The Victorian government won’t rule out legislating to escape a massive compensation claim over the scrapped East West Link tollway, but an expert says this is likely a bargaining tactic.

The Victorian government won’t rule out legislating to escape a massive compensation claim over the scrapped East West Link tollway, but an expert says this is likely a bargaining tactic.

Premier Daniel Andrews is in talks with the East West Connect consortium as he seeks to walk away from contracts signed in the final days of the former Napthine government to build the $6.8 billion tollway.

The Greens said they would support introducing legislation to specifically rule out paying compensation for the axed project, a move Mr Andrews is yet to rule out.

Monash University Associate Professor of politics Paul Strangio says public talk of such legislation may well be a bargaining tactic, as negotiations continue behind closed doors.

“It’s probably part of bargaining and negotiations as much as anything,” Prof Strangio told stated.

Prof Strangio said it sent a message that no compensation may ultimately be paid, and also said such legislation would likely be a last resort.

“I think that’s a statement for the public … to counter alarmist talk about the scale of compensation coming from some sections of the media,” he also said.

Prof Strangio said there were several unknowns to be dealt with – as the East West Link contracts had not been released publicly, and $3 billion in Commonwealth funding allocated to the project was yet to be reallocated.

Compensation for axing the $6.8 billion road tunnel could reportedly hit $1.1 billion, but Mr Andrews has refused to confirm the figure.

Also on Wednesday, Greens MP Ellen Sandell said the consortium was well aware of Labor’s plans to axe the project should it win the state election.

She said her party would support any legislation required to stop the project, and also prevent taxpayers from footing a compensation bill.

“The contractors … were put on notice months before they signed the contracts, months before the election,” Ms Sandell said.

“They should have known this was coming and the Greens will use our votes in both houses to legislate to stop East West.”

Mr Andrews said he wrote to the consortium before the election to tell them not to sign the contracts.

“We’re happy to talk to the winning bidders about costs that they’ve incurred, that’s fair,” Mr Andrews told reporters on Wednesday.

“But we’re not going to be a soft touch on this.”

When asked on Tuesday whether his government would legislate to avoid paying compensation, Mr Andrews responded “I wouldn’t rule that out”.

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

  • Obviously, this is a bargaining tactic and no-one takes seriously the idea there would be no compensation.

    Moreover, those that argue against compensation should consider the facts: the successful consortium dealt with the government of the day on the terms set by the government of the day according to the duly elected representatives of the people of Victoria. In absence of any evidence to the contrary, we can only assume that they dealt in good faith with the elected representatives of the day, and they now doubt expended much in the way of financial and other resources in doing so throughout this process. Now that the contract and process have been abandoned, it would be totally unreasonable for them to accept that all this what we must assume was good faith effort has now been wasted simply because the elected representatives of Victoria changed their policy. They have every right to compensation and every right to expect this should happen.

  • The contract was signed between two parties that were at the time legally entitled to do so. The government of the day had been elected by the people of Victoria to " run" the state and parliment was not prorogued, hence a contract exists. Any negotiations must, I believe be conducted in accordance with the contract. Any negotiations that are in variance with the contract can only occur if both parties agree. Some how I can not really see a commercial organization willingly agreeing to giving up monies that they are legally entitled to receive. Further if the current government ultimately attempts to " legislate" it will be a lawyers picnic! And, of course Victoria's triple AAA rating is potentially jeopardized.

    • Another interesting question relates to Mr Andrews writing to contractors and threatening them! Is this another legal nightmare given Mr Andrews has no part in the contract at the time it was signed?