Ripping up the multi-billion dollar contract on the East West Link would be a significant mistake that would cause immeasurable damage to Victoria’s reputation as an investment destination, a leader in the building and construction sector says.
In the lead-up to the state election on November 29, Master Builders Association of Victoria chief executive officer Radley de Silva warns Labour Party plans to dump the $6.8 billion East West Link connecting Hoddle Street to CityLink and cancel a contract awarded to a Lend Lease led consortium last September to build, operate and maintain the road would be a significant mistake.
“I think we need to seriously reconsider the idea of ripping up the contract,” De Silva said. “If it was to be one party coming in like on the East West Link (and cancel the contract), the reputational damage and the impact that could have on future investment cannot be understated.”
de Silva’s comments come as infrastructure has been a key part of the election battleground, with the government promising to build the East West Link as well as a new rail link connecting Southern Cross Station with the Melbourne Airport and add new tunnels linking Southern Cross to South Yarra Station in Melbourne’s inner south-east as well as two new stations. The opposition, meanwhile, is promising a rail link of its own, removal of dangerous crossings and $2 billion worth of upgrades on regional and outer suburban roads.
The comments also follow the earlier release of a Master Builders report card assessing stated policies of both parties against 40 criteria covering six main areas, which showed that both had made extensive commitments on infrastructure but neither had outlined any policies to improve housing affordability, cut red tape or support promote greater fairness for registered builders by, for example, taking more action against unregistered builders or tightening owner builder requirements.
de Silva welcomes the overall level of infrastructure promises from both parties but stresses that whoever wins needs to ‘get on with it’ as the state does not have any big infrastructure projects currently underway. He adds that the debate about whether the East West Link or a rail link is needed largely misses the point as both are needed over the long term.
He also says the industry is being held back by costs associated with mandatory energy requirements, developer contributions and stamp duty (albeit with this having been reduced by the current government) and delays associated with planning and building permit issues.
As an example, he says Victoria is dragging its feet on the introduction of private certification, which has been introduced in South Australia and is about to be introduced in Western Australia.
de Silva says measures to streamline processes could make a significant difference.
“Clearly, reducing red tape for builders may not sound that sexy but the most recent report in 2010 showed the cost of complying with planning and building could add up to around $875 million dollars,” he said, referring to a Master Builders report released earlier this year.
“Tell me that doesn’t affect housing affordability or the cost of building houses and schools.”