East West deal before Vic budget: Pallas

East West deal before Vic budget: Pallas by Angus Livingston April 14, 2015, 5:27 pm

Victoria says negotiations over the dumped East West Link contract will finish within three weeks after Spain and France lodged official complaints.

Spanish company Acciona and French company Bouygues were part of a consortium that won the right to build the $6.8 billon road tunnel project dumped by Labor after it won the state election last year.

Treasurer Tim Pallas says he expects negotiations to settle the contract will come to a “rapid conclusion” before the May 5 budget.

That came after the French and Spanish ambassadors complained to the Victorian and Australian governments over the dumping of the project.

“To the best of our efforts and endeavours, with the best will in the world, we will attempt to reach a negotiated settlement with the consortium,” Mr Pallas told reporters on Tuesday.

“But that is not a never-ending process and we expect these matters to be brought to a rapid conclusion.”

Compensation could be as high as $1.1 billion.

Mr Pallas said he took the diplomatic approaches seriously but would make no apology for protecting the interests of the Victorian taxpayer.

Labor remains resolute about keeping its pre-election promise to dump the road, even though contracts with the East West Connect consortium had been signed by the previous government.

Opposition Leader Matthew Guy said the government was risking Victoria’s international financial reputation.

“(It is being) trashed through international circles that will be exceedingly difficult for us to repair to get to invest in other projects,” Mr Guy told reporters.

The East West Link stage one was to connect two of Melbourne’s freeways across the city’s north.

Before the election last year Labor promised no compensation would be paid for axing the road, but did say it would cover costs accrued by a company.

The government has begun drawing up legislation to avoid paying compensation if a negotiated settlement isn’t reached.

But with just two sitting days before the May 5 state budget, any legislation is unlikely to have time to pass through parliament.