Victoria facing cost blowout over East West Link if deadline not met

The Age: Victoria facing cost blowout over East West Link if deadline not met. Jane Lee, Mark Hawthorne, Clay Lucas September 24, 2014

Brunswick resident Anthony Murphy. Photo: Justin McManus

The East West Link toll road project faces a further $145 million of cost blowouts if contracts to build the Napthine government’s signature project are not signed before the start of October.

Lawyers for the state of Victoria told the Court of Appeal that the project faces losses of €100 million ($145 million) from foreign exchange risks unless contracts are signed by October 1 this year.

The potential $145 million of foreign exchange losses come on top of a $500 million kill fee being sought by the toll road’s builders. As revealed by Fairfax Media, the successful East West Connect consortium wants the kill fee if the toll road does not proceed, after Opposition Leader Daniel Andrews’ vow that he will block the project if Labor wins the November state election.

The Court of Appeal was hearing an appeal brought by Brunswick resident Anthony Murphy, who maintains the state misrepresented the road’s economic benefits to the public in breach of consumer law. Mr Murphy asked the court to prevent the government from signing the contract until the case could be reheard.

Ron Merkel, QC, acting for Mr Murphy, said they wanted the chance to prove to the court the project would come at a “monumental loss” likely in the order of hundreds of millions of dollars.

Lawyers for the state and East West Connect argued it should not block them from signing a contract beyond Monday morning, due to the substantial losses they would suffer as a result. “If the contract is signed at a later point than 1 October, there are €100 million of exchanges to the state [at risk], ” said Mark Moshinsky, QC, for the state.

After reviewing the government and Linking Melbourne Authority’s evidence – which was not released to the public – Justice Geoffrey Nettle said an injunction beyond Monday would likely have “profound consequences” including a “foreign exchange risk in relation to approximately €100 million” for the state.

“The difficulty is that [East West Connect] has not been misled by any of the impugned representations – to the contrary, it says that it knows all of the facts – and…has opposed the grant of injunction for anything longer than a few days,” he said.

The Victorian government has agreed not to sign the contract, or compulsorily acquire any properties it has issued notices to, before 10am on Monday. At that time, Justices Nettle, David Beach and Joseph Santamaria will hand down their decision on whether Mr Murphy’s unsuccessful case against the project should be reheard.

Pressure has also mounted on the Victorian government to release the secret business case that underpins the project prior to the election.

Moreland and Yarra councils won an early victory in their Supreme Court battle pressing Planning Minister Matthew Guy to say whether he read or considered the secret business case for the road before approving it.

Judge Melissa Daly ordered, in a judgment handed down on Wednesday, that Mr Guy disclose to the councils the documents he considered before giving the go-ahead for the $6 billion to $8 billion road. This case will be heard after the election.

In federal Parliament, Greens senator Janet Rice will on Thursday give notice of a motion calling for the Victorian government’s business case and documents relating to the project provided to Infrastructure Australia to be tabled to the Senate by 4pm on October 2.

Greens deputy leader Adam Bandt pressed Infrastructure Minister Warren Truss to release the business case for the project.

Mr Truss said Infrastructure Australia was examining the project and would release its report and cost-benefit analysis in due course.

A spokeswoman for Infrastructure Australia said its final report had been delayed as it was awaiting further information from the Napthine government. “We have provided some questions to the Victorian government and the report cannot be completed until we have those answers,” she said.

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