Andrews government looks to road project in the west by Lucille Keen
The Victorian government is considering building a road in Melbourne’s west similar to the cancelled second stage of the East West Link that it cancelled in an effort to break the stalemate with the federal government over billions in funding.
Sources said the government was looking to build a road link on the western side of the city, similar to that of East West stage two. Premier Daniel Andrews is promising a “significant” infrastructure announcement in the May 5, state budget.
They said any project would need to be renamed and the route slightly altered in order to avoid comparisons to the original project.
Last week the Victorian government reached a non-binding agreement with the Lend Lease-led consortium, which was contracted by the former government to build stage one of the $6.8 billion East West Link to join freeways on the west and east of the city, just north of the central business district.
The project has been cancelled and the group is expected to receive $339 million as a result of the decision.
The government denies it will build the $10 billion stage two of the road, which was proposed to link Tullamarine Freeway to the Western Ring Road.
In a statement, a spokeswoman for Mr Andrews said the government would not proceed with stage two of the East West Link.
“The government is committed to delivering our election commitment to build the West Gate Distributor, which will ease congestion in Melbourne’s west,” the statement said.
Infrastructure Partnerships Australia chief executive, Brendan Lyon said the western end was a “very sensible project”.
Mr Lyon said since there was “no doubt” the state government’s reputation has been tarnished by cancelling the eastern section of the road project, especially given the time the government took to resolve the issue with the consortium.
“They’ve definitely blotted their copybook,” he said.
“But at the same time if there is bi-partisanship with the opposition on the western section this will de-risk the project from a political risk point of view. I would imagine people [investors] will have questions and some of the bidders involved in the section may decide they don’t want to participate. I would expect it will attract a competitive field but I would expect the government would have to give the market certainty.”
NO EXTRA COSTS
Mr Lyon said he didn’t expect the project to cost more with the risk factored in, rather greater legal provisions than previous public-private partnerships protecting equity and debt.
Last May, Prime Minister Tony Abbott was slammed for promising $1.5 billion to stage two of the road despite not seeing the business case for the project.
At present Infrastructure Australia has only received the interim business case for stage two but many have suggested the benefit-cost ratio would be higher than the 1.4 estimated for the eastern section.
The Victorian government currently has the $1.5 billion in funding from the federal government sitting on its balance sheet that will need to be repaid after it cancelled the first stage of the road. It also has $500,000 that was an advance payment of the $1.5 billion for stage two.
Federal Assistant Infrastructure Minister Jamie Briggs said the federal government would seek all federal funding allocated to the East West Link to be returned pursuant to the Memorandum of Understanding and National Partnership Agreement signed by the federal and Victorian governments.
“Three billion dollars from the Commonwealth Government remains on the table for any Victorian Government, which wants to build the East West Link,” he said.
“Premier Andrews recently advised that he will provide to the Australian government a proposal of alternative infrastructure projects for funding consideration and I look forward to receiving this soon. If Premier Andrews wants to save political face and proceed with East West Link stage two we would be more than happy to work on this to ensure we create thousands of jobs and reduce congestion to grow Victoria’s economy.”
Master Builders Association of Victoria chief executive, Radley de Silva said because plans already exist it should be easier to get the project shovel-ready, at a time when the state urgently needed major infrastructure projects in the pipeline.
“Rescuing a portion of East West Link would help towards alleviating the decline in engineering construction works, and provide much-needed jobs for the state’s second-largest employer,” Mr de Silva said.
“But the Government could face a costly hurdle in convincing private investors to risk partnership so soon after contracts were torn up.”
Victorian Employers’ Chamber of Commerce and Industry chief executive Mark Stone said the business group strongly supported a road link from the Western Ring Road to the CBD, creating a vital second river crossing.
“Victoria’s longer term economic growth depends on meeting the challenges East West Link was designed to address: major congestion, a growing economy and the ability to cater for forecast growth in passenger, trade and freight volumes,” Mr Stone said.
“We supported East West Link stages one and two and recently indicated that if the State Government was not willing to commence stage one, it should consider stage two.”