely to be some sort of risk share.