Victorian taxpayers pick up $420m bill for East West Link deal

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The Australian: Victorian taxpayers pick up $420m bill for East West Link deal Rick Wallace, Pia Akerman 15 Apr 2015

A deal to resolve the standoff ­between the Victorian government and construction companies over the East West Link cancellation will mean taxpayers are charged more than $420 million and is yet to include a conclusive settlement with banks.

The government hopes the in-principle agreement, announced yesterday, will allow it to shrug off one of its major political headaches, although it had to fend off opposition claims the true cost for dumping the $6.8 billion toll road was up to $900m, taking into ­account sunk costs.

Premier Daniel Andrews, whose deal was labelled an ­“obscenity” by the federal government, insisted the $339m Victoria has paid to the consortium was for work done and included no compensation. “This concludes the matter,” he said. “This extinguishes any claims for the future.”

The government also agreed to absorb $81m in establishment costs for the $3bn debt facility ­attached to the project, but it said this debt would be shifted into the Metro Rail project to avoid having to pay these costs again.

The Coalition, which signed the East West Link contract in the dying days of the Napthine government, sought to put the spotlight on how it had spent hundreds of millions of dollars for no result. Opposition Leader Matthew Guy said the government had not included $500m in sunk costs including “land acquisitions, project development and bid costs” that took the true cost as high as $900m. The deal means the government won’t proceed with its threat to pass legislation nullifying any compensation.