The state government's planned multi-billion dollar upgrade of the Great Western Highway has been shelved as NSW Premier Dom Perrottet looks to contend with surging construction costs and global labour shortages.
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The Sydney Morning Herald revealed on Tuesday the state government's independent infrastructure body has recommended the state's $27 billion infrastructure spend be diverted to smaller projects that will provide "high returns and faster paybacks with less budget and delivery risks".
The planned 11-kilometre tunnel on the Great Western Highway, to stretch from Blackheath to Little Hartley, bypassing Mount Victoria, would be Australia's longest tunnel but is one of the state government's megaprojects likely to be put on ice.

It was confirmed by Minister for Regional Roads and Transport Sam Farraway just two weeks ago that the tunnel will be toll free, too.
MAKING NEWS:
The Beaches Link, Parramatta Light Rail Stage 2 and stages of Sydney Metro, including from south-west Sydney to the new airport, are other projects in danger of being delayed.
The report sites both the pandemic and an overheated construction market as the two biggest risks for charging ahead with big builds.
The Beaches Link, Parramatta Light Rail Stage 2 and stages of Sydney Metro, including from south-west Sydney to the new airport, are other projects in danger of being delayed.
Like WestConnex, the Great Western Highway upgrade is being jointly funded by the NSW and Commonwealth governments to the tune of $4.5 billion.
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