A multi-billion-dollar tunnelling deal has been signed for Melbourne's Suburban Rail Loop but it is unclear how much taxpayers could be on the hook for if the mega project is canned.
Victorian Premier Jacinta Allan and Transport Infrastructure Minister Danny Pearson announced the first major works contract for the $34.5 billion eastern section of the rail line on Tuesday.
It is worth $3.6 billion and involves tunnelling 16km of the 26km stretch between Cheltenham and Glen Waverley.
The contract has been awarded to a consortium of CPB Contractors, Ghella and Acciona Construction, with boring on the twin tunnels to start in 2026.
Another contract will be awarded for the 10km of tunnelling between Glen Waverley and Box Hill next year.
The entire 90km orbital rail line is designed to run from Cheltenham to Werribee via Melbourne Airport.
Construction on the first phase of the loop is expected to be completed by 2035 and the state has pledged to stump up $11.8 billion, with the remainder expected to come from federal funding and "value capture" revenue.
The federal government has only set aside $2.2 billion for the project so far.
The state government and consortium will share any extra costs incurred under a "painshare/gainshare" agreement.
Ms Allan would not confirm if the contract included a cancellation cost after the state paid out $380 million to organisers for scrapping the 2026 Commonwealth Games.
"Only the Liberal Party are talking about cancelling this project," she told reporters in Burwood.
"We are not contemplating that at all."
Victorian Ombudsman Deborah Glass took aim at the project last week, finding it was conceived by a single executive and handled by private consultants under a veil of secrecy.
Ms Allan conceded the rail link had plenty of "blockers and knockers" but was steadfast it was needed.
"As our city continues to grow, every economist will tell you that congestion on your roads ... is a handbrake on productivity," she said.
The Suburban Rail Loop was unveiled by the Andrews government before the 2018 election, with the entire project initially estimated to cost up to $50 billion.
It became a contentious issue before the 2022 state election, with the opposition threatening to shelve the project if it took government.
A 400-page business and investment case released in 2021 showed the east and north sections could cost between $30.7 billion and $57.6 billion.
The state's independent Parliamentary Budget Office cast doubt on that estimate, putting the cost to build the first two sections at $125 billion.
The premier was unable to provide an updated cost estimate for the entire project on Tuesday.
Opposition transport infrastructure spokesman David Southwick branded the decision to sign the contract "reckless" and called on the government to release its full details.
"Labor have signed Victorians up to a huge mortgage today," he said.
Former premier Daniel Andrews controversially ripped up a contract signed by the Napthine government to build Melbourne's East West Link after Labor won the 2014 state election.
Victoria's Auditor-General later revealed the total cost of scrapping the road project topped $1.1 billion, including a $642 million termination settlement.
