Resident loses bid to delay contracts for East West Link but will go to appeal

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The Age: Resident loses bid to delay contracts for East West Link but will go to appeal. September 29, 2014, Henrietta Cook, State Political Reporter at The Age

Transport Minister Terry Mulder, Premier Denis Napthine and Linking Melbourne Authority chief Ken Mathers at the contract signing. Photo: Eddie Jim

After months of speculation and years of controversy, the Napthine government has signed the contract for the East West Link project.

The multibillion-dollar contracts were hastily signed in the Linking Melbourne Authority’s city office around 4.45pm on Monday.

It followed the High Court throwing out a move by a Brunswick resident to halt the signing of the contracts.

The Premier puts pen to paper. Photo: Eddie Jim

Premier Denis Napthine would not disclose the cost of the so-called kill fee included in the contract.

“We know there will be penalties for not building this essential piece of infrastructure; $3 billion provided by the commonwealth will have to be returned … and Victorians will be condemned to decade after decade of gridlock and congestion,” Dr Napthine said.

Dr Napthine refused to outline how much money the state government would contribute to the project.

“You will see that in the coming days,” he told journalists.

He also refused to disclose details of the compensation clause in the contract.

Earlier, Brunswick resident Anthony Murphy lost his bid to delay the signing of the East West Link contracts, freeing up the Napthine government to seal a deal to deliver the project.

Mr Murphy had argued that the contracts should not be signed because the state had breached consumer laws by misrepresenting the road’s benefits and traffic projections.

Asked when the project would reach a financial close, Dr Napthine said: “The contract is signed and the tunnel will be built. The East West Link will be built under a Coalition government.”

He said the contracts would be made publicly available at the appropriate time. He said the route had been finalised and would be unveiled on Tuesday morning.

Dr Napthine said a “whole range” of additional benefits for the community would soon be announced.

“We’ve taken a massive step forward to make a real difference to our great city and our great state.”

Transport Minister Terry Mulder said commercially sensitive details in the contract would not be released.

“It’s an important project, It is gamechanger in terms of what it is going to do for our state.”

In a statement to the ASX, Lend Lease said it had entered into a $5.3 billion public private partnership with the state government to “finance, design and construct” the first stage of the East West Link.

The construction giant said the project was still subject to financial close, which was expected to occur in October.

A bid by Mr Murphy’s lawyers in the High Court to halt the signing of contracts for the Napthine government’s signature project was refused when Justice Susan Crennan ruled that the risks to the state and the consortium outweighed any risks to Mr Murphy.

She said Mr Murphy remained free to pursue his case, which could result in a mandatory correction of misleading claims about the project’s benefits.

Opposition parties have called for the government to make public the contracts it has signed.

Labor has stuck by its plan to rip up the contract for the project with Deputy Leader James Merlino saying the party’s legal advice was clear.

“Denis Napthine’s so-called contract isn’t worth the paper it’s written on. There is no legally binding contract for the
East West Link,” Mr Merlino said.

The opposition says the election will be a choice between the government’s plan for a “dud tunnel” and Labor’s plan to remove 50 level crossings as well as suite of other improvements.

“The only irresponsible person here is Denis Napthine, signing a sham contract before an election and throwing away $8 billion that should be spent on the things we need,” he said.

“East West will go to the November election, whether Denis Napthine likes it or not. The Victorian people will decide the future of this project.”

Greens Leader Greg Barber said the full contents of the contracts must be made public immediately so the “voters could see what the Libs have gotten us into.”

“The Greens are resolute that we won’t support any government that intends to proceed with the road,” Mr Barber said.

Ron Merkel, QC, acting for Mr Murphy, argued in the High Court that signing the contracts would cost taxpayers hundreds of millions of dollars. He referred to economic modelling that showed a loss of 20¢ for every dollar invested in the project. “This is a loss-making project of significant proportions.”

Mr Merkel dismissed the government’s argument that delaying signing the contracts would cost taxpayers, but acknowledged there was a risk.

An impassioned Mr Merkel pleaded for an injunction. “The gates are about to fall because contracts are due to be signed tomorrow,” he said.

Counsel for the state government said delaying the signing of the contracts would cause “significant harm to the state” and posed a foreign exchange risk of €100 million ($144 million).

The court heard there was also a risk of interest rate fluctuations.

Appearing on behalf of the East West Connect consortium, Michael Wyles, QC, told a packed courtroom that the consortium was an “innocent third party” that would be hit with losses around $434,000 a week if contracts were not signed.

“The consortium is ready and willing to enter into the project agreement,” he said.

The contracts were signed even though earlier in the day, Mr Murphy was granted a retrial in the Court of Appeal.

The court found Mr Murphy had been denied procedural fairness in the Supreme Court because he was not granted access to documents, including the business case for the project.

With Richard Willingham

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