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Cars & traffic

Apr 8, 2014

East West Link: twin nightmares over Melbourne’s freeways

It's turning into a bad dream for the Government, but Melbourne's East West Link is also turning into a nightmare for Opposition Leader Daniel Andrews says guest writer Andrew Herington

East West Link - planned interchange with CityLink

Guest writer Andrew Herington is a former adviser to Premiers Bracks and Brumby. He is taking an active part in the current Assessment Committee Hearings on the East West freeway on behalf of community groups:

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The $8 billion East West Link project is being pushed ahead by the Victorian Government in a bid to secure it before the State election at the end of the year.

However, community opposition to the project is more widespread than the Government expected. The current Assessment Committee hearings have received 1,430 objections and are being closely followed on a community blog, East West Link Blog.

Opinion polls are finding big majorities of people favouring public transport over more road spending. So the Government is repositioning with a heavy advertising campaign on public transport, and has now dropped mention of the East West Link from leaflets.

However Premier Napthine is not the only person suffering freeway election nightmares. Labor leader Daniel Andrews is caught in a difficult dilemma about what to do about the East West Link if he wins the election and contracts have already been signed.

The formal position of the Labor Party is that if they are elected they will not proceed with the proposed East West Link; but if contracts are signed they will honour them. Labor has produced a detailed transport plan called Project 10,000 which prioritises grade separations, the Melbourne Metro, selected road projects and foreshadows some line extensions.

The roads centrepiece is a widening of the Tullamarine freeway approaches to Melbourne Airport and the Westgate Distributor- an arterial link to create a new route between the Port and the western suburbs. This would bypass the Westgate bridge which is reaching capacity (despite the addition of a lane in Labor’s last term). Both are eminently economically justified projects – not focussed on commuter traffic.

This policy has partially rebutted the very active campaign being run by the Herald Sun in favour of the East West Link on the grounds that it will create construction jobs. Putting up more productive construction projects as an alternative means Labor has fended off the criticism that being pro-public transport would be bad for the economy.

This week three inner city Labor MPs and the Shadow Minister for Planning, Brian Tee, delivered strong submissions to the Assessment Committee considering the “Comprehensive Impact Statement” for the East west Link. This statement bundles together all the required approvals into a single decision within a compressed timeframe of 3 months.

Mr Tee concluded by calling on the Committee not to approve the freeway saying “In particular, there is no business case and the traffic projection data is insufficient, contradictory and in any event does not justify the financial cost or warrant the assault on Melbourne’s liveability.”

There was no doubting the depth of opposition being expressed by Labor to the freeway. Colleen Hartland from The Greens was equally strong, highlighting the importance this issue will have for inner city politics and the likelihood of civil disobedience campaigns during construction.

There is little ambiguity in the statement by the Shadow Roads Minister, Luke Donellan, an outer city MP who recently told The Age that new traffic modelling showed the government was “on a road to nowhere with the east-west tunnel”. He said $6 billion to $8 billion would be spent “and congestion will be no better at best, or worse in 12 years’ time on Alexandra Parade … Mr Napthine’s congestion busting tunnel is bust.”

Shadow Treasurer and former Roads Minister Tim Pallas also weighed in last July predicting the project could “strangle the life out of Victorian budgets for decades to come”.

Denis Napthine’s East-West Link requires Victorian families to accept financial risks of greater magnitude than any comparable road project recently constructed in Australia.

However, Labor’s contract caveat is causing considerable angst. When pressed by journalists, Labor leader, Daniel Andrews concedes that if the contract is in place and effective when there is a change of Government then it will be very difficult for it to be overturned. This is a fact of life in Westminster Governments albeit sometimes very inconvenient.

Inner urban resident groups opposing the freeway are incensed that this suggests Labor will quietly let the freeway be built. They urge Labor to pledge to “tear up the contracts” arguing that the ink will be barely dry and the normal arguments about sovereign risk and payment of damages hold little weight if the validity of the contract is questioned in advance. (1)

When in Opposition, the Coalition made much noise about tearing up contracts for myki, the Desalination plant and Regional Rail Link. The Baillieu Government held reviews into each project but decided after considerable delay and consequential cost increases, it had no option but to proceed with all three.

There is also the complicated question of what constitutes the “contract”. This is not a simple matter of a Government signing a piece of paper and be done with it.

The concession deed to construct the East West Link will be a very complex document. It will contain numerous provisions and conditions and, if the same model is followed for the Eastlink and CityLink projects, it will need to be supported by substantial legislation – in the case of EastLink Project Act over 180 pages in length.

This would confer all the necessary powers on a private authority to carry out various types of work and to formalise the financial arrangements and the obligations on Government.

Another reason why the passage of legislation before Parliament rises on 16 October is critical is the Eastern Freeways Land Act remains in force and this provides for the acquisition of land for the purpose of the freeway and the Doncaster railway in the median strip.

Passing legislation in a situation where the Government lacks a majority in the lower House means the attitude of Geoff Shaw to the freeway will also be critical. There is absolutely nothing that the freeway offers his electorate of Frankston. However should the legislation pass, the task of unpicking any deal would become all the more complicated.

There are growing signs that the Government is alarmed that it has misread the public mood by putting all its eggs in the East West Link basket. A prime argument used by opponents is that the $8 billion commitment to the freeway will sap the ability of any future Government to invest in alternative public transport projects for the next decade.

A flurry of public transport announcement have been made by Premier Napthine – lower fares for the outer suburbs, a level crossing removal project to partly match Labor and the long delayed order for new trains have amounted to a public transport blitz. This has been backed by saturation advertising about “Moving Victoria”.

The nightmare for the Napthine Government is that the East West deal becomes the centrepiece of the election which becomes a referendum between freeways and public transport – with them on the wrong side. The nightmare for Daniel Andrews is that a contract is signed and legislation passes sufficiently far in advance to lock in any future Government to the freeway option.

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  1. To explore these themes a “legal seminar” to be addressed by Dr Nick Seddon a contract law specialist from ANU, has been organised for 16 April by the campaign group Public Transport Not Traffic.

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10 thoughts on “East West Link: twin nightmares over Melbourne’s freeways

  1. J Angelis

    Premier Napthine needs to resign or be removed from office effective immediately, for his dictatorial style; appalling behaviour; and failure to serve the public through his high level of incompetence, conscious deceit of Melburnians and appalling conflicts of interest.

  2. Recalcitrant.Rick

    I’m a Labor voting, green sympathiser, free enterprise supporting, (with conditions) Self employed business owner, and I’m afraid, I hope the east west link gets built. I’ve lived in Melbourne on and off most of my life. And for 45 years, I’ve driven from East to West each and every way there is, and I have yet to be convinced that turning Alexander Parade into a civilized boulevard instead of a sewer as it is now, is anything but a good thing. I am also to be convinced that being able to travel entirely by freeway/tollway from any part of Melbourne to any other part is also anything but a good thing. If this link is completed, the only gap in the system will be the Greensborough end of the Western ring. Bring it on, I say! In 20 years time cars will be smaller, less polluting, and on freeways, will probably self drive. You can-not stop the future, but you can stuff it up! I’m not advocating against public transport, I just think personal transport is here to stay and has to be accommodated effectively.

  3. Jacob HSR

    If construction companies dont invest in Victoria, where will they invest?

    In 2012, The Maldives president was ousted and the new mob cancelled his airport expansion contract worth $500m with a private company. There is now a court case, the private co is being compensated. Now the same private co says they are willing to sign another contract to expand the airport!

    Not many airport expansion contracts going around these days for them to pick and choose. The same goes for Victoria.

    The 2011 F1 race in Bahrain got canned, yet Bernie and his crew came back the next year, what else was he going to do!

    Time to put these “sovereign risk” fears to bed. If Labor comes to power after contracts have been signed, all we should do is compensate the construction companies for the capital spent and tell them to move on.

  4. Austin M

    I think its a lot more complicated than tearing up the contracts and only compensated the tool up loss. The winning company would have factored in a significant potential profit with the project in order to support the investment decision then they will argue they are still entitled to be compensated for the loss of that profit opportunity particularly after spending many, many millions preparing a bid. I bet they will have a team of lawyers which will also need to be paid following court settlements to argue that their $XYZbillion profit was legitamte and needs to be compensated. Lets not forget the bidders will have a substantial justification covering both their burrowing costs, construction opportunities etc. Lets then also not forget any special clauses to protect their interests (that are in nearly all PPPs) and how these will also be valued.

    If funds were being recovered through a tolling arrangement within the PPPs they will probably argue there was significantly more profit opportunity that may even exceed the capital cost which will need to be compensated.
    The other point is does the ALP really want EWL to not happen? They have said it should be started with the West first but I am not aware of them changing from the fact that the full project is needed long term. There would be labour voters in the outer suburbs that may support the project and this allows their inner counterparts to look like their hands were forced with the liberals poor decisions whilst their outer counterparts can go and claim credit for getting it built.

    I agree that the project is almost useless for people in Frankston or the south east except perhaps for anyone going onto the airport or North of the city. The current M1 sections of the trip to the airport from the outer south east can be a nightmare and using Eastlink, Eastern and East-West to Tullamarine may at times be a better choice especially if patronage of the tunnels is very low like is being claimed by some groups.

    I’m not convinced that the current statements and rhetoric by the ALP is more than an effort to seizing upon a point scoring opportunity as opposed to a solid commitment. I haven’t once heard them demand that a suitable out clause (which they could easily draft) be inserted into the contract such that if the contract is terminated within 3-6 months only incurred design costs would be claimable by the winning bidder.

  5. Persia

    I think Tom #1 is right – the inner-city Labor MPs are wedged on this issue.

    Another possibility for the project getting canned is if the Greens win those 3 or 4 seats in the lower house because of the issue and hold the balance of power, then insist that whichever major party wants their support, has to bin the freeway.

  6. melburnite

    Ive noticed all those adds – just makes the EWL seem worse when compared to buying some new trains and eliminating some level crossings. Sadly the whole thing, this article included shows how major infrastructure appears to be a political game rather than derived from understanding the most critical needs then acting on them – time for a truly independent transport (ALL transport) board or committee ? not to mention planning…..

  7. Smith John

    Of course you can break a contract. I believe the normal principle is that the breaking party compensates the other party for actual loss – but the other party must also take reasonable steps to minimise their loss.

    On that basis compensation would be for the contractor’s unrecoverable costs of ‘tooling up’ for work that is cancelled. If it’s a matter of a few months into an $8 billion project, I can’t imagine that would be a serious problem.

    It would not be compensation for forgone profits.

    Happy to stand corrected and look forward to a report back from the legal seminar on 16 April.

    If a few hundred million in compensation is the price needed to avoid wasting $8 billion on a a politically driven boondoogle that won’t solve any long term problems and is almost certainly economically unsound (as suggested by the government’s refusal to release detailed figures), it sounds like a bargain.

    PS I think public discussion of large infrastructure projects is bedevilled by the fact that at a deep level, I suspect, many people just don’t understand how big ‘a billion’ is. ‘A few hundred million’ in compensation might sound like a lot – but that might be ONE TWENTIETH of the project cost.

    If you were talked into buying a second hand car for $20,000, then decided you didn’t like it, and the best offer you could get to unload it was $19,000, what would you do? Of course you’d feel a bit sorry for yourself, but if you had any sense you’d take the offer and cut your loss.

  8. IkaInk

    @John – Tom hasn’t suggested we tear up any contracts, perhaps you’ve misread his comment. Regardless, I’m sure the “exit costs” would still amount to considerably less than the $8billion just stage one is predicted to cost.

    I saw Brian Tee talking recently about this issue. He vaguely seemed to be in favour of “tearing up contracts” but wouldn’t say it in so many words, rather he stated the party was very divided about that.

    I guess Geoff Shaw is our best bet. I wonder what can be done to make him even angrier with the Libs than he currently is and convince him to start blocking every piece of legislation being waved in front of him.

  9. John Kotsopoulos

    Well Tom let’s see you put your money where your mouth is. Start a trust fund to pay the massive court judgement that will surely follow the breaking of the construction contract. I am sure your bank will lend you the money if you mortgage your home

  10. Tom the first and best

    If the contracts are signed before the election and the ALP commits to following through with construction because of that, the Greens will relentlessly attack the ALP over it and probably take seats they currently hold (Melbourne, Richmond, Brunswick and possibly Northcote) or would probably otherwise win off the Liberals (Prahran).

    The Greens would loose all political credibility if they supported a government allowing construction to go ahead.