Billions of dollars of Victorian taxpayers’ money is being wasted on bad government contracts

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The Age: Billions of dollars of Victorian taxpayers’ money is being wasted on bad government contracts. Jason Dowling (21 January 2015)

Comment

Billions of dollars of Victorian taxpayer money could be washed away this year with nothing to show for it.

Why? Because taxpayers are being ripped off by reckless, selfish and opportunistic governments that care more about their immediate political fortunes than the future financial health of the state.

The fact that Victoria faces a massive compensation payout for the scrapping of the East West Link – perhaps a billion dollars – should be the subject of an independent inquiry and an Auditor-General investigation.

First of all the contract and any “side deals” must be made public.

The East West deal was signed just 36 days before caretaker period for a project that had no political mandate.

It was a risky/tricky deal where hundreds of millions of dollars in compensation could be owed should voters throw the government and the road project on the scrap heap.

Why would a government do that?

If you had the best interest of Victoria at heart the Coalition would have either said to the East West consortium there is no point signing the contract until after the election just a few weeks away or offered a contract that explicitly said there is no compensation should there be a change in government – given the opposition opposed the project.

Now Opposition Leader Matthew Guy and shadow treasurer Michael O’Brien should stop bleating about the compensation and finger pointing because the trail leads back to them.

The advice the former government received from treasury must be released to show how this awful deal for Victoria was arrived at.

Who negotiated such a deal? What does correspondence between the parties show? How was the compensation figure and trigger for the payment arrived at? Who knew what and when? What was the haste in signing the contract?

Just days before the November poll, government estimates of a $1.1 billion cost of breaking the contract emerged – it was a transparent attempt to blackmail voters, scare them into returning the Coalition government and it failed.

The worst part is governments have been signing terrible contracts in Victoria for years.

The courts have just awarded $540 million to gambling behemoth Tatts for a poker machine licence contract it entered into in 1995 – the state government may appeal this.

The contract promised Tatts a licence refund if Tatts – after making billions of dollars from poker machines in Victoria over two decades – was not given a new poker machine licence.

Tabcorp is attempting to take its fight with the Victorian government, for a $686 million poker machine licence payout, all the way to the High Court.

Governments are taking up-front cash and mortgaging the financial future of the state to later generations.

It is cynical, disingenuous politics and no way to manage a state. Where could that money have gone? The $1.1 billion compensation for the East West Link is the same price tag as Melbourne’s new Royal Children’s Hospital.

Tatts’ $540 million could have helped fund a new rail line to the airport or extend the rail line to Mernda.

Where will the money come from to pay these ridiculous compensation bills?

Registration fees went up $25 last year, straight from the household budget. How much of that will make up the $540 million Victoria now owes to Tatts? Or will it be the $50,000 in stamp duty payment for that next house purchase that goes to a toll road consortium who built nothing?

It has to stop. Those who make bad deals for all Victorians must be held to account.

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