Dumping East West Link may cost $1.2bn

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PerthNow: Dumping East West Link may cost $1.2bn. 20 January 2015

Tearing up the contract for Melbourne’s East West Link could cost as much as $1.2 billion.

Premier Daniel Andrews wrote to the East West Connect Partnership in December requesting a halt to work on the controversial project, which was signed off by the previous state government.

News Corp Australia reports the East West Connect consortium is taking a hard line over the contracts, which Mr Andrews says “aren’t worth the paper they’re written on”.

Some members of the consortium want at least $1.2bn to scrap the dumped project, but builder Lend Lease only wants hundreds of millions of dollars, the Herald Sun reports.

Treasurer Tim Pallas said financial adviser John Wylie and commercial litigator Leon Zwier are advising the government in the negotiations.

“Mr Wylie and Mr Zwier have agreed to work towards a fair and appropriate outcome for Victorian taxpayers in the circumstances where the government has decided that the project will not proceed,” Mr Pallas said on Monday night.

“These discussions are commercial-in-confidence. The nature, timing and make-up of the meetings are confidential to all parties.”

The previous government signed the deal for the $6.8bn toll road and included a side letter guaranteeing compensation if the contract was ripped up.

Opposition Leader Matthew Guy said Labor only had itself to blame for the scale of the compensation payout.

“Labor knew their claim that (East West Link) had no binding contract was wrong. It will now cost $1 billion to scrap a roadway that Melbourne needs,” Mr Guy said on Twitter on Tuesday.

In December, the Andrews government released a previously secret business case showing the benefit cost ratio for East West Link was just 45 cents for every $1 spent.

This increased to 84c when wider economic benefits were taken into account.

East West Connect has been contacted for comment.

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