Senate Rural and Regional Affairs and Transport Legislation Committee, , 3:35:34 to 3:42:45
Discussion focuses on value capture revenue targets for the Suburban Rail Loop and the Commonwealth's decision to cap its contribution at $6 billion.
Topics: Infrastructure, Government spending
Speakers: Hon Bridget McKenzie, Lachlan Wood, Mr. Jim Betts, Hon Anthony Chisholm, Senator Ross Cadell
>> They have not. And as I said, um, their view is that the project remains on >> Our view [clears throat] is that our contribution is capped. In any case,
Yes, but the earlier one was capp two and then we added 3.8 to it secretary. So additional scope >> capped doesn't mean capped means until the next political requirement. Um the report states uh the suburban rail loop authority has identified significant additional costs not covered by the project budget for works and investment needed to achieve the government's claim benefit of the project and its value capture revenue target. And I remember infrastructure this is my words infrastructure Australia having a lot of concerns about their value capture revenue targets. The government is yet to fully fund these costs, which may exceed $2.5 billion. Were you aware that significant works required to deliver the project's intended benefits were not included in the approved project budget?
>> I don't believe so, Senator.
>> You weren't aware? Did Belg Grove >> Bel Grove um was that something they were asked to assess the additional aspects of cost that weren't included in the original project?
>> So they assessed the cost estimate that was provided to us and the scope that was provided to us as well. So in
assessing the scope, did they assess >> the scope included all the parts that would actually make the project stack up, including the value capture uh revenue >> arrangements.
>> The value capture was not within their scope to look at. Um the value capture,
>> but it's a big part of how the numbers stack up of the budget.
>> Yes. But it is Victoria who is taking the lead on the value capture strategy. Um and we did receive that funding and financing strategy which includes the value capture. Um but that's really more of a matter for Victoria in regards to their approach to that value capture.
>> Has the Commonwealth assessed how removing or deferring station interchanges would affect the project's cost benefit ratio?
Not as yet, Senator. That's something we would intend to do um once the independent reviews have been completed by >> And when are the independent reviews? >> So, there was a rapid review which was completed recently and there is an independent technical review which is currently underway and which we're expecting to have the outcomes from in early 2027. and we would then review the output from those reviews and provide advice to the >> The auditor general found that the
Victorian government still requires another 5.5 billion in Commonwealth funding to complete its proposed funding package and this shortfall is delaying procurement. Is that your understanding?
>> Uh I don't believe so. The procurement packages that remain to be let are for two station packages. The Victorian government has taken a decision not to sign those contracts until the completion of the review. >> But that's the review of the scope as opposed to being triggered by the 5.5 billion.
>> Okay. And so by the sounds of it, the review won't be reporting till after the state election. Um, has the department provided any advice to government on a further commonwealth contribution?
>> In terms of above the 3.8 billion, >> we provide advice in the budget context earlier this year. We haven't provided further advice since then to my knowledge.
>> And the advice that you provided to the minister included the announcement she made or that would have been agreed by were there other options given provided to the minister for funding? >> to consider
>> budget advice. So I'm not sure I could go into the options that were provided.
the Victorian government provided any information to the department about the impact of the $5.5 billion shortfall they want the Commonwealth to fund including any information about the procurement delays identified?
uh they are certainly aware of it that it's a risk and it's captured in their risk register the funding um gap
>> but it's not in our risk it's not on our statement of risks in our budget is it this project
>> I mean our statement of risks would be different to what you'd expect from a project level risk register um and I think from a statement of risk point of view the Commonwealth contribution at this point is capped at $6 billion and therefore or would not fall into the scope of the statement of risks.
>> Was our was the Commonwealth's original $2 billion commitment a capped commitment?
>> Yes, it was
>> 2.2
>> 2.2 capped then. Then that cap was exceeded with another announcement.
>> I think the cap was changed with another announcement.
semantics. I would suggest
>> well the Australian government
>> but nice try. the Australian government
took a decision that it wanted to invest more in that project.
>> And so there's nothing to suggest. I mean, we're using the word cap to suggest that somehow um we've tapped out of investing into this project, the Commonwealth. But the reality is from the behavior of this federal government. Um there's nothing to say, Minister, that your government won't be stumping up the $5.5 billion shortfall at the next budget opportunity. Well, I think
the department have talked through the process that led to us to get to $6 billion in terms of the contributions that we've made. I'm unaware of uh any plan to uh give further money to this project, but we understand the importance of infrastructure uh in the state of Victoria.
>> Secretary, is there any regulatory or legislative hurdles to expanding the level of that um commitment to make it a bigger an
amount? Uh no that would be a investment decision that a future government um would be able to take. It would need obviously to satisfy then provisions of things like the PGPA act to make sure that it constituted um a proper use of public funds and that's kind of the process that we are embarked on with the with the 3.8.
Um, was the department aware of the Victorian Labor government's secret levy on public transport fairs, which the report describes as the project's largest source of value capture revenue?