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Victorian Treasurer Tim Pallas says the Andrews government is yet to reach a final settlement with the consortium building its signature Melbourne Metro rail tunnel, as negotiations continue over blowouts which could cost taxpayers up to $3bn.
The Australian reported today the government is close to striking a deal with the tunnel builders after refusing for more than five months to reveal the extent to which the public-private partnership has exceeded its $11bn budget.
Late last year it was reported that the Cross Yarra Partnerships consortium and its contractors were seeking up to $3bn extra, after an audit revealed the cost of initial construction-focused works on the tunnel had increased by hundreds of millions of dollars.
The news comes amid a costly impasse on another of the Andrews government’s signature projects: the $6.7bn West Gate Tunnel.
More than 200 workers on the road project were stood down last week, with the jobs of a further 400 at risk while toll road operator Transurban struggles to reach agreement with the government and its builders CPB and John Holland over the disposal of toxic soil.
Asked on Tuesday whether the Andrews government had signed a deal on the on the Metro tunnel cost blowout yet, Mr Pallas said: “There are ongoing negotiations, and we’ve not reached any final settlement.:
Asked whether a deal was close, the Treasurer said: “Oh, well, I suppose we’re closer today than we were yesterday.”
“All the progress has been in the right direction, but we’re not there yet, and can I say, when there is something to tell, we will tell you,” Mr Pallas said.
Asked whether the government was likely to agree to a figure as high as $3bn, Mr Pallas said he would not be drawn on “exactly how much or for what”.
“We’ll declare all of that if and when an agreement is struck,” he said.
Asked why taxpayers were on the hook for billions of dollars extra despite an $11bn contract having been signed, Mr Pallas again said he would not be drawn further on the issue.
“We will take you through the justifications if and when an agreement is struck,” he said.
Mr Pallas said the tunnel cost blowout would not be paid for with up to $24.5bn the Andrews government has arranged to be able to borrow to cover the cost of the economic downturn caused by coronavirus.
“Certainly our view is that the allocations that we’ve made will be provided for and expressly identified at the time that Treasurer’s advances occur, so we don’t anticipate that we’ll need to use Treasurer’s advance for the purposes of paying for infrastructure that has already been identified and costed by the state,” he said.
“To the extent that we need to identify additional funds for any projects, they will be properly accounted for in a budgetary sense.”
The Andrews government yesterday announced it was now funding some of its 2018 education infrastructure election promises with money from the $24.5bn.
Asked whether the $24.5bn would be used to fund other budget shortfalls which preceded the COVID-19 pandemic, Mr Pallas said all of the government’s 2018 election commitments had been “fully funded”
“We produced all of the costings for that at the time of the last election,” he said.
This article first appeared on www.theaustralian.com.au
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