According to the Property Council of Victoria executive director Jennifer Cunich our opinion piece on the East West Link in Melbourne covered in the latest News from the Front Desk on Thursday was focused too much on emotion and not big enough on industry consequences.
Our piece focused on the size of the kill fee for the contract to build the EW that the new Andrews Government has promised to cancel – a massive $1.1 billion in compensation with up to $3 billion in total costs, or nearly half the $6.8 billion total costs, according to media reports.
Our point was that the fee was excessive. Our line was that it was little different to blackmail and that the contractors who stood to benefit should be entitled to fair compensation, but should probably forego this extortionate amount for the sake of their reputation.
Ms Cunich said there was strong emotion on both sides of the debate, which had been extremely divisive in Melbourne.
But from a business only point of view, the feeling is that ripping up government contracts was dangerous.
“There are a whole lot of implications if you can rip up a government contract,” she told The Fifth Estate on Friday.
“Regardless of whether or not you believe it’s the right infrastructure project for Melbourne or not, there is real concern that the government can rip up a contract and what that does for future of contracts and who will wear the risk.
“If it’s the private sector then costs will go up.”
Was there a parallel with the Greener Government Buildings Program, when the previous government cancelled this major program for ambitious energy savings across government facilities? The Fifth Estate reported major financial costs, numerous job losses and some business closures as a result of the cancelled program.
“We haven’t talked about that but it’s the same thing,” Ms Cunich said. “When you gear up to do program and it’s cancelled there are serious consequences.”
Some of the fiery contention can be at least partly sheeted back to the failure of the governments to invest in infrastructure over an extended period, she said.
This has made cherry picking some projects over other equally worthy projects far more political and contentious than it might otherwise be.
“There are so many projects in Melbourne that are important. And governments across the country have absolutely been negligent in building infrastructure. That’s the crux of this issue.
“And the former government made the decision [to build the East West Link] because [prime minister] Tony Abbott said he would not support rail; he would only support road projects.”
Ms Cunich said there was much emotional support for both sides of the EW link debate.
“Around the industry, talk to any one group of people and there will be those who fully support it and those who oppose it.
“But those to who support it are not as vocal as the opponents, but there are a hell of a lot of people who commute across the city and get stuck in traffic.”
- See the original story and update pointing out that a clincher could be or should be that previous government and related parties signed the contracts for the EW just ahead of the election, knowing that the Labor Opposition promised to cancel the contracts if it won and knowing that Labor was well ahead in the polls and likely to win.
- See an article on ABC discussing the issue