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November 3, 2022

Cost concerns could harm Melbourne’s $8–13bn airport rail project

Uncertainty surrounds the business case for Melbourne’s airport link following the release of a new report warning its benefits may not outweigh its high price tag.

By Lizzie Waymouth

On 31 October, independent advisory body Infrastructure Australia (IA) issued a report warning that, although “the strategic need for Melbourne Airport Rail is strong and there will be long-term benefits”, with passenger and freight volumes at the airport continuing to increase, “the economic benefits… do not outweigh its economic costs at this time”.

Melbourne airport rail
A passenger exits Melbourne Airport, where the new rail link has now become contentious. (Photo by Leifu Song/Shutterstock)

Given its growing population of more than five million – or almost 20% of Australia’s total population – it may come as a surprise that Melbourne Airport is still inaccessible by rail from the city.

This is set to change by the end of the decade with the construction of 12km of new railway track and the upgrade of existing systems to provide a new connection between the airport and the city’s central business district (CBD). The project is slated to cost between A$8bn and A$13bn and has a forecast completion date of 2029.

However, there are concerns that the budget may make the project unsustainable.

Benefits to Melbourne Airport ‘do not materialise’ until 2036

IA noted that passenger numbers at Melbourne Airport rose by 52% between 2009 and 2019 to reach 37 million, which has made traffic congestion on the Tullamarine Freeway, the main motorway leading to the airport, a major issue. 

As a recent report issued by the Victoria government noted, bus times from the airport to the city are projected to increase from 40 minutes in 2031 to 66 minutes by 2056. With Melbourne expected to surpass Sydney as Australia’s largest city in the next nine years, this could be set to become an even greater problem. 

With this in mind, it may come as a surprise that IA has advised delaying the project. However, the high costs mean that “although construction completion is expected in 2029, most benefits do not materialise until the (recently widened) Tullamarine Freeway reaches capacity, forecast in 2036”. 

As a result, IA expects passenger numbers will be lower for the first ten years the rail link is in operation. “This indicates that construction could be deferred to better align with forecast demand and still ensure an operational airport rail service before the Tullamarine Freeway reaches capacity,” the report added.

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Victoria government remains committed to rail link project

Despite IA’s advice, the state and federal governments appear to remain in support of the project, and the state government is still pushing for the rail link to reach completion on schedule in 2029. Ahead of the Victoria state elections in November, the current Labor government led by premier Dan Andrews issued a statement confirming its commitment.

“After years of proposals, planning and empty promises from others, the Andrews Labor Government will be the first to start work to build a train line to Melbourne Airport,” the statement released on 30 October said. 

The Liberal opposition also highlighted in a statement on Monday that the airport link has “popular support” and noted that it has received investment from both parties, having been jointly funded by Andrews and Liberal prime minister Malcolm Turnbull.

With early stages of construction already under way, it remains to be seen whether the Victoria government will heed IA’s warning. 

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