East West Link issues

This section was completed by Victorian-based group Yarra Campaign for Action on Transport (YCAT).

The East West Link (EWL) was to be an 18 kilometre cross city road connecting the Eastern Freeway at Hoddle Street to CityLink, the Port of Melbourne precinct and on to the Western Ring Road at Sunshine West, with a range of associated works. It would have been one of the largest transport infrastructure projects ever undertaken in Australia, and significant in terms of its impact, complexity and cost.

YCAT representatives previously addressed Senate Rural and Regional Affairs and Transport References Committee in February 2014 at the Role of public transport in delivering productivity outcomes.

http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22committees%2Fcommsen%2F7f08b4ac-4217-4b61-824e-74435357ca94%2F0005%22

6.0 Anthony Murphy vs Supreme Court challenge

As noted in the Anthony Murphy vs Supreme Court challenge in Victoria (2014-2015)

The benefit cost ratio, net economic benefit and projected traffic volumes included in the Business Case for East West Link - Stage 1 are deceptive and misleading representations, and these figures have been calculated according to standard methodology as claimed.


The nature of the-then proposed Victorian contract would of exposed Victorian taxpayers to huge ongoing financial risks.

This Supreme Court case involved important questions around the level of transparency and accountability that should lie on the State and Federal governments when engaging in public private partnerships to fund large infrastructure projects.

Extremely limited information was released to the public in relation to the business case for East West Link, leading to concern that this project did not meet the robust standards required to justify an $8 billion liability for Stage 1. Even the Senate was not previously given access to information in support of an Abbott government contribution.

Many Victorians believed that if this project genuinely justified the cost, then there was no need to keep this essential information from them, indeed the state and federal governments would want it out in the public domain.

Infrastructure Australia, an independent body that assesses and advises the Australian Government on major public infrastructure projects that it puts money into, had not seen the full business case for the East West Link - Stage 1 until late 2014, and previously did not consider the project  ‘ready to proceed’.

7.0 Australian National Audit Office (ANAO) Report (December 2015)

The Abbott government inflated the Federal deficit during its first year in power by transferring $1.5bn to Victoria for the East West Link despite “clear advice” the payments were not yet needed

This was done despite “clear advice” that the project had not been finally assessed. This fraudulently inflated Labor’s final deficit by $1.5 billion and made the deficit the following year lower than it should have been.

Infrastructure Australia did not receive the full business case until July 7, 2014 - two months after prime ministerial approval was given.

8.0 Victorian Auditor General’s Report (December 2015)

The bedrock of our system of public administration is that the public service is apolitical, impartial and has a fundamental obligation to provide frank and fearless advice to the government of the day. Frank and fearless advice should complete - it is not sufficient for the public service to avoid providing advice or recommendations simply because they believe the government of the day does not want to hear them.

Doing so is at odds with the Public Administration Act 2004 and the Code of Conduct for Victorian Public Sector Employees, which require the public service to act impartially and seek to achieve the best use of resources.

- Dr Peter Frost, Acting Auditor-General, 9 December 2015

8.1 Project business case

The East West Link business case did not provide a sound basis for the Victorian government's decision to commit to the investment because it did not:

  • clearly establish the need for the investment through robust analysis of the costs, benefits and risks of reasonable options

  • provide a sound basis for prioritising the eastern section over other sections of the road

  • include sufficient information and evidence to demonstrate the accuracy and plausibility of the assumed wider economic benefits of the project, or the validity of underlying traffic modelling

  • adequately address significant issues raised about the traffic modelling by peer reviewers.

  • The project delivery approach proposed in the business case was sound notwithstanding that undue weight was given to the government's desire to begin work on the project prior to the 2014 state election in the assessment of available options.

8.11 East West Link “Letter of Guarantee”

From the VAGO report:

However, in departures from standard practice for PPP transactions in Victoria, the state agreed to the inclusion of clause 58- Specific Key Approval Event in the contract, and signed a side letter confirming the state's commitment to honour the contract. These variations from standard contractual terms were requested by EWC.

Clause 58 increased the state's exposure in circumstances where the planning approval decision was found to be invalid, as compared to the standard provisions of the contract. The risk and exposure for the state created by clause 58 was linked to the outcome of the judicial review of the planning decision for the project.

The timing of this document being signed before November 2014 Victorian State Election surely demands further investigation via either a Royal Commission, the Independent Broad-based Anti-corruption Commission (IBAC), if it had beefed up powers or a federal Independent Commission Against Corruption (ICAC).

9.0 Conclusion

Surely former Victorian Treasurer Michael O’Brien would be aware of the principles of accountability and good governance put forward by The Honourable Tony Fitzgerald AC QC:

Govern for the peace, welfare and good government of the State;
Make all decisions and take all actions, including public appointments, in the public interest without regard to personal, party political or other immaterial considerations;’
Treat all people equally without permitting any person or corporation special access or influence; and
Promptly and accurately inform the public of its reasons for all significant or potentially controversial decisions and actions.

The former Victorian Treasurer treated people with contempt when putting the political interests of the former State LNP government ahead of the public interest

It appears that the former treasurer was prepared to give away $1.2 billion of Victorian’s funds to a foreign consortium just to hide the incompetence of a project that was always off the rails.

At the time of signing, he knew that the Andrews Government had committed to walk away from the project, and he knew the polls predicted an ALP win. So the deal was done purely to stop the consortium walking away before the election instead of after.

Again, questions must be asked regarding the level of transparency and accountability that should lie on the State and Federal governments when engaging in public private partnerships to fund large infrastructure projects.

 


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