Engineering, Passenger Rail, Research & Development

Opinions abound on ‘absurd’, ‘disastrous’ East West saga

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A day on from the Andrews Government’s announcement that $420 million would be spent to move on from the cancelled East West Link tollroad project, commentators were debating who’s to blame.

Herald Sun columnist – and conservative provocateur – Andrew Bolt laid the blame squarely on Victorian Labor and premier Daniel Andrews, for allegedly breaking his pre-election promise to not pay compensation to East West Connect consortium members.

“Before the election, [Andrews] claimed there wouldn’t be much money wasted if he cancelled the contract to build the East West Link,” Bolt said on his blog on Thursday morning.

“Andrews implied that just $15 million or so of work might have to be paid if he cancelled the contract … and four days before the election Andrews claimed he wouldn’t have to pay compensation.”

Indeed, Andrews was quoted just prior to the election saying consortium members would have to be paid “some modest compensation” paid to the consortium for some “soil testing” work already conducted, according to the Herald Sun.

Andrews’ announcement yesterday that the consortium would be paid $339 million to settle the contract – and that a further $81 million would be spent to transfer the East West Link debt facility to be used for the Melbourne Metro rail project – contradicts the premier’s pre-election commitments, according to Bolt.

“None of the above squares up with what Premier Andrews said yesterday,” the commentator wrote, before quoting RMIT economics professor Sinclair Davidson, who yesterday quipped: “That must be the most expensive soil testing in human history.”

“Or, of course,” Bolt added, “this is compensation by other means.”

Fellow Herald Sun commentator James Campbell called the East West decision a “gamble”.

“Daniel Andrews will be hoping Victorian’s forgive him for spending their money on nothing and instead blame the previous government,” Campbell wrote on Wednesday. “If he’s wrong he could be in real trouble.”

As far as Bolt’s concerned, however, Andrews’ ‘gamble’ has already failed.

“Tony Abbott will be sending a big thank you to [Andrews],” Bolt wrote in a separate column. “See, a key factor in the Prime Minister’s poll recovery is the awfulness of the new Labor governments in Queensland and Victoria.

“Abbott figures voters now need only look north and south to see how dangerous it could be to vote Labor federally, too. Queensland Labor was already warning enough. Narrowly and surprisingly elected in February, it is in crisis just two months later.

“But worse is Victoria’s new Government,” Bolt continued, “rapidly threatening to be as union-matey, ideological and incompetent as [former Labor premier] Joan Kirner’s. Yesterday it set a new standard in craziness by announcing it would give at least $420 million to a foreign consortium to NOT build the East West road link Melbourne badly needs.”

Other commentators were more measured in their views.

The AFR’s Tony Boyd called Wednesday’s decision “pragmatic,” saying it “pulls the state back from the brink of being the sovereign risk pariah of Australia”.

“But the Labor government’s policy of dishonouring the contractual terms of a $10.7 billion contract marks a new low in political expediency,” Boyd conceded.

“While there were doubts over the efficacy of the East West Link contracting process and the project’s wobbly economics, these did not warrant abandoning a principle that has prevailed in Victoria for more than 20 years.”

Boyd, like Bolt, pointed out Andrews’ pre-election references to “modest” payments that would have to be made to the consortium.

“Their costs were not ‘modest’,” Boyd wrote on Thursday. “This is one of the running sores of infrastructure projects in Australia. Multiple consortiums bid for projects, expend tens of millions of dollars whilst facing the possibility of getting no work.”

Another columnist, John Durie, agreed that the process was flawed, writing in The Australian: “The politics of Victoria’s $10.7 billion East West project was bad on both sides, but the dumbest part of the saga was the way the public-private partnership deal was written to front-load commissions on work that wasn’t planned for years.”

Sydney Morning Herald commentator Malcolm Maiden also spread the blame, saying Labor “lit the fuse” by opposing the East West Link in the lead-up to the election, but the former Napthine Government and the Lend-Lease led consortium were also partially responsible, “by pushing ahead with a project that was set to return only 45c on the dollar, using Infrastructure Australia’s cost benefit methodology”.

And AFR columnist Jennifer Hewett summed things up, scalding all those involved.

“Given the figure of $1.2 billion in compensation originally in dispute, the outcome is better for taxpayers than it might have been,” Hewett said. “But Andrews is certainly wrong in describing this agreement as ‘the best possible result’.

“The whole episode has been an absurd waste of opportunity, of money and of very valuable infrastructure.

“The East West saga counts as a political and commercial debacle for a country that urgently needs better infrastructure, including the jobs that go with building it, at lowest possible cost.”

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