East West Link contracts are not binding, says Daniel Andrews

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Herald Sun: East West Link contracts are not binding, says Daniel Andrews 30 September 2014

Oppostion Leader Daniel Andrews has stuck with his promise not to build the East West Link if he wins the November 29 election.

Mr Andrews disputed whether the contracts signed by the Government with the wining consortium yesterday were legally binding.

“There is nothing to walk away from, be very clear about this, the contracts are not worth the paper they’re written on,” Mr Andrews said. “This is not a legally binding contract.”

Mr Andrews said he could not discuss compensation clauses without further information from the Government about what was included in the deal.

“We haven’t seen the business case and we won’t, we haven’t seen these, what’s called a contract, these alleged contracts, and we won’t.”

Despite this he said there could be “some modest compensation”.

His comments come in the wake of Victorian taxpayers discovering they will pay $2 billion towards the construction of the first stage of the controversial East West Link project.

Premier Denis Napthine said the final price tag for the first stage was $6.8 billion, with $3.3 billion coming from the East West Connect consortium and $1.5 billion from the Federal Government.

“The cost of construction to Victorian taxpayers is only $2 billion, and that is great value for money,” Dr Napthine said today.

But he refused to reveal how much extra money Victorian taxpayers would cough up through regular payments to East West Connect over the 25-year life of the contract.

Part of the regular payments would come from tolling revenue, but the government has also refused to flag potential tolling prices.

Dr Napthine said removing two exits on Elliott Ave had reduced the complexity of the project, keeping the price tag lower.

He said construction of the 6.6km project would start this year.

The twin 4.4km tunnels will be the longest in Victoria, connecting the Eastern Freeway and CityLink.

The contract for the project was signed yesterday immediately after a resident’s legal challenge failed in the High Court.

The Labor Opposition has promised to rip up the contract if it wins the November 29 state election.

Treasurer Michael O’Brien said the tendering process was competitive.

“It’s led to some very significant cost savings to the government, but also some significant design innovations, which has led to a far better product,” he said.

Mr O’Brien said any party that wanted to walk away from the contract would need to compensate the other, in keeping with other Victorian government contracts.

He said if the government was to do the project on its own, without the public private partnership, it would cost 24 per cent more.

Mr O’Brien said the first stage would create 3700 jobs.

Opposition Leader Daniel Andrews will face rising pressure to dump his high-risk pledge to block the project if he wins the election.

The Napthine Government yesterday moved immediately to ink a deal with the East West Connect consortium after the High Court rejected one protesters’s 11th-hour bid to block the project.

The builder gets $5.3 billion for the 6.6km road from the Eastern Freeway to CityLink, Parkville, creating 3700 jobs — 500 more than forecast.

The Herald Sun can reveal that on top of the $5.3 billion that will go to the contractor, a further $1.5 billion will be spent on upgrading nearby roads and public transport, acquiring land for the project and on project management costs.

Shovels will hit the ground later this year, and the consortium, which includes Lend Lease, Capella Capital, Bouygues and Acciona, is required to finish the road by late 2019.

An enhanced Hoddle St flyover — known as the Soundwave — is part of the plan, which will also see a 4.4km tunnel built under Royal Park to connect the Eastern Freeway to CityLink in Parkville (pictured in new artwork obtained by the Herald Sun last night).

Dr Napthine said that he was proud to have signed a contract for a project that would “make a real difference to ordinary Victorian families”.

“This is a day that will live in the history of Melbourne and Victoria as a day we’ve taken that massive step forward to make a real difference to our great city and our great state,” Dr Napthine said.

“The contract is signed, the tunnel will be built. The East West Link project will be built.”

Business groups welcomed the move last night and warned against dishonouring it.

“VECCI’s view is Victoria needs East West, so whoever is in power should build it,” said Victorian Employers’ Chamber of Commerce and Industry CEO Mark Stone.

Property Council executive director Jennifer Cunich said ripping up contracts could lead to dire consequences.

The contract signing was only possible after the High Court threw out a challenge by protester Tony Murphy.

Earlier in the day Mr Andrews’s deputy, James Merlino, said Labor wouldn’t honour the deal, and believed the contract “isn’t worth the paper it’s written on”.

“There is no legally binding contract for the East West Link,” he said.

Some details of the contract are likely to be released later this week, and Infrastructure Australia will also publish more information.

Critics said the details should be released so Victorians can make a judgment on the project’s merits.

Greens leader Greg Barber savaged the plan, saying it would cost “three times” the project’s price tag over the life of the 25-year contract.

The Government is yet to detail any possible “kill clause” fee taxpayers would face if the project was dumped by Labor.

-with Annika Smethurst and AAP

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