Victorian Government forced into embarrassing backflip over East West Link compensation payout

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9News: Victorian Government forced into embarrassing backflip over East West Link compensation payout. 20 January 2015

The Victorian Government has come under fire for backtracking on a key election promise not to handover billions in compensation to ditch the controversial East West Link.

Before last year’s election, then-Opposition Leader Daniel Andrews promised taxpayers no compensation would be paid to the consortium contracted to build the 6.6km toll road and that the contracts weren’t “worth the paper they’re written on”.

But Mr Andrews today confirmed the consortium would be refunded for any work it had already carried out before being cancelled by Labor in December.

“There are issues around costs that have been incurred, and we were very clear about, it’s appropriate to refund people costs that have been incurred,” he told the Herald Sun today.

“That’s a usual practice, whether you are building a house worth two or three hundred thousand dollars or a much bigger project.”

Mr Andrews has refused to outline how much compensation will be paid, saying “negotiations were ongoing”.

But key members of the consortium contracted for the East West Link deal are reportedly demanding at least $1.2 billion to walk away from the project.

A spokesman for East West Connect said the consortium was continuing its discussions with the government.

“Given the confidentiality obligations under the consortium’s contract with the state of Victoria we will not be commenting further at this time,” the spokesman said.

March 27, 2014: Community groups calling on the Victorian state government to re-think the design of the East-West Link have come up with a proposal to move the tollway’s connection to Citylink.

Four days out from the election, Mr Andrews announced: “Be very clear about this: there will be no compensation paid”.

The backflip is particularly embarrassing for the new government and the Opposition has slammed Mr Andrews.

“Labor knew their claim that [East West Link] had no binding contract was wrong,” Opposition Leader Matthew Guy tweeted today.

“It will now cost $1 billion to scrap a roadway that Melbourne needs.”

While work has stopped on the East West Link, Federal Treasurer Joe Hockey still holds hope Victoria will go ahead with the major roads project.

“I am still hopeful that Premier Andrews will change his position on East West,” Mr Hockey told Fairfax Radio this morning.

The Federal Government allocated $3 billion in funding to the project last year and Mr Andrews is now in talks with Mr Hockey over potential alternatives.

In December, the Andrews Government released a previously secret business case showing the cost benefit ratio for East West Link was just 45 cents for every $1 spent.

This increased to 84 cents when wider economic benefits were taken into account.

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