The Age: Labor to dump East-West Link if elected, even if contracts are signed, September 11, 2014, Josh Gordon, Henrietta Cook
The East West Link will be dumped if Labor wins the state election, even if business contracts to build the multibillion-dollar road have already been signed.
In a high-stakes gamble that will set a clear battle line for the November 29 poll, Labor has confirmed if it forms government it will use a looming court battle to render the contract for the eastern section of the project invalid.
The extraordinary move follows high-level legal advice from former Federal Court judge Ray Finkelstein, administrative law expert Richard Niall, QC, and contract law expert Siobhan Keating.
The advice, provided to Labor, concludes that if Supreme Court action by Moreland and Yarra councils is successful, the $6 to $8 billion contract would be “unenforceable”.
The case is due to be heard on December 15, more than two weeks after polling day.
Opposition Leader Daniel Andrews has confirmed a Labor government would support the councils’ case rather than defend the project. Under these circumstances, the councils’ legal challenge would be likely to succeed. Even if minor legislative changes are required after the election, Labor has vowed not to support them, which potentially would also render the contract invalid.
The councils claim the planning process that led to the June 30 approval of the project was botched because Planning Minister Matthew Guy failed to meet key legislative requirements.
“In the event that the Supreme Court holds that the approval decision made by the Minister for Planning … is invalid … any contracts entered into will be beyond power and unenforceable,” the legal memorandum says.
A senior business source last week told The Age Labor had suggested it would be unwise to sign any contracts before the election, with the road unlikely to be built if it wins. Labor’s new hardline stance will fuel concerns in the business community about the risks of financing the project, which is one of the world’s largest infrastructure projects currently out to tender.
Labor, which has labelled the project a “dud tunnel”, has vowed that if it wins it will honour any legal contract.
Opposition Leader Daniel Andrews on Wednesday said Labor was breaking that promise, declaring “Victorians must be given a choice”.
“Labor will honour valid and legally binding contracts, but the advice of two of Australia’s most eminent commercial SCs says a contract signed weeks before Victorians vote, for a project currently under Supreme Court challenge, cannot be entered into safely,” Mr Andrews said. “This election will be a referendum between Labor’s plan for better public transport and Denis Napthine’s $8 billion dud tunnel.”
But the bold move could leave Victoria exposed to compensation claims potentially worth hundreds of millions of dollars. The legal advice warned even if the contract was rendered unenforceable, this would not protect the state from litigation.
“None of that is to say that there is no remedy for harm that might be caused to the contractors …” the memorandum concludes.
Treasurer Michael O’Brien earlier this week told The Age the government was determined to sign the contract before the onset of the pre-election caretaker period. He said failing to honour the contract would “send a shocking chill” through the business community.
“Who would do business in Victoria if you are facing a Labor Party which would renege on legally binding agreements?” Mr O’Brien said. “It would be the most economically irresponsible thing Victoria has ever seen. It would make Joan Kirner look like Alan Stockdale by comparison.”
The Napthine government this week revealed the field of bidders vying to build the first half of the project, a six-kilometre road linking the Eastern Freeway to the Tullamarine Freeway, has been narrowed down to a single preferred consortium, lead by construction giant Lend Lease.
In August Lend Lease won a court battle with the Baird government over the Sydney Harbour Barangaroo development, which has potentially left NSW taxpayers with a $500 million bill. Last year the company was also embroiled in a legal battle with the Victorian government after being barred from a hospital contract for failing to meet to its building code.
Balance-of-power MP Geoff Shaw recently also slammed the road project, which he said was expensive and should be put to voters at the November state election.
Contract law and public policy experts have said there is no legal impediment that would prevent a Labor government from tearing up the contract for the toll road.
East West Link protesters have been targeting the electoral offices of Labor MPs in the inner-city seats of Richmond, Melbourne and Brunswick, where it is feared votes could be lost to the Greens over the opposition’s wavering stance on the link.
On Wednesday, Brunswick resident Anthony Murphy lost a separate legal challenge against the East West Link. Mr Murphy, who has flagged an appeal, argues that the state and Linking Melbourne Authority have breached consumer protection laws by basing the project on “misleading” facts about its cost benefits and traffic estimates.