Dan’s dodgy words in East West Link compensation flip-flop

Herald Sun: Dan’s dodgy words in East West Link compensation flip-flop. 20 January 2015

PREMIER Daniel Andrews’s election pledge that Victorian taxpayers would not pay compensation to dump the East West Link is in tatters.

Breaking the election-eve no-compensation promise, the State Government confirmed yesterday it was now negotiating a “settlement” with the international consortium that was to have built the toll road.

The Premier and his deputy, James Merlino, spent the day dodging questions over the breach and refusing to repeat the pledge Labor made just days before millions of Victorians voted.

And in a bid to increase pressure on the consortium, Mr Andrews sensationally warned that he might introduce retrospective laws to limit the compensation payout.

The move comes as a major international rating agency revealed it was keeping a close eye on developments, to assess whether they would affect Victoria’s AAA credit rating.

Opposition Leader Matthew Guy seized on revelations in the Herald Sun yesterday that consortium members are pushing for $1.2 billion to walk away from the road project.

“They are paying more than $1 billion to tear up contracts when only $2 billion would be required to build the biggest road project in Australia,” Mr Guy said.

The Premier conceded that axing the 6.6km road would cause taxpayers some pain.

“There are issues around costs that have been incurred, and we were very clear about. It’s appropriate to refund people costs that they have incurred,” he said.

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

NOVEMBER 25: “Be very clear about this: there will be no compensation.”
JANUARY 20: “We will work through respectfully, in good faith and with goodwill, a negotiation”

He said negotiations were continuing and he couldn’t speculate on a potential final settlement sum. “It would be inappropriate for me to put a number on it. We are going to work through these issues responsibly, carefully,” he said.

Four days before the November 29 election, Mr Andrews told voters: “There will be no compensation paid.”

Mr Andrews said yesterday he gave the consortium plenty of notice he wouldn’t build the tunnel, and the Coalition should “hang their head in shame” for a “rushed” contract for the road in government.

“I will not break the commitments I made before November the 29th. We are not building this project,” he said.

“Having said that, we need to work through — and we are — the mess that has been left to us,” Mr Andrews said.

Asked whether Labor could introduce legislation to kill the contract and avoid some compensation, he said: “I wouldn’t rule that out.”

But former treasurer Michael O’Brien said this would lead to a “risk premium” being added to major projects being considered by private partners.

Ratings agency Standard & Poor’s said it was monitoring reports on negotiations.

“We’re following it very closely,” credit analyst Anna Hughes told the Herald Sun.

She could not say if a $1 billion-plus payout would affect the state’s credit rating: “It depends on what other aspects of the Budget are changed to accommodate the payout.”

The Government and East West Connect are now in a stand-off in negotiations.


HUNDREDS of millions of dollars set to pour into the pockets of multinational banks or building giants could have funded hospitals, schools and vital transport in Victoria.

Opposition leader Matthew Guy said the potential $1 billion compensation bill could have built lifesaving services across the state.

“(It) will mean fewer schools and hospitals will be built, fewer trains will be ordered and Victorians will endure more traffic gridlock for the Labor years ahead,” he said.

Projects that could be funded with such money include five new Monash Children’s Hospitals with neonatal intensive care wards.

Another option would be dozens of brand new schools built across the state.

Scores of 24-hour police stations could have been erected and hundreds of new Ambulance depots installed.

The Andrews Government says it is working on a settlement with East West Connect but that negotiations are ongoing.

What can $1.2 billion buy?

1x Royal Children’s Hospital — $1 billion

5 x Monash Children’s Hospitals including neonatal care units — $260m each

54 x X’Trapolis trains — $22m each

70 x Schools — $17m each

83 x Police stations — $14.4m each

600 x Ambulance stations — $2m each

1000 x CFA hubs — $1.2m each

– Alex White


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