A costly road to nowhere

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Herald Sun Editorial: A costly road to nowhere

PREMIER Daniel Andrews has dug himself into a very deep and very expensive hole over his disastrous East West Link backflip.

Mr Andrews has left himself nowhere to run on the abandoned tunnel and is facing the prospect of breaking a major election promise, even before his new Government has settled in at Spring St.

The crisis has left Victorians wondering whether they face footing a bill of tens or hundreds of millions — or conceivably up to $1.2 billion — in compensation for a road they never get.

The Premier has conceded taxpayers would be forced to compensate East West contractors for work already begun.

But Mr Andrews was forced yesterday to go a step further and admit an unknown additional compensation payout was also being negotiated.

The Labor Government’s credibility on the $6.8 billion, 6.6km arterial is in tatters.

What was supposed to be the nation’s largest road infrastructure program, designed as a major plank in alleviating Melbourne’s gridlock and a huge fillip for construction jobs, is now a bizarre and costly joke.

Mr Andrews — who has been in office for just over 50 days — has changed his stance on the East West debacle and the spectre of a huge taxpayer-funded compensation payout at least four times.

The Premier, while in opposition, at first pledged to honour any contracts signed under the former Coalition government.

He changed tack in August, vowing to scrap the project.

And just four days before the November 29 poll he promised no compensation for East West contracts would be paid.

“Be very clear about this: there will be no compensation paid,” Mr Andrews said at the time.

That contradicted a September statement in which he said he expected “some modest compensation” would need to be met.

He has since conceded payment for work already embarked upon would have to be made to the private consortium, including Lend Lease, Bouygues, Acciona and a network of financiers, building the Link.

Following revelations in yesterday’s Herald Sun, Mr Andrews has admitted compensation, above that for work already completed, is on the cards.

The Premier refuses to explain what that might mean, saying only “negotiations” were taking place.

And in a major blow to the investment sector, he would not rule out new laws to specifically protect the Government against compensation claims made over East West.

Labor’s language has changed dramatically as this saga has dragged on. To add insult to injury, all this confusion and damage to investment confidence has also meant a crucial link between the Eastern Freeway and the city’s west, a priority identified by the comprehensive Sir Rod Eddington report, will be sacrificed.

Mr Andrews has two real choices: he either builds the roadway, which breaks his election pledge to scrap it, or he writes a cheque for compensation, which breaks his promise that none would be paid.

His third option, which incredibly he raised yesterday, of bringing in legislation to prevent compensation being granted, would render Victoria a banana state.

The Premier has managed to navigate himself into a lose-lose situation marked by a series of embarrassing backflips.

All because of a cynical political decision to reverse his position last year on whether contracts — signed by the Napthine government in September — would be honoured.

In the end, Labor’s opposition to East West was based on political expediency to manufacture policy difference between it and the Coalition. A factor in its opposition to East West was seen to be Labor’s bid to save inner-suburban seats being lost to the Greens — a strategy that failed to protect the electorates of Prahran and Melbourne from going to the minor party.

Arguments about the cost-benefit for East West are as much a matter of magnitude as they are about interpretation of different business case scenarios, including expanded charges on the overall toll network.

What is obvious is the need for a second east-west crossing to take massive pressure off the West Gate Bridge.

Federal funding of $1.5 billion has also been forfeited, albeit the subject of ongoing discussions between the Victorian and Abbott governments for other potential projects.

But this mess will haunt Mr Andrews and his Government for the next four years. Deputy Premier and acting Treasurer James Merlino did his own credibility no favours in an interview with 3AW’s Neil Mitchell.

Mr Merlino told Mitchell government negotiators were looking at the terms of a “settlement” but evaded key questions on what that meant. That’s a universe away from Labor’s pre-election pledge to voters that no compensation would be paid.

The public don’t want weasel words from the Premier and his deputy or them hiding behind claims that clarity might hurt “settlement” negotiations.

Another unknown is how the debacle might play out for Victoria’s AAA credit rating. A billion-dollar compensation payout will wreak havoc on the state Budget.

And the international investment community looks poorly on governments who ride roughshod over contracts or write retrospective laws to void them.

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