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Estimates: Melbourne Metro funding

Estimates & Committees
Janet Rice 6 Mar 2017

Senator RICE: I want to have a final reprise. I know we have covered this during the day, but hopefully it will not take too long. Give us as a preliminary statement the history of engagement between Victoria and the federal government on funding for Melbourne metro.Mr Mrdak : Well, I do not have a chronology with me. I am happy to try to provide you with that, if that would assist.

Senator RICE: Even if it is without the actual dates. It ended up that there was a request from the Victorian government. You have talked through it today. I just want to have it summarised.

Mr Mrdak : Essentially, as the Victorian government took office and made this their number one priority, in commissioning this project, they did seek Commonwealth funding support.

Senator RICE: And how much support did they seek from the Commonwealth?

Mr Mrdak : I would have to check, but they certainly did look at fifty-fifty funding for projects like the tunnels and the stations.

Senator RICE: So in the order of $3 billion to $5 billion, given it is a $10 billion project?

Mr Mrdak : It was of that order. The Commonwealth engaged in identifying, as they developed their business case, where the Commonwealth may be prepared to invest. The next stage from the Commonwealth was really around identifying our view that there needed to be more planning, particularly on the city shaping aspects. The Commonwealth did offer $10 million to Victoria. The Victorian government came back, rejecting that offer.

Senator RICE: Ten million dollars is a very small amount of money.

Mr Mrdak : But to complete some of the critical planning work, which we felt needed to be done. To also identify options for financing of the project, utilising things such as value capture and the like, where you might be able to use some of the land development. Essentially, that is where the matter now sits. Victoria is proceeding and has announced that it will fully fund the project.

Senator RICE: So since that rejection of the $10 million, Victoria have not requested any further funding?

Mr Mrdak : I am not aware of any further requests for funding since that point. I think the Victorians obviously welcome any Commonwealth investment in the project. At this stage, in terms of our negotiations on the $3 billion funding package which we discussed earlier and the $877 million future investment, we have moved on to talk about other projects.

Senator RICE: So do you see any likelihood or any scenario in the future where the Commonwealth could be putting money into Melbourne metro?

Mr Mrdak : Well, as I said, at this stage, the Victorian government has announced its intention to fully fund the project itself through a combination of funding mechanisms. Should the Victorian government seek to make any further approach for funding, the Commonwealth will obviously consider it.

Senator RICE: The Melbourne metro project is now identified as one of the Infrastructure Australia high priority projects. So if the Victorian government did come back to you to seek funding, it would be seriously considered?

Mr Mrdak : It would certainly be considered. As I say, the Australian government would need to have a look at that as opposed to other projects it may wish to fund in Victoria.

Senator RICE: But, by contrast, for any future Victorian government that wants to build the East West Link, the government is guaranteeing that there be that $3 billion?

Mr Mrdak : They have made that commitment, yes.

Senator RICE: But that is despite the fact that it is the Melbourne metro that is on the high priority project list and that the business case for the East West Link showed a return of only 50 cents in the dollar for any money invested into it?

Mr Mrdak : I do not think that was the final assessment by Infrastructure Australia. In fact, I will come back to a question that we were going to come back to Senator Sterle on. The Infrastructure Australia assessment of the East West came in with a much higher value than that in terms of the final business case. But essentially that is correct. The Australian government has a commitment to a future east west road link, which remains on the books.

Senator RICE: But the benefit-cost ratio for Melbourne metro, I understand, is higher than what the final benefit-cost ratio for the East West Link was?

Mr Mrdak : That may be the case. I would need to refresh my memory on that.

Senator RICE: But the government nonetheless is more committed to funding the East West Link through putting that $3 billion on the table?

Mr Mrdak : It maintains its commitment to the $3 billion for the East West Link. As I said, it is also talking to Victoria about other projects at the moment.

Senator RICE: So given it is maintaining that commitment to $3 billion, even though you have a government that is not asking for it, does the federal government see the East West Link as being a more significant or more urgent project than Melbourne metro?

Mr Mrdak : I think the government sees both projects as being required for Melbourne.

Senator RICE: But you could see that the community would think that given you have that standing offer of $3 billion, even with a government that is not wanting to take it, the federal government would see the East West Link as being more significant than Melbourne metro?

Mr Mrdak : I think it is fair to say that both projects are regarded as important. The Australian government believes its funding contribution to the east west would advance that project, which is equally required.

Senator RICE: But you could similarly have some of that money on the table for Melbourne metro, to say, 'Victorian government, we want to give you money for Melbourne metro because we see it as a city shaping project.'

Mr Mrdak : That is a potential construction of it. I cannot comment beyond saying what the Australian government's position is at the moment.

CHAIR: You are venturing into—

Senator RICE: Sorry, I have concluded with that, thank you, Chair.

Mr Mrdak : If I may, Chair, just to add: Senator Sterle asked earlier about the East West Link. East West Link stage 1 was on the Infrastructure Australia 2013 infrastructure priority list as a real potential project. In the infrastructure priority list released this weekend, on 25 February, Infrastructure Australia still identified the east west corridor as one of Melbourne's major congestion challenges and highlighted it as a high priority initiative.

Senator Nash: And I would point out that the Victorian government has spent $1.2 billion to not build a road.

Senator RICE: And as we discussed, it is initiatives compared with projects. Initiatives identify that you have a problem. It is not necessarily the best solution to solve that problem.

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