Winning West Gate tunnel formula now looking a risky gamble
Speed humps for Daniel Andrews as delays and cost blowouts strike his tunnel projects.
Daniel Andrews has staked his reputation on a big infrastructure agenda and “getting things done”, but little more than a year into his second term his government is hitting speed humps.
Delays and cost blowouts on the Premier’s signature tunnelling projects have left his winning formula looking a risky gamble.
It is not yet clear how a dispute between builders CPB and John Holland, toll road company Transurban and the state government over contaminated soil on the $6.7bn West Gate Tunnel project will be resolved, but it is hard to see how a solution won’t involve spending taxpayers’ money.
This follows a $3bn blowout on the $11bn Metro Rail Tunnel.
Questions need to be asked about whether it was ever in the public interest to accept an offer from Transurban under which the toll road company is contributing $4bn of the $6.7bn West Gate Tunnel cost in exchange for being able to increase tolls on the entire CityLink network by 4.25 per cent a year for a decade.
The state Parliamentary Budget Office last year calculated the deal would reap Transurban $37.3bn in extra tolls by 2045.
Transurban’s relationship with both sides of politics in Victoria has long been cosy. Its shareholders continue to benefit from the deal done with the Kennett government to build CityLink, Liberal Party fundraising entity the Cormack Foundation owns more than $4m worth of Transurban shares, and the company’s lobbyist ranks are dominated by former Labor staffers.
Treasurer Tim Pallas divested himself of a portfolio of ASX 20 shares last year after The Australian revealed they included shares in Transurban.
Transurban’s share price increased in value by 37 per cent in the nine months to July 2019 as the government announced the details of its West Gate Tunnel project, with shares rising on Wednesday to $15.93, just short of their August high of $16.09.
Lawyers and shareholders look likely to be key beneficiaries of the West Gate Tunnel, at the expense of taxpayers and motorists.
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