East West Link stage one to cost Victoria $2 billion

The Age: East West Link stage one to cost Victoria $2 billion. September 30, 2014. Richard Willingham. State Political Correspondent for The Age

Victorians taxpayers will contribute $2 billion to build stage one of the East West Link, which has undergone significant design changes.

The government also warned that taxpayers could be liable for more than $1 billion in compensation payments if contracts were ripped up.

Premier Denis Napthine – joined by Treasurer Michael O’Brien, Transport Minister Terry Mulder and Lend Lease chief executive, Construction & Infrastructure David Saxelby – outlined the final design for the 6.6 kilometre link between the Eastern Freeway at Hoddle Street and CityLink in Parkville.

There have been major revisions to the design of the western entrance to the 4.4 kilometre tunnel at Royal Park. The tunnel now surfaces north of the Upfield train line at Ross Straw Field. It will have seven entrance and exit ramps.

At the eastern end, a spire on a new connecting outbound bridge from Hoddle Street to the Eastern Freeway has been dumped and replaced with a “soundwave” tunnel, which the promotion video says will provide residents with noise and “visual protection”.

The entrance to the tunnel will be near the Gold Street intersection, and a 10-storey tunnel vent will be built on the median strip of Alexandra Parade, between Gold Street and Wellington Street.

Other changes include a new CityLink on-ramp at Brunswick Road for city-bound traffic, to boost access to the tunnel.

Dr Napthine confirmed that the state’s contribution to the $6.8 billion section of the road would be $2 billion, with the Abbott government chipping in $1.5 billion and the successful bidder East West Connect responsible for the remaining $3.3 billion.

Asked repeatedly if the $6.8 billion price tag was the nominal or net cost of the project, Dr Napthine said “it is the cost of the project”. He finally said it was the 2014 price.

As reported by The Age, should Labor win the election and then rip up contracts for the project, compensation would be paid to the consortium.

But the government refused to detail the extent of the state’s liability, arguing it depended on the circumstances of the termination and how far along the project had progressed.

“Daniel Andrews would cost Victorian taxpayers hundreds of millions, and potentially over a billion dollars in compensation, damages and break fees if he was to go through with his reckless threat to rip up the contract,” Mr O’Brien said.

Under the deal, the Victorian government will set and collect the tolls. The government will not say how much it will be, other than to say it will be comparable to EastLink and CityLink prices.

The government will also make quarterly service payments to the consortium, but Mr O’Brien refused to say how much they would be.

He said it was consistent practise to not disclose this figure and that negotiations for stage 2 of the project were ongoing.

“They are consistent with the size of the project, they are consistent with the work and the investment that the private sector will need to put in to maintain this very significant project over its 25-year life,” Mr O’Brien said.

The government says it expects 80,000 cars a day to use the road when it opens in 2019, increasing to 120,000 by 2031.

Properties will be compulsorily and voluntarily acquired.

Mr Mulder said everything would be done to minimise impact on residents, and that only 1 per cent to 2 per cent of Royal Park land would be lost to make way for the tunnel.

He said more details would be made available in the coming weeks, including how to provide extra power to the project.

Mr Saxelby said the consortium would assume the risk of dealing with protesters and the industrial relations risk. He said the normal labour bargaining would take place.

“As long as people [protesters] express that view safely and don’t disrupt the work, then everything will coexist reasonably well. If we have any other issues we will liaise with respective agencies,” Mr Saxelby said.

The government estimates that the cost-to-benefit ratio is $1.40, but Mr O’Brien said it could be more given improvements to the projects.

“We have secured an outcome which is even better than we initially anticipated,” he said.

He said more elements of the business case would hopefully be released.

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