The tunnel under Medlow Bath and Blackheath is desperately needed. The traffic jams at Blackheath used to be a long weekend thing. Now it’s an everyday occurrence. Plus, it is politically unacceptable to put a motorway near people’s homes (bear in mind it’s quite a narrow ridge line), and you also must not disturb the Blue Mountains National park. Which only leaves tunnelling as the last option.
I don’t expect to ever use said tunnel. It took 35 years for Main Roads Dept (and its successors) to duplicate the Great Western Highway from Lapstone to Katoomba and, with traffic lights installed in every tinpot village (more than one set in larger villages), the net improvement in driving time Sydney to Lithgow was zero. It took 2 hours in 1982 and it still takes 2 hours, even though the first 55km are motorway.
Disappointingly, no mention of reinstating passenger trains to Mudgee or Cowra.
As a regular traveller over the Blue Mountains to the Central West for the past 50 years, I can tell you that the upgrade of the GWH to dual carriageways between Lapstone and Katoomba has been a blessing, improving the driving experience and reducing journey times significantly. Outside peak hours, it used to take me up to 1h 45m from Epping to Katoomba and now takes up to 1h 15m via the M7 and M4. On a good day, I've done it in 1h, without going over the speed limit. If that's not an improvement, then I don't know what is? How you can suggest that journey times haven't improved beggars belief. Katoomba to Lithgow is a different matter entirely, as that has so far only received modest upgrades.
It's not practicable to build a motorway standard highway through the Blue Mountains via Katoomba, as it would also have to service the multiple townships along the route and negotiate the narrow ridge line, as the existing highway and rail line have done. The compromise to upgrade the existing highway to dual carriageway standard with realignments and bypasses, improving access to the various towns and villages, is all that could be realistically expected. That same strategy should be continued for the upgrade between Katoomba and Lithgow, rather than building an expensive motorway standard tunnel, bypassing Medlow Bath, Blackheath and Mt Victoria. A mostly surface upgrade of the whole corridor could be achieved at a fraction of the cost of a long tunnel, for which there doesn't appear to be any funding, and in a much shorter time frame. Short tunnels under the Blackheath and Mt Victoria townships in conjunction with widening and realignments of the existing highway is all that is needed. A proposal for a short tunnel under Mt Victoria with a long viaduct down Victoria Pass to Little Hartley is already in the pipeline. I can't see any justification in replacing it with a long tunnel, as the existing highway will still need upgrading to improve safety and journey times between townships.
The only practicable solution for upgrading the road link across the Blue Mountains to motorway standard is the proposed route from the M2/M7 Motorway to Lithgow via the Bells Line of Road corridor, which obviously won't be cheap. In the meantime, completing the proposed upgrade of the GWH, without an expensive long tunnel, will suffice until the funding is available for the Bells Line of Road Motorway.
The only way passenger services will be restored to Mudgee and Cowra is if the respective lines are re-opened and upgraded for freight, if ever.