Back at the start of April, I said the Premier of Victoria, Denis Napthine, shouldn’t sign any contracts pertaining to the $8 billion East West Link motorway prior to the forthcoming State election. It would give his Government a point of difference with Labor as well as give the electorate an opportunity to have a say on the issue.
Yet the Government seems determined to get ink on paper as soon as possible. For its part, the Opposition makes it clear it’s against the East West Link, but won’t commit to cancelling any signed contracts if it wins the election.
After evading persistent questioning on Friday night from 7:30 Victoria’s Josie Taylor, Deputy Opposition Leader James Merlino finally said:
We are not about to rip up contracts, that’s not what a responsible alternative government would do.
Sceptics accuse the Opposition of wanting to curry favour with pro-motorway suburban and business interests, while simultaneously seeking to win the support of anti-motorway inner city electors.
The Opposition’s caution on this issue is understandable; the idea that a new Government might reneg on a contract signed by their predecessor isn’t a trivial one. It’s not about legal impediments or even about potential compensation – that should be minor in the context of a project this big – but about perceptions of sovereign risk and government reputation (see here and here).
But in this case Labor’s argument for accepting a signed contract gets weaker as every day brings the State election closer and every week seems to bring some new revelation about the shaky rationale for the East West Link.
Victoria has a fixed four year term; the date for the election is scheduled for 29 November 2014. So even if the Government were in a position to sign a binding contract with a builder as early as the end of this month, it would leave just 4 months until the election.
Indeed, if the election writs were lodged three to four weeks before the due date as they were in 2010, there’d only be three months until the start of the election caretaker period (1).
If it’s minded to, Labor could confidently and justifiably say that, should it win the election, it will cancel any contract signed over the East West Link for the following reasons:
- As noted, there’s very little time left until the election period starts.
- It’s a huge contract involving billions of dollars of public funds, so it will have huge ramifications for the spending program of any new Government.
- It wasn’t taken to an election so there’s no plausible argument the Government has a specific “mandate” for it.
- There are very serious and, importantly, credible doubts about the economic viability of the project.
- It’s reasonable on the basis of what we now know to doubt the Government has been frank in the claims its made about the project.
- Major design and engineering changes with cost and BCA implications have to be made as a result of the recently concluded report of the Assessment Committee.
- There’s no time for the winning contractor to incur significant legitimate costs warranting compensation.
These concerns aren’t about differences of opinion on policy; they’re primarily about issues of process and behaviour.
The Leader of the Opposition, Daniel Andrews, can argue the East West Link should itself be the subject of an effective “caretaker period” of at least six months prior to the election.
If he doesn’t commit to repudiating a signed contract in the event he wins office, he invites the suspicion that his opposition to the East West Link isn’t genuine.
For essentially the same reasons set out above, the Premier, Denis Napthine, shouldn’t sign any contracts; he should take the East West Link to the election and let the voters sort out what they want.
Since the Government presumably still thinks the project is a political winner in the middle and outer suburban seats that matter for winning the election, that strategy would give the Government a point of difference with the Opposition i.e “you only get the road if you vote for us”.
The view of the winning contractor is also relevant. Given legislation to implement the project is very likely (CityLink and EastLink followed this path) and can’t be introduced until after the election, the contractor should surely want to have a positive relationship with whichever party wins the November election.
In the last State election in 2010, the then Premier lodged election writs on 2 November 2010. The election was held on 27 November 2010.