Victorian election: Labor vows to fight for $3bn after Tony Abbott threat

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Guardian: Victorian election: Labor vows to fight for $3bn after Tony Abbott threat. Oliver Milman. Thursday 27 November 2014

ALP says Victoria would still get funding despite prime minister saying $3bn would be withheld if Labor cancelled East West link

Labor has vowed to scrap the controversial East West link toll road, but the prime minister says Victoria will lose $3bn in funding if it does. Photograph: vic.gov.au

Victorian Labor has vowed to fight the federal government over $3bn that Tony Abbott has said he would withdraw from the state, as the party unveiled its pre-election costings.

The prime minister said he would withhold federal funding for the proposed East West link toll road if Labor won office and followed through with its plan to tear up the project’s contracts.

But Labor, which is ahead in the polls going into Saturday’s election, has insisted that an inter-governmental agreement means Victoria should still be allocated the $3bn if the contract is cancelled.

Labor’s treasury spokesman, Tim Pallas, said a Council of Australian Governments agreement on transport funding made it “very clear” that federal funds should be given to the state if a contract was terminated.

“There will be a very robust conversation with the commonwealth,” Pallas said. “We are not going to simply accept Tony Abbott acting in the most malicious and extreme manner. We won’t take that lying down and we’d expect the commonwealth to meet its share.”

Victoria’s Coalition government has warned that East West link’s contractors will be liable for $1.1bn in compensation if Labor attempts to rip up contracts for the controversial road, which is scheduled to cost up to $18bn to build. Labor says its legal advice shows the contracts “aren’t worth the paper they are written on” and can be cancelled.

Nevertheless, Labor’s pre-election costs include a contingency for any compensation, a scenario Pallas called “the most extreme and hypothetical of situations”.

“We don’t believe liability is due here and we will fight the federal government in terms of their responsibilities,” Pallas said. “We take the view people of Victoria should not be penalised for making a choice freely and openly in a democratic process.”

Labor’s costings, assessed by the accounting firm Moore Stephens, promise to maintain Victoria’s budget surplus over the coming four years, while not increasing taxes or introducing new ones.

Labor has committed to a total new spending program of $3.7bn over the forward estimates, which includes $1.93bn on transport and $898m for education at all levels.

To fund this, Labor has identified $334.5m in savings, to be achieved by measures such as firing about 50 executive officers, reducing the government car fleet and the number of executive rooms and the scrapping of the freedom of information commissioner, to be replaced with a similar role.

The biggest saving would come from the abolition of taxpayer-funded political advertising. Only “public service” ads, such as anti-drink driving or health messages, would be allowed, saving $72m in the first year of government.

The Coalition has criticised Labor for what it says are unfunded, irresponsible spending promises. It has also attacked the opposition for using an accounting firm, rather than the state treasury, to assess costings. The Coalition also used an outside firm for its costings at the last state election.

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