The troubled West Gate Tunnel project will cost Victorian taxpayers an extra $1.9 billion after the state government reached a deal with builders to end a construction stand-off.
Key points:
- The government has struck a deal with Transurban and CPB John Holland over disposal of contaminated soil
- Transurban will contribute $2.2 billion and CPB John Holland will give up its profit margin
- The project was originally due to be completed next year but now has a completion date of 2025
The deal ends a stalemate involving the government, Transurban, and builder CPB John Holland over who would be responsible for disposal of contaminated soil from the tunnel project.
That dispute has resulted in the project running at least two years behind schedule.
The government said the deal would see Transurban contribute an extra $2.2 billion towards costs, while CPB John Holland would give up all of its profit margin and make significant losses.
The government said tunnelling work would now begin early next year, with a completion date for the whole project pushed back to 2025.
The project was originally scheduled to be completed ahead of next year’s Victorian election.
Treasurer Tim Pallas said the deal was in the best interests of the Victorian community.
“It allows us to reset this project, it allows us to recognise that it is a vitally important project that will grow the economic prosperity of the western suburbs,” he said.
“It will also assure thousands of jobs in the construction industry.”
Mr Pallas described negotiations with Transurban and CPB John Holland as “fractious”.
“I’m not happy with the fact that we had to live with a process where effectively the delays on this project have been constructed in a way to try and put pressure on the state,” he said.
The government claimed the alternative to the deal would have resulted in lengthy legal disputes, and additional costs of $6.8 billion if the current builders were replaced.
Opposition accuses government of ‘squandering’ billions
Shadow Treasurer David Davis described the cost blowout as “another two billion dollars wasted”.
“This is an absolute scandal. It is not a big build; it is a big blunder,” he said.
“The government can’t manage these huge projects. Every project they touch is botched and the cost blow outs are huge.”
He said the overruns would increase Victoria’s debt and could see resources directed away from mental health, hospital waiting lists and schools.
“All of these need more resources and yet the state government is squandering money,” he said.
“This is two billion dollars that’s been wasted. That would have bought two Royal Children’s Hospitals.”
