On an ordinary weekday morning, the queue on Rosanna Road in Melbourne's north-east can run for the best part of a kilometre before peak hour has properly started. Rosanna Road, together with Bulleen Road, Banksia Street and the Greensborough Highway, forms the roughly 9.5-kilometre chain of suburban streets that traffic has used for decades to get between the M80 Ring Road at Greensborough and the Eastern Freeway at Bulleen, because no freeway has ever joined the two (North East Link Project, business case documentation, 2018, approx.). It is the last unbuilt piece of Melbourne's orbital road network, and residents along that route have campaigned to fix it for longer than some of today's commuters have been alive. North East Link, the project meant to finally close the gap, is now also the single most expensive road Victoria has ever built.
What the government did
Premier Daniel Andrews announced a $10 billion North East Link in December 2016, promising to fast-track it if re-elected (Premier of Victoria, Only Labor Will Build The North East Link, Dec-2016). The government selected the current alignment — tunnelling under the Yarra Valley parkland rather than a cheaper surface route — through 2017, and its 2018 business case set the project's overall long-term budget at $16.5 billion and its benefit-cost ratio at 1.3, rising to 1.4 once wider economic and land-use benefits were added (North East Link Project, Business Case Executive Summary, 2018). Infrastructure Australia's independent evaluation, published in October 2018, accepted the project onto its priority list but calculated that 1.3 ratio against a nominal cost band of $14.87 billion to $15.79 billion, and flagged that some of the underlying assumptions were likely to overstate the reported figure (Infrastructure Australia, Project Evaluation Summary: North East Link, Oct-2018).
Jacinta Allan, who became Premier in September 2023, held the Transport Infrastructure portfolio responsible for North East Link from late 2018 — meaning she was the minister who signed off the project's major decisions before she became the Premier now managing its cost. Under that portfolio, a state-owned entity, the North East Link State Tolling Corporation, was established by legislation in 2020 to hold and eventually operate the tolling infrastructure directly, rather than handing it to a private concessionaire (North East Link State Tolling Corporation, Annual Report 2021–22, approx.). Only the newly built tunnelled section between the ring road and the Eastern Freeway will be tolled; the upgraded above-ground Eastern Freeway, widened from nine lanes to as many as twenty in places and given a new dedicated busway, remains free to use. In 2021 the government awarded the Primary Package — the tunnelling and interchange works — to the Spark consortium under an $11.1 billion public-private partnership, then the largest transport PPP let in Australian history, including a $1.75 billion contribution from the Commonwealth (Victorian Auditor-General's Office, Major Projects Performance Reporting 2023, approx.).
Early works began in 2020 and tunnel boring started in mid-2024, with the project scheduled to open in stages through to late 2028 (Victoria's Big Build, North East Link project updates, approx.). On 15 December 2023, the government announced that scope had expanded and costs had risen sharply, citing the Eastern Freeway upgrade component alone at $5.7 billion and the M80 Ring Road upgrade at $3.8 billion, and attributing the overall increase to inflation, construction-cost escalation and an expanded project scope (Premier of Victoria, Delivering The North East Link Our Growing State Needs, 15-Dec-2023). Treasurer Tim Pallas was reported at the time as attributing roughly 60 per cent of the additional cost to deliberate design changes — larger noise walls, altered interchanges and other adjustments made to reduce the project's impact on nearby homes — with the remainder from rising materials and labour costs (Treasurer of Victoria, quoted in wire reporting, 15-Dec-2023, approx.).
The strongest case
A genuine missing link, and a toll that doesn't touch existing roads
Put at its strongest, North East Link is not a discretionary add-on to Melbourne's road network — it completes a ring road that has been missing its final link for decades, a gap that has featured in Melbourne transport planning since at least the 1969 Melbourne Transportation Plan (approx.). Every alternative to building it forces cross-town traffic and freight bound for the port and the airport through suburban streets never designed to carry it. Population in Melbourne's outer north-east growth corridors has grown faster this decade than almost anywhere else in the state, and none of that growth is served by a direct freeway connection to the city's east and south-east — it is served by Rosanna Road.
The toll structure also draws a real distinction other Melbourne toll roads have not: only the newly built section is tolled, no existing free road is converted into a toll road, and the tolling company is state-owned rather than a private concession that locks in decades of returns to a corporation such as Transurban. On the government's own figures, the completed project is forecast to deliver $7.8 billion in travel-time and reliability benefits and a further $420 million in safety and environmental benefits (North East Link Project, Business Case Executive Summary, 2018, approx.). If the project is delivered near its current budget and performs as modelled, Victoria will have closed a genuine, long-standing infrastructure gap and kept the toll revenue in public hands rather than a private concessionaire's.
The evidence
The difficulty is the gap between "as modelled" and what has actually happened to the price. North East Link's cost estimate has only ever moved in one direction: $10 billion at the 2016 announcement, $16.5 billion in the 2017–18 business case, and $26.1 billion by the government's own December 2023 statement. The Victorian Auditor-General's Office, reviewing the project in its Major Projects Performance Reporting 2024 report tabled 19 February 2025, put the current figure at $26.21 billion across the North East Link road packages — $10.42 billion above the cost band Infrastructure Australia had assessed the project's 1.3 benefit-cost ratio against in 2018 (Victorian Auditor-General's Office, Major Projects Performance Reporting 2024, 19-Feb-2025).
Victoria's Auditor-General found no evidence that anyone in government had formally rechecked whether the project still stacked up once its cost had grown by two-thirds.
None of that escalation is disputed by government. What is contested is what it means for the case originally used to justify the project. The Auditor-General's 2024 review states plainly: "we saw no evidence that Victorian entities formally reassessed the original benefit-cost ratio or project benefits to reflect the project's significant changes" (Victorian Auditor-General's Office, Major Projects Performance Reporting 2024, 19-Feb-2025). Separately, the Public Transport Users Association has argued that once the current cost and more conservative traffic-growth assumptions are applied, the true ratio is closer to 0.7 — meaning roughly 30 cents of value lost for every dollar spent, rather than gained — though this is a critics' recalculation rather than an official one, since the government has not published a revised ratio to test it against (Public Transport Users Association, North East Link is Victoria's real budget bin fire, 9-May-2024, approx.). The Auditor-General's 2023 major-projects review separately recorded a schedule slip of roughly six quarters against the project's original completion date, moving from the fourth quarter of 2026–27 to the second quarter of 2028–29, attributing part of the delay to design changes required by environmental approvals (Victorian Auditor-General's Office, Major Projects Performance Reporting 2023, approx.).
The critique
Some of North East Link's cost growth is inflation no government controls. Steel, asphalt and skilled labour all rose sharply through the pandemic and the energy shock that followed Russia's invasion of Ukraine, and most major Australian infrastructure projects carry some of that same scar. But the government's own account, given when it announced the revised budget, put a large share of the increase down to design changes made inside government after the business case and its benefit-cost ratio had already been published and used to justify the project publicly. A cost increase driven substantially by chosen design changes is a different kind of failure to one driven by a global supply shock, and the Auditor-General's finding that the underlying ratio was never recalculated means neither Parliament nor the public has been told, in the state's own numbers, what those changes did to the project's value for money.
This also is not a case of an incoming government inheriting a mess made by its predecessor. Jacinta Allan held the transport infrastructure portfolio for most of the period in which North East Link's estimated cost more than doubled — from the 2018 business case, through the 2020 tolling legislation, to the 2021 Primary Package contract — before becoming Premier in September 2023 and personally fronting the $26.1 billion announcement three months later. The minister who oversaw the decisions that drove the cost up is the same person now accountable, as Premier, for explaining it. That continuity sits awkwardly with a public explanation that leans heavily on global events outside the government's control.
The toll arrangement, held up as part of the government's strongest case, is also less settled than it looks. The North East Link State Tolling Corporation was established in 2020 to hold the tolling infrastructure directly, but the actual toll price motorists will pay when the tunnel opens in 2028 has not yet been published, and nor has a public account of how tolling revenue will be applied against the $26 billion already committed. One of the largest single revenue streams the state has ever created for one road is being built out ahead of the price transparency the public will need before it opens (North East Link State Tolling Corporation, Annual Report 2021–22, approx.).
The most expensive road in Australia, in numbers
None of what follows displaces the case made earlier for building North East Link: it closes a genuine, decades-old gap in Melbourne's freeway network, and the government's own modelling puts real travel-time, freight and safety benefits on the other side of the ledger. But measured against what Australia's other big-city road megaprojects have actually cost to build, North East Link is not just expensive by Victorian standards — on the numbers available, it is the most expensive road project the country has built.
At its current $26.21 billion cost across a 10-kilometre corridor, North East Link works out at roughly $2.6 billion per kilometre (approx.). Sydney's WestConnex, a 33-kilometre motorway network, had an official construction budget of $16.812 billion — about $510 million per kilometre (approx.) — and the NSW Audit Office separately found a further $4.26 billion of directly related projects had been funded outside that headline figure, a transparency finding it said understated the full cost of achieving the project's objectives (Audit Office of New South Wales, WestConnex: changes since 2014, 17-Jun-2021). Melbourne's own West Gate Tunnel, an 8-kilometre link between the West Gate Freeway and CityLink, settled at a final $10.2 billion in December 2021 after the state, Transurban and the builders split an earlier blowout — about $1.28 billion per kilometre (approx.) (Transurban Group, ASX announcement, 17-Dec-2021). North East Link costs roughly five times WestConnex's rate per kilometre and about double the West Gate Tunnel's.
- ≈$2.6bn per km (approx.) — North East Link's cost per kilometre on its current $26.21 billion budget over a 10km corridor.
- ≈$510m per km (approx.) — WestConnex's cost per kilometre on its $16.812 billion official construction budget over 33km (NSW Audit Office, 17-Jun-2021).
- ≈$1.28bn per km (approx.) — the West Gate Tunnel's cost per kilometre on its final $10.2 billion budget over 8km (Transurban ASX announcement, 17-Dec-2021).
- $3.9bn — total borrowings by the North East Link State Tolling Corporation since March 2021, carrying $145.3 million a year in interest before a single toll has been collected (North East Link State Tolling Corporation, Annual Report 2023–24, cited in media reporting, Nov-2024).
That financing detail matters because of who ultimately pays it. The $26.21 billion VAGO reports is the construction cost; it does not include the interest the state-owned tolling corporation is paying on money already borrowed to build the road years before any toll revenue exists to repay it. On the corporation's own reported borrowings and interest run-rate, financing costs are on track to exceed half a billion dollars by the time tolls start being collected in 2028 (approx.) — a cost recovered either through the toll price motorists eventually pay or through the state budget if toll revenue falls short, and the toll price itself has still not been published (North East Link State Tolling Corporation, Annual Report 2023–24, approx.).
Zoom out further and the overrun sits inside a larger problem. Victoria's general government net debt was projected at $165.3 billion for June 2026, rising to $175.6 billion by June 2027, in the state's 2026–27 Budget handed down on 5 May 2026 (Victorian Government, 2026–27 Budget, 5-May-2026, approx.), while separate reporting puts gross state debt at roughly $215 billion — about 30.7 per cent of the state's economic output, the highest debt-to-GSP ratio of any Australian state. Moody's has warned that interest costs, which absorbed about 3.5 per cent of Victorian government revenue in 2019, are on track to consume close to one dollar in every ten of state revenue by 2030 (Moody's Ratings, cited in MacroBusiness debt-affordability analysis, 21-Jul-2026, approx.). North East Link's $10.4 billion of cost growth beyond Infrastructure Australia's 2018 costing did not create that trajectory on its own, but it is one of the largest single contributors from any one project in the state's capital program, and every dollar of it is now serviced rather than spent once.
None of this means North East Link should not have been built. It means the state committed to a project whose price nearly tripled without ever publishing a revised benefit-cost ratio to show it was still worth it at the new price, financed part of that growth through debt whose interest bill is opaque to the motorists who will eventually cover it, and did so while the state's capacity to borrow for the next project — a school, a hospital, a rail line — was already narrowing. Cost control on a single road is not a side issue for the state carrying Australia's highest debt-to-GSP ratio; it is the mechanism by which everything else in the pipeline either gets built or does not.
The risk to the future
A ring road Victoria will be paying off long after this government has moved on
North East Link will very likely open, close a genuine gap in Melbourne's road network, and take real traffic off Rosanna Road — none of that is seriously in dispute. The risk is what an unreassessed, near-doubled cost does to everything the project sits next to. Victoria already carries one of the highest net debt loads of any Australian state, and every dollar the budget has grown beyond the $16.5 billion originally approved is a dollar of borrowing serviced from the same budget that funds hospitals, schools and the rest of the state's transport pipeline — including the Suburban Rail Loop and the West Gate Tunnel, itself several billion dollars over its own original budget (approx.).
The deeper risk is precedent. If a project's cost can grow by two-thirds without Parliament ever being shown a revised benefit-cost ratio, the discipline the Auditor-General and Infrastructure Australia are meant to bring to major projects weakens for the next one too. Whether North East Link ultimately proves worth its price will not be known until well after it opens and its toll is finally set. What is already established, on the government's own record, is that the number the public was originally sold and the number now being spent were never formally reconciled — and the minister who managed that gap now leads the government that must answer for it.