By Josh Gordon, Richard Willingham and Benjamin Preiss
Federal cash for the Melbourne Metro Rail tunnel is under a cloud because the Andrews government is refusing to include a $1 billion new station at South Yarra.
Prime Minister Malcolm Turnbull is being vigorously lobbied by senior colleagues furious over an Andrews government decision to bypass the station by just metres to avoid a claimed $970 million cost blowout and more than 100 additional property acquisitions.
Federal funding for the Metro Rail link could be dependent on South Yarra being included.Credit: Eddie Morton
Although Mr Turnbull is steering clear of the stoush, he is believed to be carefully considering pleas for a new interchange in the high-density area.
Assistant Treasurer Kelly O'Dwyer, whose federal electorate of Higgins covers the station, said an interchange at South Yarra "must be included" as part of the $11 bill project.
"I have been strongly advocating for this inclusion," Ms O'Dwyer told The Age. "The federal government is still awaiting the state government to put forward the business case for the Melbourne Metro Rail project."
State Opposition leader Matthew Guy has also been lobbying Mr Turnbull over the need for a new interchange at South Yarra, claiming the rail link without it would be like building a house without doors.
"If Daniel Andrews is able to develop a detailed and comprehensive plan for Melbourne's long-term growth, it has to include a South Yarra station interchange and I will continue making that point in my discussions with the Turnbull government," Mr Guy said.
As it is, the project is likely to cost at least $11 billion, with Labor suggesting this should be shared between Victoria, the Commonwealth and the private sector. Although Mr Turnbull has, unlike his predecessor, signalled a willingness to fund urban rail, he has stopped short of committing ahead of an updated business case from the Andrews government.
A report by the state government's Metro Rail Authority concludes the economic case for the new station is "very poor". Part of the problem is existing platforms could not be used because new 234-metre long high-capacity trains which will eventually be used on the new line would not have the space to dive deeply enough underground before hitting the Yarra River.
That means a new interchange would mostly need to be built about 500 metres to the south east at a cost of up to $970 million, necessitating 114 residential and commercial title acquisitions, including part of the Jam Factory. This could, according to Labor, in turn undermine the business case for the entire project, with the new station expected to return as little as 20 cents for every $1 spent on it.
The area directly next to South Yarra station – Forrest Hill – has undergone massive development and will be home to the 50-storey Capital Grand project, which will have 450 apartments. It will be the tallest building outside the CBD.
In 2010 the Stonnington council allowed planning rule changes to have a car park ratio of less than one per person for the precinct, due to access to public transport.
It is projected tens of thousands of people will call the precinct home.
Former Stonnington mayor, now Liberal MP Tim Smith, said the parking changes were allowed because it was envisioned that South Yarra would be a major rail hub and residents would be able to rely on trains to get around Melbourne.
"The entire policy was designed to encourage people to use public transport with the idea that South Yarra station would one day become a mega station connected to the loop in some sort of a metro system," Mr Smith said.
"We are at capacity now, we have more people coming, South Yarra is just going to get busier and busier.
Mr Smith said it was ridiculous not to include South Yarra in the Metro project.
The station is the 11th busiest in Melbourne, connecting four suburban lines, with almost 2.5 million passengers a year using it. If the station is not included as part of the project, the Cranbourne-Pakenham line would bypass the station, meaning passengers wanting to get off at South Yarra would need to switch lines at Caulfield.
With the government sending bureaucrats back to the drawing board to reduce disruption along Swanston St, Greens Leader Greg Barber called on designers to take another look at the South Yarra interchange.
"How about they go back and do the same thing for the South Yarra interchange," Mr Barber said. He said any funding for the project should be contingent on transparent analysis.