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AAP
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Callum Godde and Cassandra Morgan

Vic rail loop build costs tipped at $125b

There is not a binary choice between funding hospitals and transport, Premier Daniel Andrews says. (James Ross/AAP PHOTOS) (AAP)

Building the first two stages of Melbourne's Suburban Rail Loop (SRL) could set Victorian taxpayers back $125 billion, more than double previous estimates.

The new calculation from the state's independent Parliamentary Budget Office, released on Thursday, accounts for the east and northeast sections of the 90-kilometre orbital rail line running from Cheltenham to Melbourne Airport.

On top of the $125 billion figure, it puts the cost of running the SRL East and North at $75 billion over its first 50 years.

The estimate was calculated at the request of the Victorian opposition, which has vowed to pull the brakes on building the first part of the loop and instead redirect cash savings into the health system.

Shadow Treasurer David Davis called the office's findings "alarming" but maintained the coalition would shelve rather than scrap the plan.

"Part of the project may at some point be worth building. We're redirecting money to health, which is needed," Mr Davis told reporters.

But Premier Daniel Andrews insists governments need to do many things at once and it is not a binary choice between funding hospitals and creating transport infrastructure.

"There's only one sure way to see the Suburban Rail Loop cost more than it should and that is to delay it or scrap it," he said.

"Nothing that has ever been built in the state was cheaper because it was delayed, or shelved, or put off."

The budget office's findings go well beyond the Victorian government's initial estimates, with costs originally slated to be up to $50 billion for the entire line from Cheltenham to Werribee.

Mr Andrews argued that figure, publicly stated by Transport Infrastructure Minister Jacinta Allan before the 2018 election, was an estimate and not a "definitive cost".

A 400-page business and investment case, released in August last year, showed the east and northeast sections of the line could cost up to $50.5 billion, with the latter part to be completed in 2053.

The cost of the SRL East section alone was put between $30 billion and $34.5 billion, in line with the budget office's estimate of $33 billion.

The business case indicated the loop's first two parts had a benefit-cost ratio between one and 1.7, meaning for every dollar spent on the project the state would reap between $1 and $1.70.

Despite the new cost estimates, Mr Andrews said his government would not redo the overall benefit-cost ratio for the SRL East and North and declined to say what the second phase of the project would cost.

"I'll leave it to others to speak about the methodology that the Parliamentary Budget Office used," he said.

When SRL was first announced, three months before the 2018 state election, Infrastructure Victoria had not recommended it or been consulted on the plan.

A preliminary submission to Infrastructure Australia, an independent advisory body to the federal government, was only received in November last year.

Prime Minister Anthony Albanese announced an initial $2.2 billion federal commitment towards funding the project before heading to the polls in May.

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