Premier Daniel Andrews and Treasurer Tim Pallas today announced that the Labor Government and the East West Link consortium have reached a good faith agreement that puts the interests of Victorians first.
Under the Heads of Agreement, signed today, the $10.7 billion East West Link will not proceed and no compensation will be paid to the consortium.
Under the agreement, the State will purchase the companies in the consortium (‘EWL Project Co’) for one dollar. All assets owned by Project Co will transfer to the State.
$339 million of net costs had already been drawn down and paid to the consortium for the bid process, and design and pre-construction. These costs have already been incurred and cannot be retrieved. They will be retained by the consortium subject to a certification process between it and the State.
A further $81 million of fees were incurred to establish the Project Co credit facility of $3 billion. The State intends to negotiate with the banks to take over that facility to contribute to funding for the Melbourne Metro Rail Project and will receive value for those fees.
All rates, fees, swaps and obligations related to the credit facility will now be worked through between the financiers and the State.
Before the 2014 State Election, Daniel Andrews promised that a Labor Government wouldn’t proceed with the Liberals’ East West Link and wouldn’t be liable for a cent of compensation. These promises have been kept. The East West Link contract signed in September 2014 has also been released, as promised.
While the Labor Government has incurred costs of just one dollar, in contrast, all other costs associated with this project, including the drawdown of net $339 million, were incurred because of former Victorian Treasurer Michael O’Brien and the Liberals.
The Andrews Labor Government thanks the East West consortium members for negotiating in good faith to achieve a fair result and looks forward to working with them on future infrastructure projects.
Quotes attributable to Premier of Victoria, Daniel Andrews
“The Labor Government and the consortium are on the same page and have come to a good faith agreement. The Government will now get on with building the projects our state needs and Victorians voted for.”
“Today’s agreement is the best possible result we could have achieved and it puts the interests of Victorians first – no ten billion dollar tunnel, no compensation and far more funding available for the Melbourne Metro Rail Project.”
Quotes attributable to Treasurer of Victoria, Tim Pallas
“This isn’t a day for celebration. The previous Liberal Government deliberately left Victoria with only a handful of options – none of them good.”
“We worked hard to get Victoria out of this mess, cleanly and fairly. $339 million is equivalent to one year of payments for this dud project. This would have been repeated every year for 25 years if Michael O’Brien had his way.”