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Vic treasurer justifies project blowouts

By Callum Godde
Victorian Treasurer Tim Pallas is seeking to put infrastructure cost blowouts in perspective. (AAP)

Victorian Treasurer Tim Pallas has defended billions of dollars in infrastructure project cost blowouts laid bare in the state budget.

The 2022/23 Victorian budget, handed down last week, forecast costs to rise for a number of major infrastructure projects, including $3.9 billion on the problem-plagued West Gate Tunnel.

Taxpayers will pay $1.9 billion of that, along with an extra $503.6 million and $512.9 million each to build new hospitals in Footscray and Frankston.

Mr Pallas says the state government has delivered about 780 projects worth more than $159 billion since coming to office in 2014 and attributed the cost overruns to various factors.

"We're not alone when dealing with the challenges that we confront around commodity price rises, from resourcing price rises, skill shortages and a lack of competition because of an overabundance of government activity around construction," he told a Public Accounts and Estimates Committee hearing on Friday.

"If you look at this year's total escalation, it's around four per cent. If you take out the West Gate Tunnel, which was already announced in December, it's one per cent on close to $190 billion worth of projects continuing or commencing."

Mr Pallas sought to put the cost blowouts in perspective, citing a report published by the Office of Projects Victoria last year that found a third of 379 large transport and social infrastructure projects across 14 OECD countries went over budget.

That figure rose to 53 per cent for major transport infrastructure projects and, of those, each on average overran its costs by 59 per cent.

But Nationals MP Danny Hill rejected his justification, claiming the state government has racked up $28 billion in project cost blowouts over its past two terms.

Mr Pallas replied: "Am I hearing from you that you believe we're getting much better at this as we go along then?"

"Well, you couldn't get much worse, quite frankly," Mr Hill said.

It comes as the treasurer formally requested Australia's financial watchdog run the rule over the federal government's future infrastructure funding commitments to Victoria.

Mr Pallas wrote to Auditor-General Grant Hehir on Tuesday to ask him to review whether Victoria has been "dudded" by the Commonwealth in its March budget and how decisions were made.

"I am concerned that Victoria may have been short-changed on funding for critical infrastructure by the Commonwealth," the letter says.

Mr Pallas and Premier Daniel Andrews have repeatedly criticised the federal government over Victoria's share of infrastructure spending, the proposed GST carve-up and - unlike other states - not to receiving Commonwealth funding for a "city deal".

In a statement, a spokesperson for the Auditor-General confirmed he has received the request and is considering it.

Mr Andrews is due to face the state budget committee on Friday afternoon.

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Dive Deeper:
Mark McGowan's WA budget surplus labelled 'unfair distortion' by Victorian Treasurer Tim Pallas
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One subscription that gives you access to news from hundreds of sites
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