Victorians taxpayers to step in to help reduce risk of North East Link legal battles
Victorian taxpayers are set to shoulder more financial risk to build the North East Link as part of a bid to avoid costly legal battles that have bogged down other mega-projects.
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Victorian taxpayers will shoulder more financial risk to build the state’s most expensive road in a bid to avoid costly legal battles that have bogged down other mega-projects.
Contracts for the $15.8bn North East Link, to connect the Eastern Freeway to the M80 in Greensborough via a road and tunnel, will shift away from the traditional public-private partnership when signed early next year.
Changes include creating more incentives to hit targets, and using state resources to resolve problems with utility removal, contaminated materials and third party negotiations.
The state will also be able to open the project’s books in real time, with taxpayers and the private builder able to share gains as well as pains in the hope of steering disputes away from court.
The changes, similar to those adopted by NSW to avoid major project chaos, were made due to the size and complexity of the NE Link project.
They also come after the West Gate Tunnel Project debacle, which has seen delays and expensive legal battles erupt over project scope changes and toxic soil removal.
Cost overruns have also plagued the $11bn Melbourne Metro Tunnel, which is now subject to a $1.5-2bn settlement on blowouts already conceded by the Andrews government through legal battles.
Similar problems could push up the cost of the NE Link under a traditional PPP.
Major contracts for the NE Link road and tunnels — expected to cost between $7-9bn — were initially expected to be signed this year after expressions of interest opened in late 2018.
That has now been pushed out to the new year, but the state government insists large-scale works will still start next year as scheduled.
Transport Infrastructure Minister Jacinta Allan said the change to the PPP model would not affect costs or timelines.
“Teams are making great progress on early works and our construction timeline remains the same, with major works starting in 2021,” she said.
“Victorians have been waiting for the North East Link to be built for decades and that’s why we are continually talking to the construction industry and adapting now to market conditions so we can deliver this much-needed project.”
Ms Allan said a huge amount of work has already progressed on the NE Link, including moving 34km of gas, water and sewer pipes and drains, and works to build a new Bulleen park and ride that will open in 2022.
Final designs for the project are set to be released early next year.
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