Labor should rip up East West contracts

May 23, 2014

The East West Link is not the vote-winner that Victorian Premier Denis Napthine had hoped it would be.

A recent opinion poll shows most Victorians are opposed to the state government’s plan to build the new toll road and want the money spent on public transport infrastructure instead.

The Labor opposition says it opposes the project and would not continue the project if it wins the next state election, due to take place in November. That is, unless contracts have already been signed, in which case an incoming Labor government would allow the project to go ahead.

The Napthine government is rushing the process to try to get the contracts for the project signed before the state election so work can begin.

Campaigners against the East West Link have called on Labor to promise to rip up or rescind the contracts if it is elected. Many Labor rank-and-file members support the call to rip up the contracts.

Labor could stop the East West Link project now, before the election, by announcing that it would not recognise any contracts signed for the project. If it did this, companies would be less likely to tender for the project.

The fact that the ALP will not make such a promise suggests it secretly supports the East West Link and hopes the government signs the contracts before the election, letting it off the hook if it is elected.

The ALP says it cannot make such a promise because the Murdoch media would describe it as irresponsible, and therefore ensure Labor did not win the election.

However, the campaigners against the East West Link say honouring the contracts would be irresponsible. The Coalition government did not mention the East West Link during the last election campaign. It has been secretive and refused to release the business case for the project.

The government is treating the public consultation process as a joke. Companies have to submit their final tender for the project before the public consultation process has been finalised so that the government can sign contracts before the state election and lock in any future government to the project.

The Labor Party also says it can not rip up the contracts because of sovereign risk. Arguments about sovereign risk are misleading.

Professor Nick Sneddon, Australia’s foremost expert on government contracts, told a public meeting last month that there were no legal impediments to state governments cancelling contracts entered into by their predecessors. He said any compensation arising would be minimal.

A statement from the ALP before the election that contracts signed before the election would not be honoured would make the situation clear to tenderers. This is the only responsible course of action for the ALP to take, given the absence of a mandate for the project, the lack of transparency surrounding it and the serious flaws identified at the hearings before the assessment panel.
Labor leader Daniel Andrews has already said an incoming Labor government would not recognise the contracts that have been signed for the sale of the Lilydale TAFE campus. So why not state that it would not recognise East West Link contracts? Or do Andrews and the ALP secretly support the East West Link?

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