Daniel Andrews’ East West Link compensation shame

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Herald Sun: Daniel Andrews’ East West Link compensation shame 15 Apr 2015

DANIEL Andrews stands condemned.

Condemned for gross financial waste.

Condemned for a failure to meet Victoria’s strategic infrastructure needs.

Condemned over his preference for short-term political gain and partisan intransigence at the cost of the greater good.

Condemned for placing at huge risk Victoria’s reputation as a place to invest.

The Premier’s decision to set fire to almost half a billion taxpayer dollars over the East West backflip will be remembered by voters the next time Victoria goes to the polls.

It will be remembered as the state’s roads continue to be choked by commuter traffic and industry struggles against gridlock.

Rarely has there been such a waste of huge sums of public money for absolutely zero benefit.

Even the $6.1 billion Labor splurged on the Wonthaggi desal plant or the $1.5 billion it blew on myki left us with a finished product.

In handing over at least $420 million in compensation — and possibly wasting up to $900 million, according to the Opposition — not to build the crucial East West tunnel link, Mr Andrews has invoked the worst excesses of the Cain-Kirner Guilty Party legacy and its notorious financial mismanagement.

Put simply, Victorian voters should never forgive Mr Andrews or the Labor Party for this shameful decision.

In opposition, Mr Andrews repeatedly pledged Labor would honour contracts signed by the previous government. He said only an “irresponsible political leader” would walk away from existing contracts.

“To rip up contracts is to send a message to the world that we are closed for business. I won’t do that to working families,” Mr Andrews told 3AW on November 19, 2013.

Then came his backflip almost three months before the 2014 election, in what can only be seen as an expedient grab for inner-urban Green votes, by vowing to walk away from East West.

That broken promise was followed by another just four days before the November 29 poll when he vowed no compensation for East West contracts would be paid.

“Be very clear about this: there will be no compensation paid,” Mr Andrews said then and repeatedly since as Premier.

Yesterday, he announced $339 million would be paid to East West Connect — the group contracted to build the road — and a further $81 million in fees would be met by his Government to cover a credit facility set up to borrow the project costs.

Then, as if to further insult taxpayers, the Premier described the payout as “the best possible result we could have achieved and it puts the interests of Victorians first”.

The Andrews hypocrisy in ripping up the East West contract left the then Napthine government in 2014, and the East West Consortium, no option but to write a “side letter” clause in an attempt to protect both the crucial infrastructure project and Victoria’s reputation of honouring contracts.

Mr Andrews cannot now criticise this side letter because he co-authored it courtesy of his broken promises.

Still, the full cost — both financially and in terms of sovereign risk and reputation — of the East West shambles is hidden.

Part of Wednesday’s payout will involve a debt swap to placate banks and financiers where about $3 billion was being sourced to build East West.

The Government will take on that debt exposure, which could add hundreds of millions of dollars more.

Regardless of arguments that exposure can be transferred to future infrastructure projects, the amount of money taxpayers have already lost to an abandoned East West project actually runs to at least $640 million, including bid, development and related property costs.

Opposition Leader Matthew Guy says it will end up between $800 million and $900 million when compulsory home and business acquisitions are factored in.

Even the State Government’s own figure of $420 million is money Victoria cannot afford to simply hand over for a road not to be built.

Also in play is the $3 billion being offered in federal money for East West.

That cannot afford to be lost.

Greater Melbourne’s population is expanding exponentially — already reaching its forecast 2050 target of 4.4 million and now heading to 8 million by mid-century.

Dan Andrews has played bad politics on East West, a project identified by the comprehensive Eddington report as a key priority transport response to tackle Melbourne’s crushing gridlock.

The city and state are crying out for major infrastructure to cope with massive growth.

A second Yarra crossing to duplicate the West Gate Bridge is essential.

Hark back to CityLink and there was public concern about costs and tolls. But how would Melbourne’s traffic snarls look now if CityLink did not exist. The same rationale applies to East West.

The reality is Premier Andrews has scrapped East West.

What is your plan now, Mr Andrews?

How will you get Victoria moving? Train level crossing removals and rail upgrades can be only part of the answer.

Public transport needs must be balanced by serious investment in new bitumen or Victoria will grind to a halt.