East West probe “limited” without proper audit powers, watchdog warns

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East West probe “limited” without proper audit powers, watchdog warns Farrah Tomazin

An investigation into the East West Link is likely to be hampered because the Andrews government has not yet delivered on a pledge to give the state’s financial watchdog full authority to scrutinise public private partnerships.

The auditor-general’s office admits that without so-called “follow-the-dollar” laws, its upcoming probe of the expensive road project will be limited, as it does not have the ability to access information from private companies.

Deputy auditor-general Peter Frost also warned that the office was facing critical resourcing issues that needed to be addressed given the volume of audits on major projects and public services conducted each year.

“The auditor general has made the decision that this is the appropriate time to commence the audit we’d flagged last year on the East West Link but it does pose significant challenges in terms of the current state of the audit legislation. Also, we need to be serious about making sure that the office is effectively resourced going into the future,” he said.

The comments come after the Andrews government announced on Wednesday that it had secured a deal to abandon the project, costing the state at least $420 million to dump the 5.3 kilometre tunnel from Clifton Hill to Flemington.

However, the opposition claims that this expense is in addition to approximately $400-500 million in “sunk costs” already incurred by the state government, and questions remain around possible compensation to the financiers and the “credit facility” that was created to borrow money.

With so many missing details, the Auditor-General’s investigation is expected to shine a light on the total cost to the state, key decisions made by the former and current governments, and advice provided since the road proposal was first announced in the Coalition’s 2013 budget.

However, without follow-the-dollar legislation, which may not be introduced until the end of the year, the Auditor-General can not compel the private companies involved in the consortium to provide information.

This problem was flagged during the election campaign last year, when Victoria’s last four auditors-general took the unprecedented step of joining forces to warn both parties that public scrutiny was being hindered by “seriously out-of-date” state integrity laws.

“After years of unnecessary delay there is now a gathering threat to the ability of the Auditor-General to undertake the depth of investigation required to make appropriate conclusions about public spending and government programs,” Mr Doyle and his predecessors Des Pearson, Wayne Cameron and Ches Baragwanath wrote in The Sunday Age.

“We need contemporary audit legislation, early in the term of the new government, so that Victorians get an integrity system that works, and Parliament’s – and thus the citizen’s – right to know is fully strengthened.”