Minister ignored business case when approving plans for $6.8 billion road

The Age: Minister ignored business case when approving plans for $6.8 billion road. November 26, 2014. Clay Lucas, City Editor

Planning Minister Matthew Guy did not consider the business case for the $6.8 billion East West Link when he approved the road, instead relying largely upon Plan Melbourne – a strategy he himself signed off – to give the project the nod.

Yarra and Moreland councils on Monday filed an outline of submissions in their Supreme Court case against the road.

The court case is at the centre of this Saturday’s state election – which Prime Minister Tony Abbott has deemed “a referendum on the East West Link”.

Labor has promised to dump the massive road tunnel under Carlton and Royal Park if elected, by relying on the two councils winning their case in December against the Planning Minister.

Lawyers for Mr Guy, as part of the case, have detailed the material the minister relied on before approving the controversial road in June.

The councils’ submission argues that, under the act controlling approval of major projects like the East West Link, Mr Guy was required to consider the road’s economic impact before approving it.

They argue Mr Guy “wrongly chose not to have regard to credible, relevant and significant evidence” in ignoring the project’s secret business case and any other economic information available to him.

Lawyers for Mr Guy detailed four documents he considered in making his decision in June to approve the road, including Plan Melbourne, an impact statement, and the government’s assessment committee report.

Mr Guy said the East West Link “has been approved lawfully, and Labor’s reckless plan to tear up the contracts will cost Victoria billions”.

He had made it “very, very clear that my role in the East West is in the planning for the project”, he said. “I wasn’t involved, and did not want to be involved, in any of the business case discussions.”

Treasurer Michael O’Brien said on Tuesday that if Labor walked away from the East West Link, $1.1 billion would be payable under the government’s contract.

“That would just be the compensation,” he told 3AW’s Neil Mitchell.

The uncertainty around the road led the consortium building it to threaten to pull out unless Mr O’Brien created a “side letter” – a separate undertaking from the government to compensate it if the East West Link does not proceed.

Opposition Leader Daniel Andrews said on Tuesday that this “secret side deal is not worth the paper it is written on”.

And he said he would release the full business case, contract and side deed for the East West Link on Monday if he wins the election.

The contract to build the road with consortium East West Connect was was signed in September but is still not public.

Premier Denis Napthine said Labor’s pledge to walk away from the road was “putting Victorian taxpayers at enormous risk for purely political purposes”.

Dr Napthine again refused to release the East West Link contract before the election.

He said there was nothing unusual about the contract, despite the existence of the side letter guaranteeing compensation if the contract was voided.

Treasury advice to Mr O’Brien on the side agreement, obtained by The Age in October, noted it had some risk of creating “a precedent for future projects”.

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