Australia Scraps Northern Half of Inland Rail as Cost Balloons to $45 Billion

Key facts

• The Inland Rail project was originally envisioned to run 1,700 km from Melbourne to a port near Brisbane.
• The government will now only connect Beveridge, Victoria, to Parkes, New South Wales, about half the original distance.
• The cost estimate has blown out to more than $45 billion, a 450% increase from the original $9.3 billion estimate in 2017.
• Dr Kerry Schott's 2023 independent review estimated costs of at least $31.4 billion, calling the figures 'astonishing'.
• Further independent costings commissioned by Inland Rail pushed the completion date to 2036.
• The government had budgeted only $14.5 billion for the freight link and will reallocate $1.75 billion to other national rail upgrades.
• The Coalition announced the project in 2017 with an estimated cost of $9.3 billion and a completion date of 2026-27.
• Construction between Parkes and Beveridge is now expected to be completed in late 2027.

A Vision Halved

The Albanese government has effectively abandoned the northern half of Australia's beleaguered Inland Rail project, scrapping plans to connect New South Wales and Queensland by rail as costs spiraled beyond $45 billion. The decision, to be confirmed in next week's federal budget, ends the long-held vision of a 1,700-kilometer freight link from Melbourne to a port near Brisbane. Instead, the mega infrastructure project will now terminate at Parkes, in central west New South Wales, about halfway to Brisbane. The truncated route will connect Beveridge, on the outskirts of Melbourne, to Parkes, allowing double-stacked freight trains to run west to Perth and east to Newcastle. The government expects construction on this reduced segment to be completed by late 2027.

Cost Blowout and Delays

The project's cost has increased by more than 50% in just three years, since Dr Kerry Schott was commissioned by Labor in 2023 to independently review the project. Schott estimated the project would cost upwards of $31.4 billion and be completed by 2031, a doubling of the previous estimate, which she called 'astonishing,' adding she was not confident on the figures. Further independent costings, commissioned by Inland Rail, found the project would now take until 2036 to complete and cost more than $45 billion. That represents a 450% blowout from the original $9.3 billion estimate when the Coalition announced the project in 2017, with a planned completion date of 2026-27. By 2020, the estimated cost had already increased to $16.4 billion.

Reasons for the Blowout

Schott's 2023 review pointed to 'immature preliminary designs and approval requirements,' prolonged approval processes, and 'recent escalations' as reasons for the cost blowouts. The government had budgeted just $14.5 billion toward the freight link, and by abandoning half of the track while reallocating a portion of the funding, it will deliver a small improvement to the budget bottom line. The government is still seeking environmental and state approvals and preserving areas of land where the project was intended to be built, through northern New South Wales and south-eastern Queensland. This suggests that while the northern half is effectively dead, the government is keeping a sliver of possibility alive for future revival.

Political and Economic Stakes

The decision marks the end of a project championed by former deputy prime minister Barnaby Joyce, who envisioned the inland rail link as transformative for Australian transport. The Albanese government's move to cut taxpayers' losses comes amid mounting fiscal pressure and a need to rein in spending. In 2024, then Inland Rail chief executive Nick Miller insisted the project was not 'stalled' and that the government was still committed to the northern half. But the new independent appraisal forecasting a $45 billion price tag and a completion date pushed out by several more years has forced a dramatic reversal.

What Comes Next

With the northern half scrapped, the government will reallocate $1.75 billion of the funding to other national rail upgrades. The truncated line from Beveridge to Parkes will still provide a strategic freight corridor, linking to existing rail networks to Perth and Newcastle. But the abandonment of the Melbourne-to-Brisbane connection leaves a gap in Australia's freight infrastructure, raising questions about how to efficiently move goods between the two largest eastern cities. The government's decision to preserve land along the northern route suggests the possibility of future revival, but for now, the Inland Rail vision is effectively dead.

The bottom line

• The Inland Rail project will now only connect Beveridge, Victoria, to Parkes, New South Wales, ending plans for a Melbourne-to-Brisbane link.
• Cost estimates have blown out to more than $45 billion, a 450% increase from the original $9.3 billion in 2017.
• The government will reallocate $1.75 billion to other national rail upgrades, improving the budget bottom line.
• Construction on the truncated route is expected to be completed by late 2027.
• The decision effectively kills a project championed by Barnaby Joyce and the former Coalition government.
• Environmental and state approvals are still being sought, and land is being preserved for a possible future northern extension.