West Gate Tunnel to now cost $6.7 billion

NEXT year’s state election is shaping as a battle on how the $6.7 billion West Gate Tunnel will be funded after it was revealed the project’s cost had blown out by a massive $1.2 billion in another embarrassment for the Andrews Government.

NEXT year’s state election is shaping as a battle on how the $6.7 billion West Gate Tunnel will be funded.

The Labor government favours a deal that sees Transurban chip in $4 billion in exchange for a 10-year extension of CityLink tolls, to 2045.

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The tolls will also increase by 4.25 per cent every year — double the current inflation rate — for a decade, starting in just 18 months and running until 2029.

Transurban could reap an estimated extra $15 billion from Victorian motorists over the next 28 years.

The government said on Tuesday it would fund about $2.6 billion to build the twin tunnels under Yarraville to link the West Gate Freeway and CityLink to the north of the CBD. But if parliament blocks the bid to extend the CityLink tolls, Transurban will cut its contribution from $4 billion to just $1 billion.

It would force taxpayers to stump up a total of $5.7 billion.

An artist impression of the West Gate tunnel project.

Although the funding arrangement hinges on parliament’s approval of the toll extension, which the Coalition combined with Greens MPs could vote down, the CityLink deed does not have to change until the West Gate Tunnel is finished in 2022 — well after the next election.

The Opposition has vowed to block the extension deal, labelling it unfair.

Opposition Leader Matthew Guy said the government was Transurban’s “golden goose”. He said the private company had “stitched up the desperate Premier”.

Mr Guy refused to confirm he would build the project if elected, although said he would not rip up a valid ­contract.

Premier Daniel Andrews on Tuesday revealed the cost of the tunnel had blown out by $1.2 billion — another embarrassment for the government.

Mr Andrews said the cost increase from $5.5 billion to $6.7 billion was due to a longer outbound tunnel. Its exit has moved further west on the West Gate Freeway to avoid nearby houses.

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The westbound exit now emerges on the freeway before Millers Rd and the citybound entrance is just before ­Williamstown Rd.

The project will also widen the West Gate Freeway to 12 lanes and see a new bridge built over the Maribyrnong River and continue on top of Footscray Rd to CityLink.

An artist impression of the project.

Despite the opposition from the Coalition and the Greens, Mr ­Andrews said the project would proceed, with work to begin early in the new year.

“This road will be paid for by motorists or it will be paid for by every single Victorian taxpayer,” he said.

“Either way, work starts in a couple of weeks’ time.”

But Transurban has flagged to investors it will receive “completion/substitution payments” if parliament does not approve extending the CityLink tolls for a decade.

The payments would cover construction and financing costs and “a return component commensurate with Transurban’s investment metrics and the risk profile”.

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To pay for its $4 billion ­investment under the government plan, Transurban will boost the tolls on CityLink by 4.25 per cent each year from 2019 to 2029.

From its opening in 2022 until 2029, the West Gate Tunnel will also have 4.25 per cent toll increases each year.

Transurban said it would introduce the state’s first city access toll, charging cars $4.84 to exit the toll road at Footscray or Dynon Rd between 7am and 9am.

Trucks will be charged up to $21.92 to use the West Gate Freeway. A number of truck bans will be put in place on local roads in the inner west to stop semi-trailers rat-running to avoid tolls. Trucks will get multi-trip discounts and tolls are reduced to $14.60 when moving freight at night.

Mr Andrews said the contract signed with builders CPB-John Holland would be made public within 60 days.