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The State Government has agreed to pay $106 million to resolve the financial disaster surrounding the Airport Rail Link, a private-sector project that was supposed to be fully funded by private funds but has cost taxpayers $800 million.
The settlement announced yesterday comes amid a heated debate over the latest privately funded infrastructure project, the Cross City Tunnel, which is failing to attract the expected traffic and revenues.
Under fire, the Labor Government has pointed to the Airport Rail Link, commissioned when the Liberals were in power, as the worst public-private partnership so far.
Commissioned in 1995, the rail link between the airport and the city failed to attract the expected number of passengers. The operating company went into receivership and the receivers called on a State Government guarantee, which until recently had cost taxpayers $700 million.
Yesterday's deal takes that sum to just over $800 million, but the agreement caps the Government's future liability and ends a long-running legal skirmish between the operator and RailCorp.
Unlike the Airport Rail Link, where the government guaranteed patronage numbers, the current Government has said there are no similar guarantees in place for the Cross City Tunnel and that the risk is entirely with the motorway operator.
The Minister for Transport, John Watkins, said the law firm Clayton Utz had provided the Government with independent legal advice that the settlement on the Rail Link was a reasonable commercial compromise, given the background of the matter. "The lawyers advised there were significant further risks to the taxpayers, in the order of several hundred million dollars, if the Opposition's agreement was allowed to run its course, or the receivers won their legal challenge," he said.
"The use of taxpayer funds for this settlement is extremely regrettable," but the "bungling" of the former Liberal Government made it necessary.
Under the $106 million plan the receiver remains the owner of the railway, but will agree to drop future claims and legal action against the Government.
The Airport Line Company will receive 85 per cent of all train fare revenue from passengers travelling to and from the four stations on the line, and the $106 million should be paid by 2012.
But the Opposition's transport spokesman, Barry O'Farrell, said Labor's mismanagement of the rail system was to blame for the poor result from the Airport Rail link.
"The Airport Rail Link was crippled from the start by Labor's mismanagement: the Millennium train on which it was predicated arrived three years late, they didn't provide the special carriages with space for baggage, it was launched in the middle of a rail crisis in 2000, and there was a lack of marketing with people even having trouble finding it," he said.
The Government was using the cover of the Cross City Tunnel debacle to announce this payment, he said.
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