Amidst the sound and fury in Melbourne about the Victorian Auditor General’s scathing report into the East West tunnel fiasco, both sides of politics have plenty to be ashamed about.
And Crikey can exclusively reveal another damning element: the Lend Lease-led consortium offered a rail alignment to both the Napthine Coalition government and the Andrews Labor government as part of the East West project, but was secretly rebuffed by both.
When the enormous cost of buying out the contracts became apparent, the Lend Lease offer to add a rail alignment should have at least been tested with the public before the Andrews government proceeded with keeping its election commitments to cancel the project, no matter the cost.
However, the most expensive non-project in Australian history will also remain a political millstone around the neck of the next generation of Liberal Party leaders in Victoria, most notably current leader Matthew Guy and his chief rival Michael O’Brien, the former treasurer and current shadow treasurer.
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Despite the farcical pro-Liberal coverage in the Herald Sun, it is an indisputable fact that the Baillieu government was elected in 2010 promising to investigate a Doncaster Rail project and not to build the East West road project.
Whilst Daniel Andrews left his policy announcement to cancel the project too late, it was clearly Labor Party policy when Michael O’Brien ploughed on and committed taxpayers to the biggest project in Victorian history with no public business case, no mandate and a clear alternative policy to oppose it from a Labor opposition that was ahead in the polls.
And the public is entitled to be confused because for those who bought The Age today, it is the Liberals who are a complete disgrace and Michael O’Brien should resign as shadow treasurer.
Labor’s rationale and confidence at being able to cancel the “invalid” contract and pay no compensation was always a political stretch, and the Liberals responded by constructing agreements that ensured compensation would have to be paid. This showed a reckless disregard for public money, although even if $1 billion is lost, it should be remembered that this will still account for less than 1% of the spending the Andrews government will do over its four-year term.
The international banks were always going to demand full freight in compensation, and the Andrews government made another mistake in retaining the $3 billion loan facility for the Metro Rail project, because the liabilities have since moved against them, as was noted in the 2014-15 Treasury Corporation of Victoria annual report.
These banks should simply have been paid out, in accordance with the contracts.
However, it is puzzling why both the Napthine government and the Lend Lease consortium felt it necessary to source such expensive international finance for a project that was politically imperilled.
Surely it wouldn’t have been a problem to award the Lend Lease consortium the contract, but ask them to hold off on making any financing commitments until after the election. After all, the state had a $3 billion commitment from Tony Abbott and a AAA credit rating through which it could have offered finance for initial construction works if “getting started” was so important.
Abbott also deserves a whacking for his role in the whole fiasco.
When Lend Lease included both light and heavy rail options in its formal expression-of-interest documentation, it was rejected partly because of Abbott’s insane ban on funding any form of rail infrastructure in Australia’s capital cities. If only Malcolm Turnbull had pulled off his coup a bit earlier.
The road project would have been far more acceptable to inner-city voters if it had included a rail alignment, which is common with big urban transport projects around the world.
Instead, the Greens went all out against it and Daniel Andrews correctly calculated that the Greens would have won four to six inner-city seats, rather than just two (Melbourne and Prahran) if Labor was offering bipartisan support for a wasteful sub-economic project that was designed to appease Liberal drivers in Melbourne’s eastern suburbs.
Sir Rod Eddington was right way back in 2008 when he concluded that the western end of the greater East West proposal was far more important as a freight solution for Melbourne to take pressure off the West Gate Bridge.
Instead, the Liberals ditched Ted Baillieu and rushed into the East West project focused on delivering the flawed eastern section first, for base political reasons.
It is bizarre that Matthew Guy, who lives in those eastern suburbs, is now promising to re-heat the East West project if he becomes premier in 2018.
He should have waited to see the cost and scope of two huge projects the Andrews government is rapidly pursuing, namely the circa $10 billion Metro Rail project under Melbourne and the controversial Western Distributor proposal being put up by the world’s biggest toll road company, Transurban.
Transurban has already turned its $1 float price into a $10-plus stock courtesy of woeful deals struck by both sides of politics in Victoria, and this trend looks likely to continue with a proposed 10-year extension of its lucrative Melbourne concession as part of the Western Distributor deal.
When it comes to major infrastructure projects to fix Melbourne’s growing congestion problems, there are few players who can hold their heads up high.