Victoria will receive $1.5 billion worth of Commonwealth funding previously allocated to the East West Link in a move that will help the state avoid a fiscal black hole after funding was frozen following the cancellation of the project.

In a letter the Victorian State Treasurer Tim Pallas, Prime Minister Malcolm Turnbull agreed to channel $1.5 billion out of Tony Abbott’s $3 billion ‘locked box’ of East West Link money toward alternative projects.

Whilst it is not yet clear exactly how the money is to be used, it is likely to be channelled into Transurban’s Western Distributor proposal to build a tunnel and elevated motorway connecting the West Gate Freeway with the Port, CityLink and the city.

Alternatively, part or all of the money could potentially be channelled toward adding a third lane on the Monash Freeway at the Hallam Bypass.

The new funding marks a turnaround from the stance of the previous Abbott government, which had ‘locked’$3 billion in federal money which had been earmarked for the East West Link project and had cited an agreement signed by the Napthine government which promised a refund if the project did not proceed.

Since the project with regard to which the money had been allocated was not going ahead, Abbott had argued, Victoria did not have the right to keep the money.

Speaking on 3AW radio, Pallas welcomed the decision.

“I’ve got to say, there has been a pleasant change in attitude from the Commonwealth government since the new Prime Minister and new Treasurer came into office,” Pallas said.

Pallas said the decision also represented a move by the Commonwealth to ‘put the East West debacle behind it and move on with positive and rational projects which the people of Victoria voted for’.

Master Builders Association of Victoria Chief Executive Officer welcomed the decision, saying it was time governments stopped playing politics with Victoria’s infrastructure.

“While East West Link represented a vital project for alleviating congestion on our roads, it is now important to move on and take action on much-needed engineering construction projects and stop playing partisan politics with our transport infrastructure,” he said.