Tearing Up East West Link Contract Could Cost $1.2b 2

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Tuesday, January 20th, 2015
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Tearing up the contract for Melbourne’s East West Link could cost Victoria Billions.

Premier Daniel Andrews wrote to the East West Connect Partnership in December requesting a halt to work on the controversial project, which was signed off by the previous state government.

News Corp Australia reports the East West Connect consortium is taking a hard line over the contracts, which Mr Andrews says “aren’t worth the paper they’re written on”.

Some members of the consortium want at least $1.2 billion to scrap the dumped project, but builder Lend Lease only wants hundreds of millions of dollars, the Herald Sun reports on Tuesday.

Treasurer Tim Pallas said financial adviser John Wylie and commercial litigator Leon Zwier are advising the government in the negotiations.

“Mr Wylie and Mr Zwier have agreed to work towards a fair and appropriate outcome for Victorian taxpayers in the circumstances where the government has decided that the project will not proceed,” Mr Pallas said on Monday night.

“These discussions are commercial-in-confidence. The nature, timing and make-up of the meetings are confidential to all parties.”

The previous government signed the deal for the $6.8 billion toll road and included a side letter guaranteeing compensation if the contract was ripped up.

Opposition Leader Matthew Guy said Labor only had itself to blame for the scale of the compensation payout.

“Labor knew their claim that (East West Link) had no binding contract was wrong. It will now cost $1 billion to scrap a roadway that Melbourne needs,” Mr Guy said on Twitter on Tuesday.

In December, the Andrews government released a previously secret business case showing the benefit cost ratio for East West Link was just 45 cents for every $1 spent.

This increased to 84 cents when wider economic benefits were taken into account.

East West Connect has been contacted for comment.

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  1. Glenn

    How do politicians get away with throwing away billions of dollars? If l did that in my role ( even if it was $1000 ) l would be sacked and be made to pay restitutions for the rest of my natural life. Does Victoria have a Governer General to sack the Government and put in Commisioners and why isnt the Federal Goverment intervening this is Criminal in the highest form !!!

  2. Robert Awad

    **Melbourne needs to continue expanding our roads,(Freeways)
    Especially the east link.,
    It is Not pleasant to be stuck on the "car par freeways" and spending more time crawling then moving ahead.
    If we are serious about growing our Melbourne population.
    Then let's also get those in power act accordingly.
    Not back off & going backwards..
    Think ahead Victoria.