The Labor Government has issued a new cost escalation guide for public infrastructure projects as dozens school upgrades, office refurbishments, rectification works and public transport upgrades suffer cost blowouts.
A Department of Treasury and Finance briefing note obtained by the Victorian Liberals and Nationals underFreedom of Information reveals in January 2023 the Allan Labor Government approved a new practice note on addressing input cost volatility in public construction projects.
This new guidance was developed in response to ongoing cost blowouts across Victorian school, health, community safety and infrastructure projects amid private sector reluctance to accept price volatility risk in public sector contracts.
Since the guide was approved by the Allan Labor Government in February 2023, over 100 Victorian Government contracts for various capital works have been varied, including:
- A $101,200 cost escalation for a Victoria PoliceCommissioner Office Refurb.
- A $176,000 cost escalation for Minor Works on theDeputy Premiers Office.
- A $673,720 cost escalation for a Department of TransportLicence and Testing Centre in Wendouree.
- A $733,338 cost escalation for theVICSES Essendon Unit.
- A $1,416,171 cost escalation for theSunshine Law Courts Redevelopment.
- A $1,506,210 cost escalation for theHorsham Magistrates Court Security Upgrade.
- A $4,341,752 cost escalation for theBallarat Station Upgrade.
- A $6,351,407 cost escalation for aglasshouse replacement in Horsham.
- A $40,479 cost escalation for an upgrade toBalnarring Primary School.
- A $923,580 cost escalation for theKyneton Recycled Water Pipeline.
- A $60,363 cost escalation for rectification works to theElmore Water Tower.
- A $63,256 cost escalation for the SheppartonYouth Prevention and Recovery Centre.
- A $77,000 cost escalation for a Major Transport Infrastructure Authority (MTIA)office refurbishment.
- A $110,000 cost escalation for theWilliam Cooper Justice Centre (WCJC) courtroom works.
- A $139,479 cost escalation for a Department of Environment, Land, Water and Planningcommunications room upgrade and kitchenette installation.
- A $1,443,451 cost escalation forFaçade Upgrades and Restoration of 30-38 Little Malop Street, Geelong.
- A $107,926 cost escalation for anAgriculture Victoria electrical infrastructure works project.
- A $437,990 cost escalation for theParks Victoria Tower Hill Visitor Centre.
- A $385,000 cost escalation for aFamily Safety Victoria Orange Door fit out in Horsham.
- A $434,150 cost escalation for aLand Use Victoria (LUV) office consolidation.
- A $636,053 cost escalation for anemergency and exit lighting upgrade at 2 Treasury Place.
- A $699,613 cost escalation for theconstruction of a carpark in Craigieburn.
- A $813,994 cost escalation for a Department of Environment, Land, Water and Planningoffice refurbishment in Ballarat.
- A $1,353,154 cost escalation for a Department of TransportRolling Stock Office Refit.
- A $33,000 cost escalation forfencing replacement at 29 Jamieson Street, Warrnambool.
- A $30,635 cost escalation for theAttwood Biosecurity Emergency Response Central Warehouse Upgrade Project.
- A $21,085 cost escalation for abathroom and toilet upgrade at Viewbank College.
- A $17,622 cost escalation for thedemolition of a redundant Department of Energy, Environment and Climate Action building.
Furthermore, the brief identifies the Allan Labor Government's Big Build as having contributed to ongoing price increases across the construction sector as major project cost blowouts exceed $40 billion under Labor.
Shadow Minister for Finance, Jess Wilson, said: "Whether it's building the North East Link or delivering a minor office refurb, Labor cannot manage projects and Victorians are paying the price.
"Financial mismanagement has consequences. A decade of waste and cost blowouts under Labor has driven Victoria's debt to a record high which is now starving funding from frontline health, education, infrastructure and community safety services.
"Under the Allan Labor Government, cost blowouts on projects big, small and everything in between have become the norm and every dollar wasted is one less for desperately needed frontline services across the state.
"This new blowout guide is an admission that Labor cannot manage money and has lost control of delivery of projects of all sizes."
