Melbourne’s Airport Rail in danger of becoming the next East West Link

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Victoria is reluctant to build the $13 billion Airport Rail link while Canberra is all for it, setting up a standoff over funding that risks becoming another East West Link debacle for the state government.

Transport Minister Catherine King.Credit: Alex Ellinghausen

The idea of airport rail has always been politically popular. The thinking is that any self-respecting big city should have one, not a diesel-belching bus service subject to the whims of local traffic.

The federal government knows it. On Friday, Infrastructure Minister Catherine King refused to say whether the Commonwealth’s expert review of infrastructure projects, the executive summary of which was released this week, actually backed the link.

“We haven’t released the details about every single individual project, but what we have also done is released the government’s response to that review, and Airport Rail has been one of the projects that we have decided to continue the Commonwealth’s investment on,” King told ABC radio.

When former prime minister Malcolm Turnbull announced in April 2018 that the Commonwealth would stump up $5 billion for the project – provided Victoria chipped in an equal amount – he claimed “Melbourne’s airport needs a railway”.

Malcolm Turnbull announced funding for Melbourne’s Airport Rail Link when he was PM in April 2018.Credit: Alex Allinghausen

“Melbourne has been left behind by failures to make decisions about investment in this railway,” he said.

Infrastructure Victoria saw things differently. In a 2016 assessment it suggested upgraded bus services, such as dedicated traffic lanes, would be a far cheaper option in the medium term, warning the cost and frequency of the rail proposal “may not attract people to leave their cars at home”.

While people seem to instinctively like the idea of an airport rail link, there are genuine questions about how many people would actually use it, considering the cost, inconvenience and time involved in travelling to the CBD and then out to the airport. The concern is that it would, like other airport rail links, run at a big loss, given the significant capital cost – although a business case released last year found it would deliver a positive return of $1.80 for every $1 invested.

Delivering infrastructure in Australia has long been a fraught business. Remember the East West Link? Two elections and more than seven years after state Labor torpedoed the road plan by announcing it would cancel the contract to build it, the Morrison government was still insisting it should be built. It kept $4 billion in the 2022 budget for the project.

When the federal government comes knocking with a large plate of cash for a big project, it’s difficult for a state government to turn it down, even when it isn’t clear that it stacks up.

The Airport Rail link was always a trap for Victoria.

The Allan government is now forced to confront the reality of actually building and delivering a project – likely to end up costing far more than $13 billion – with only $5 billion on the table from the Commonwealth. Annual losses would almost certainly represent a further ongoing drain on the state budget.

An artist’s impression of a proposed elevated rail station at Melbourne Airport.

Then there is the dispute with the airport over the state government’s preference for a cheaper raised rail viaduct to the airport, connecting to an above ground station. The airport, facing the prospect of losing valuable space it milks for parking, is insisting on a tunnel with a below-ground station. It argues that would allow a future connection to the Suburban Rail Loop.

If the plan goes ahead and the airport can successfully argue that its business model has been undermined, state taxpayers could face a large compensation bill.

So why is the Commonwealth continuing to insist on building a project that the cash-strapped state government doesn’t necessarily want?

The non-cynical view is that it wants to invest in projects that are nationally significant, rather than piecemeal “rats and mice” offerings such as suburban carparks. After all, airports are on Commonwealth land and aviation policy remains in federal government’s remit.

In other words, there would arguably be a direct connection between the nationally significant investment and the long-term value of the asset that is being invested in.

Early morning traffic crawls towards the airport.Credit: Luis Ascui

The cynical view is that the Commonwealth is attempting to force Victoria to stump up for an investment that the federal government would benefit most from politically and financially, but isn’t necessarily in the state’s best interests.

In other words, the Commonwealth would be getting Victoria to cross-subsidise its asset.

The only thing that is clear is that, like the East West Link conflict, the standoff is unlikely to be resolved any time soon.

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