Labor Issues New Cost Blowout Guide

Liberal Party Victoria

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:

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."

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