East West Link Business Case Revealed

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Tuesday, December 16th, 2014
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The business case for the stalled $6.8 billion East West Link has been released, and likened to a fraud against the Victorian public.

The Andrews government released the previously confidential 9000-page business case and supporting documents, for the former Napthine government’s signature infrastructure project.

The documents show the benefit cost ratio (BCR) for East West Link was just 45 cents for every $1 spent, increasing to 84 cents when wider economic benefits were taken into account.

New and increased tolls on roads across the city could be required to help plug a $2.1 billion funding gap for the tollway project.

The documents also show East West Link would be substantially less profitable than Melbourne’s existing tollways – taking 56 years to generate enough revenue to cover its construction cost compared to 20 years for EastLink and eight years for CityLink.

Another document notes the business case should not be submitted in full to Infrastructure Australia.

“The risk associated with this action is that lower end range of BCRs presented in this business case may be used as a justification for not supporting the project,” the document says.

Treasurer Tim Pallas said the lack of full disclosure, low BCR and secret plans for extra tolls amounted to a “public malfeasance and fraud”.

“This tells more about the nature of government in the state of Victoria under the previous administration,” he told reporters.

“… A government so obsessed with achieving its stated objective that they forgot the people in the process.”

The opposition blasted the government for breaking with long-standing protocols and releasing their cabinet documents.

Former treasurer Michael O’Brien also refuted assertions of a funding shortfall, and said East West Link was vital infrastructure for the state.

“The project is fully funded – $3.3 billion from the consortium, $2 billion from the state government, $1.5 billion from the federal government,” Mr O’Brien said.

“The only fraud is Tim Pallas pretending to be a treasurer.”

The Andrews government has repeatedly said it will not proceed with East West Link, and contracts will be torn up.

Documents outlining the potential compensation to the contracted builders are yet to be released, and the fate of $3 billion in Commonwealth funding ($1.5b each for stage one and two of East West Link) also remains unclear.

BY THE NUMBERS: EAST WEST LINK BUSINESS CASE

  • 13 documents totalling 9000 pages
  • $6.8 billion total project costs ($5.5 billion for design and construction, $755 million for risk and contingencies, $385 million for land management and acquisition, $200 million for related transport and land use costs)
  • $4.7 billion – total project funding ($2b from the Victorian government, $1.5b for stage one from the Commonwealth, $1.2b in projected tolling revenues)
  • $2.1 billion – funding shortfall, to be made up by possibly increasing tollways on new and existing roads across Melbourne.

 

By Danny Rose
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