Vics pay $339m – not to build road project
Victoria will pay $339 million not to build the controversial East West Link road tunnel project.
The money is net costs already drawn down and paid to the East West Connect consortium for the bid process, design and pre-construction.
The Victorian government will pay the symbolic fee of $1 to buy the companies in the consortium.
Premier Daniel Andrews said the deal kept Labor’s promise not to pay any compensation to dump the road.
“No compensation payments for lost profits have been paid or will be paid,” Andrews said.
He said the road, which the previous government said cost $6.8 billion, would have actually cost $10.7 billion.
A further $81 million was spent to set up the credit facility for the East West Link, but the government plans to renegotiate that deal to use that credit line on the Melbourne Metro Rail project.
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Treasurer Tim Pallas said the $339 million deal was roughly equivalent to the annual service payments, which the state would have paid each year for 25 years.
He said the previous government tried to force a “poison pill” on the Labor government, signing a side letter committing Victorians to pay $1.2 billion in compensation if the road was dumped.
Pallas said he was confident Victoria’s AAA credit rating would remain stable.
The secretary of the department of treasury and finance confirmed the road would have cost $10.7 billion, with a $2 billion capital outlay, $1 billion to be paid seven years after financial close, and $7.7 billion in yearly service payments.
