Treasurer warns government could build North East Link itself if unhappy with private sectors offers
Victorian Treasurer Tim Pallas has fired a warning shot at construction companies, saying the state government could build the North East Link itself if offers from the private sector are unsatisfactory.
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Victorian Treasurer Tim Pallas has flagged the state government could build the North East Link itself if it is unhappy with the final bids offered by private companies.
It comes amid speculation that John Holland is pushing for a deal in which the government would accept more risk over cost blowouts on the construction process.
Mr Pallas said negotiations with the three consortiums hoping to build the project were ongoing, but the government would not accept a bad deal.
“Whatever conditions are attached to this will be ones that the government sees are appropriate,” he said.
“The government recognises the size of this project (and) that it will be important change the way that risk is allocated.”
Major works on the North East Link are expected to begin in 2021, with the results of a competitive tender process to be decided later this year.
But Mr Pallas said the government would look at other ways of building the road if necessary.
“If the state has to manage these projects, they will,” he said. “I don’t want to get back to the situation this state was in 15 to 20 years ago when construction companies employed more lawyers and less engineers.
“We have an obligation to insist that taxpayer gets value for money.
“Once contracts are signed, we expect companies to honour the terms of the contract with the state.”
It comes after the Herald Sun revealed tolls on the $15.8 billion North East Link will be collected by the state government, in a Victorian first that will help pay for the biggest road project in the state’s history.
A state-owned company will be created to charge motorists who use the new 11km connection between the M80 Ring Road to the Eastern Freeway after is built.
It will be the first time an organisation of its type will be set up in Victoria, with private companies in charge of CityLink and EastLink.
The road is expected to carry up to 135,000 vehicles every day and, based on other toll prices, would collect hundreds of millions of dollars each year.
Legislation to establish the new tolling company will be introduced to the parliament on Wednesday.
Transport Infrastructure Minister Jacinta Allan said future governments would decide how long the tolls remained in place.
“It will make a contribution towards the funds that are needed to build this project and then the ongoing maintenance of the road,” she said.
“We want to see that the tolling revenue that is raised by motorists using and trucks using the new North East Link project to be reinvested back into the road.”
But Ms Allan would not speculate on how much money the tolls would collect.
“The toll prices will be set closer to the operation of the road,” she said.
The Eastern Freeway will remain toll-free, with a dedicated busway and express lanes added as part of the project.
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