Labor government under fire for burying project costs
The North East Link and Metro Tunnel projects are already billions over budget — but the government is refusing to publish these extra costs.
Victoria
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The Andrews government has come under fire for not publicly providing financing costs for two of the state’s biggest infrastructure projects.
The state opposition has warned that taxpayers could be facing further “blowouts” out of Labor’s Big Build agenda because of rising interest rates.
The 2022-23 Budget Papers confirm that the total cost of the North East Link and Metro Tunnel, both already billions over budget, do not include “financing costs”.
Financing costs are a product of financial transactions for a project, and includes the placement of hedges and swaps, loan interest and transaction charges.
Opposition transport infrastructure spokesman Matt Bach claimed the hidden financing costs would only worsen as interest rates continue to rise.
“Victoria is paying the price of Daniel Andrews’ major project mismanagement as taxpayers are set to be hit with millions more in cost blowouts,” Dr Bach said.
“Local communities will never recover and rebuild while Labor continues to throw away billions of dollars that should be used to fix the health crisis.
“Only a Matthew Guy Liberals and Nationals Government will end the Big Bill waste and ensure taxpayers are getting value for money from their major projects.”
The state government has staunchly defended its funding arrangements for the flagship projects, but refuted the opposition’s claims they are at risk of interest rate hike rises.
A government spokesman said the financing agreements for the North East Link and Metro Tunnel – which are the two largest Private Public Partnerships (PPP) agreements the state has ever entered into – are complex, and “involve a mix of instruments”.
Financing arrangements for both projects include hedging arrangements to protect the state against interest rate risk, according to the government.
Medium to long-term fixed-rate financing for the North East Link central package was secured at financial close in October 2021, while the Metro Tunnel arrangements were set in December 2017.
“We’re getting on with the job of building the missing link in Victoria’s road network,” he said.
Originally published as Labor government under fire for burying project costs
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