The government has been criticised bysome experts and the state opposition for the scale of its popular infrastructure agenda and ability to pay for it.

The budget included close to $6 billion in project cost overruns,though the bulk of this stems from the West Gate Tunnel project and will eventually be paid by private firms. The government’s approximately$1.9 billion blowout on the tunnel project was confirmed in the budget.

A $2.5 billion suburban road upgrade program will cost $300 million more than expected due to market conditions,while the government will spend almost $2.5 billion to get rid of 10 extra level crossings.

A lack of skilled workers andhigher material costs,driven by global inflationary pressures,are making it more difficult for firms to complete projects.

Thebudget papers acknowledge “market capacity constraints due to high levels of infrastructure activity” are putting pressure on builders.

“With a high number of projects well advanced in delivery,a growing focus for the government is the efficient commissioning of new infrastructure to ensure public value is maximised.”

Tim Piper,the Victorian head of employer association Ai Group,welcomed the government infrastructure spending,while suggesting industry was running hot owing to labour shortages.

“The program for delivering this infrastructure will also need to take into account and address industry’s overall capacity to meet the additional demands,” he said.

“We know that industry is concerned at the lack of labour and particularly skilled workers. This effectively constrains capacity. We hope government will be recognising these constraints and actively pursuing an agenda to develop industry capabilities and particularly workforce capabilities.

“This is a budget with the government’s eyes firmly set on November and ensuring its social agenda is pursued.

“The government projections are for the state to have a lower growth rate than the rest of the country as a whole over the next two years. We expect the government’s ambition would be to at least meet,if not do better than,the rest of the Australian economy.”

The Metro Tunnel project will exceed its cost forecast by more than $2.5 billion. The budget includes spending for 300 train drivers and station staff who will soon be hired to work in the tunnel when it opens in a few years’ time.

Opposition transport infrastructure spokesman Matt Bach said the government was finally being honest about the affordability of its infrastructure spending.

“[Pallas] admitted that Labor was only now – after more than seven years in office – even starting to gain an appreciation of how to deal with major projects.

“Even if that’s true,it’s cold comfort for Victorians who are footing a big bill,of over $27 billion,for infrastructure blowouts,” he said.

Regional commuters will benefit from $250 million worth of new VLocity trains and $205 million in V-Line upgrades.

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