North East Link was sold as a $10 billion road. It now costs $26 billion

In December 2016, Premier Daniel Andrews promised that a re-elected Labor government would build the North East Link: the "missing link" in Melbourne's freeway network, a 10-kilometre connection from the M80 Ring Road to the Eastern Freeway, tunnelling under the Yarra. The price was $10 billion.

In December 2023, Premier Jacinta Allan revealed the cost had reached $26.1 billion, making it Victoria's most expensive road project. It's due to open in 2028.

The price tag, year by year

That's $16 billion more than Victorians were first told, and $10 billion more than the business case the project was approved on.

What went wrong

The government kept adding to it. Treasurer Tim Pallas said about 60 per cent of the extra cost came from "deliberate decisions" by the government. AAP reported $6.4 billion in changes to the project, including an extra two kilometres of tunnel (taking it to 6.5km), design changes to keep roads away from homes, noise works, a busway and a rail extension. The ABC put the cost of the longer tunnels at nearly $2 billion, and the extra work on the Eastern Freeway and M80 Ring Road at $2.5 billion.

Building costs soared. About $3.1 billion of the increase was higher materials costs. Allan blamed cost escalation from the COVID-19 pandemic and the war in Ukraine, and said she felt "great frustration and disappointment".

The case was never updated. The 2018 business case found the road would return about $1.30 for every dollar spent. Critics, including the Public Transport Users Association and MPs in State Parliament, say that figure has never been publicly updated since the cost went up by more than $10 billion.

What you're getting for it

Tunnelling finished in 2026. The government says up to 15,000 trucks a day will use the tunnels instead of local roads, and that trips between Melbourne's north and east will be up to 35 minutes shorter. The price also buys upgrades of the Eastern Freeway and the M80 Ring Road, and a busway.

"This is productive infrastructure, supporting a productive economy," Allan said.

Who's to blame?

This one is a Labor project: promised by Andrews, built under Andrews and Allan. Allan points to the pandemic and global construction costs. But by her own Treasurer's account, most of the increase came from decisions the government made.

Shadow Major Projects Minister David Southwick said: "The scale of this blowout demonstrates that Labor's major project budget figures can no longer be believed."

The federal government has kept paying. In May 2024 it added $3.25 billion, taking Canberra's share to $5 billion.

Your share: the jump from $10 billion to $26.1 billion works out to about $2,300 for every Victorian (on a population of about 7 million). Some of that comes from federal taxes paid by every Australian, through Canberra's $5 billion.

Victorians vote on 28 November. This is one of a series on the cost of the Big Build. See also: the $15 billion question on Big Build corruption.

Top photo: North East Link works at Bulleen, Melbourne, October 2024. Photo: BobTanGo, CC BY 4.0, via Wikimedia Commons.