This is why Victoria have elected another Labor Lemon.
Bereft of clever thinking and progress and siding with a handful of Greenies to get elected. Poor leadership and no ticker.
This will cost Victoria more than some compensation. Victoria needs these jobs and investment. It needs this vital infrastructure.
Andrews Government faces massive compensation bill to axe East West Link
JAMES CAMPBELL, MATT JOHNSTON AND ELLEN WHINNETT HERALD SUN JANUARY 20, 2015 9:33AM SHARE
The government of Daniel Andrews could be forced to pay compensation for the scrapped East West Link.
UPDATE: THE State Government is bracing for a gigantic East West Link compensation bill, running into the hundreds of millions of dollars, despite Premier Daniel Andrews’ insistence that tearing up the contract wouldn’t cost a cent.
Deputy Premier James Merlino told 3AW today: “There will be a settlement reached with the consortium, there was always going to have to be.”
But he refused to reveal more details including possible financial costs, saying: “I’m not going to conduct negotiations over the airwaves.”
The Herald Sun can reveal that key members of the consortium that signed the contract to build the Link want at least $1.2 billion to walk away from the dumped project.
Banks and superannuation funds that financed the deal are leading the hardline push.
COMMENT: EAST WEST PAYOUT A POLITICAL LANDMINE
EDITORIAL: CONTRACT COMPO IS A FARCE
BIG WIGS HIRED TO DUMP EAST WEST LINK CONTRACT
SECRET PAPERS REVEAL EAST WEST LINK DETAILS
But they are at odds with partner and construction giant Lend Lease, which is understood to be taking a more cautious approach for fear a fracas may dent its chances for future government jobs in Victoria.
It’s understood that Lend Lease favours a settlement amount in the hundreds of millions of dollars.
An artist’s impression of the tunnel’s entrance.
The Herald Sun can confirm that, in the wake of weeks of frantic negotiations with the consortium, there is a dawning acceptance within the Labor Government that it will have to write a taxpayer-funded cheque to rip up the contract for the 6.6km road.
The Government has engaged businessman and former MCG Trust chairman John Wylie and gun Arnold Bloch Leibler lawyer Leon Zwier to help it argue its case.
Mr Wylie was heavily involved in complex government business cases such as the privatisation of Qantas and of the state’s power industry.
Uncertainty about the looming cost to taxpayers of compensation poses problems for Budget planning.
It could also embarrass Mr Andrews, who repeatedly said the contracts — signed by the Napthine Government in September — were worthless.
Four days before the election, he said: “Be very clear about this: there will be no compensation paid.”
Mr Andrews revealed in September that he planned to dump the $6.8 billion toll road and said then he expected “some modest compensation”.
Opposition Leader Matthew Guy said Labor only had itself to blame for the scale of the compensation payout.
“Labor knew their claim that (East West Link) had no binding contract was wrong. It will now cost $1 billion to scrap a roadway that Melbourne needs,” Mr Guy said on Twitter today.
The consortium that won the contract for the $6.8 billion toll road includes Lend Lease, French group Bouygues, and Spanish company Acciona.
A complex network of institutions, including local and international banks and super funds, financed the deal.
A source said CEOs of the major partners, including from overseas, came to Melbourne before Christmas, and “made clear they would be pursuing their legal rights as contained in the contracts’’.
This was understood to relate to the sum the group believed it would be owed.
Some CEOs expressed their displeasure.
“It was a really ugly meeting,’’ the source said.
Treasurer Tim Pallas’s office said commercial-in-confidence negotiations were under way.
“Mr Wylie and Mr Zwier have agreed to work towards a fair and appropriate outcome for Victorian taxpayers in the circumstances where the Government has decided that the project will not proceed.”
A spokesman for the consortium declined to comment.
