Passenger Rail, Research & Development, Safety, Standards & Regulation

National Auditor slams federal East West funding

Tony Abbott. Photo: APEC

Tony Abbott’s decision to deliver $1.5 billion to the East West road project in 2014 was made without proper assessment of the project being first made, the Australian National Audit Office has found.

In a move approved by the then-prime minister, the Coalition gave $500 million for the first stage, and $1 billion for the second stage of the East West road project to Victoria on June 30, 2014.

This was despite an ongoing state election campaign, which featured the then-Opposition leader Daniel Andrews promising to cancel the road project if he came to power.

And that he did: In February 2015, new premier Andrews formally told the Commonwealth the East West project had been cancelled.

A report released by the Australian National Audit Office on Monday, December 14, found the project funding was simply given to the state far too early.

“Neither stage of the East West Link project had proceeded fully through the processes that have been established to assess the merits of nationally significant infrastructure investments prior to the decisions by Government to approve $3 billion in Commonwealth funding and to pay $1.5 billion of that funding in 2013/14,” the Australian National Audit Office said.

“This situation had been identified in departmental advice prior to the decisions being taken.”

According to the national auditor, the Department of Infrastructure and Regional Development specifically told the Federal Government that the $1.5 billion was being paid earlier than the project needed it.

The department reportedly proposed an alternative payment model that aligned payments with the project’s progress, but this plan was ignored.

“None of the $1.5 billion in advance payments had been spent by Victoria prior to the cancellation of the East West Link project,” the audit detailed.

It’s estimated the interest earned on the $1.5 billion held by the Victorian Government as a result, could be more than $49 million.

Despite cancelling the project, Andrews has refused to give the money back to the Commonwealth, and the audit suggests he may not have to.

“The non-legally binding nature of the agreements signed with the Victorian Government meant the Commonwealth was unable to rely on those documents to require the advance payments to be returned when the project was cancelled,” the auditor found.

“In September 2015, the Department of the Treasury obtained legal advice on how Victoria could be required under the federal financial relations framework to repay the $1.5 billion in advance payments.

“The advance payments had not, as of October 2015, been recovered from Victoria.”

Shadow minister for transport and infrastructure Anthony Albanese said the report showed the Coalition had gone against its own policy in providing the funding.

“Today’s Auditor General’s report into the funding of Melbourne’s East-West Link toll road has highlighted the complete collapse of proper process in funding major infrastructure projects under the Turnbull Government,” Albanese said on Monday.

“This [audit] is a result of a request made by myself as the shadow minister.

“I wrote to the National Audit Office because it was very clear that this farcical proposal needed proper investigation and scrutiny so that this never occurs again.

“They provided $3 billion for this project in the 2014 Budget. That’s without having seen a business case. Without any recommendation from Infrastructure Australia and without any cost-benefit analysis being undertaken.”

Greens member for Melbourne Adam Bandt also took a swipe at the Coalition, saying the report confirmed the Abbott Government’s toll road agenda was purely political.

“We now know Tony Abbott made a ‘captain’s pick’ by giving billions of taxpayers’ dollars to his Liberal mates in Victorian without a business case and against the advice of public servants,” Bandt said.

“In any fair world, Tony Abbott and [former Victorian Premier] Denis Napthine would be hauled before a tribunal for intentionally wasting billions of dollars in public funding for nakedly political purposes.”