The consortium behind the cancelled East-West Link project has been paid $339 million by the Victorian Andrews Labor government, in an agreement the government says is not compensation.

The payout is a fraction of what some commentators had expected, with figures as high as $1.1 billion having been mooted for the consortium, which included Lend Lease, French group Bouygues, Spanish company Acciona and Capella Capital.

A media release from Premier Andrews said the project, which would have cost taxpayers $10.7 billion, would not go ahead and no compensation would be paid.

“The Labor Government and the consortium are on the same page and have come to a good faith agreement,” Mr Andrews said. “The government will now get on with building the projects our state needs and Victorians voted for.”

The statement said that $339 million “had already been drawn down and paid to the consortium for the bid process, and design and pre-construction”.

“These costs have already been incurred and cannot be retrieved.”

The EWL Project Co will also be purchased for $1, with all assets owned by the consortium transferred to the state.

“Today’s agreement is the best possible result we could have achieved and it puts the interests of Victorians first – no ten billion dollar tunnel, no compensation and far more funding available for the Melbourne Metro Rail Project,” Mr Andrews said.

Treasurer Tim Pallas said the result, however, was no cause for celebration.

“We worked hard to get Victoria out of this mess, cleanly and fairly,” Mr Pallas said. “$339 million is equivalent to one year of payments for this dud project. This would have been repeated every year for 25 years if Michael O’Brien had his way.”

The Australian Industry Group welcomed the decision, saying it averted a crisis of confidence in government contracts.

“Ai Group welcomes the agreement being reached as it had the potential to cast a pall over the Victorian economy,” Ai Group Victorian director Tim Piper said. “The sanctity of these contracts is vital to business and the uncertainty around this deal had sent a terrible message to industry, both locally and around the world.

“Ai Group had not supported the contract being rescinded but it is important that both the government and industry are now able to move forward with certainty.”

Greens transport spokesperson Senator Janet Rice called for the Prime Minister to redirect funding for the toll road to public transport.

“Victoria’s traffic woes are never going to be solved by more and more polluting toll roads,” she said.

“The fact is that the only way to reduce congestion is to give people the choice of fast, frequent, affordable, reliable and safe public transport. Tony Abbott must now swallow both his pride and his addiction to toll roads, and redirect federal funding to the public transport Victorians deserve.”