Even under the most forgiving economic settings, the economic viability of the Melbourne Metro Tunnel now hangs by a thread. When we adjust the original business case to reflect the 42 per cent blowout in projected costs and a 50 per cent structural reduction in benefits due to the post-pandemic patronage cliff, the project’s net present value collapses from a massive $18 billion surplus to a razor-thin $0.72 billion. This results in a benefit-cost ratio of just 1.06, meaning that for every dollar invested, the state is now retrieving only 6¢ in surplus value.

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While a benefit-cost ratio greater than zero technically classifies the project as “viable”, this is obviously just a back-of-the-envelope calculation. If train patronage remains low and it turns out we don’t hit capacity constraints on the old network for another 15 or 20 years, then the benefits could easily fall by more than half. If assessed under Infrastructure Australia’s standard 7 per cent interest rate, the project would be deeply unviable, destroying billions in value.

The saga of the Melbourne Metro Tunnel serves as a stark warning for any heavy rail project dreamt up in a pre-pandemic world. For a long time, there was hope that the pandemic was a blip – a temporary interruption to the inevitable growth of mass transit.

But here we sit, almost six years after it began, and we are nowhere near our pre-pandemic peak. The Suburban Rail Loop business case, written in 2020, assumed that COVID-19 would lower patronage by about 5 to 10 per cent. The experience from the Melbourne Metro suggests that the losses will be five to 10 times larger, which would put the project deep in the red well before costs have had a chance to inevitably balloon.

This reality exposes a fundamental contradiction in modern government policy. If governments are going to commit to making working from home a permanent and prominent feature of the workforce, they must also have the courage to pare back their infrastructure ambitions.

We must recognise that working from home is, in itself, a massive infrastructure benefit. By keeping workers at home two or three days a week, we naturally decapitate the peak-hour congestion that these projects are built to solve. If we lock in hybrid work, we simply need fewer roads, fewer trains, and fewer expensive tunnels.

Isaac Gross is a senior lecturer at the Department of Economics at Monash University.

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