News National $1.1bn to scrap East West link

$1.1bn to scrap East West link

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The cost to taxpayers of scrapping Melbourne’s East West Link road project is more than $1.1 billion, according to a report from Victoria’s auditor-general.

Labor made an election pledge to abandon the former Napthine government’s signature transport project.

The report said the costs incurred by the state had come with few tangible benefit for taxpayers.

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The auditor-general said the decision to proceed with the project and sign a contract with the East West Connect consortium was based on flawed advice.

“Following final settlement of outstanding costs, the state will have incurred in excess of $1.1 billion in costs on the project with little tangible benefit for taxpayers,” the report said.

It said key decisions were driven by an overriding sense of urgency to sign the contract before last November’s state election.

“Signing the contract in these circumstances was imprudent and exposed the state to significant cost and risk,” the report said.

A large consortium had been contracted to build an 18-kilometre road connecting major arterials — the Eastern Freeway at Hoddle Street to CityLink, the Port of Melbourne and on to the Western Ring Road.

The report said the risks increased when the state agreed to amend the contract to provide additional compensation to the consortium if the legal challenge to the project planning approval succeeded.

“The available evidence suggests that the state knew at the time that there was a significant risk that this would happen,” it said.

The auditor-general said the billion-dollar cost would be partially offset by the sale of properties acquired for the project, at an estimated $320 million.

The total cost of terminating the contract would be around $642 million, excluding state expenditure on the planning, development and procurement of the project.

If it had been built, the entire East West Link project would have costs in excess of $22.8 billion in nominal terms, the report said.

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