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Treasurer Tim Pallas says the Andrews government is willing to build the North East Link itself, if contractors bidding for the state's most expensive road project insist that taxpayers carry too much of the financial risk.
Construction giant John Holland is pushing back against a state government demand that it be financially liable for cost blowouts in building the $15.8 billion project in a move that could sideline the company from the project.
Treasurer Tim Pallas says the state government will go it alone on the North East Link if builders don't play ball.CREDIT:SIMON SCHLUTER
The builder is planning to submit a bid that rejects the government's proposed risk allocation – a set of conditions outlining who pays for unexpected problems – and could be disqualified from the tender process, but this would leave the government with only one consortium of builders to choose from.
But Mr Pallas has said this would not undermine the project, as the government would be willing to manage the building task itself, rather than contracting this out to a consortium under a public-private partnership model.
"All my public life, I've taken the view that we do so much better when we work with the private sector to deliver things," Mr Pallas said on Thursday.
"But I don't do it at all costs ... so if the state has to manage these projects, we will.
"The government does prepare a public sector comparator ... that is, if we did the job, how much would it cost compared to what the private sector are offering.
"It may well be that in circumstances where the private sector fails to put in serious bids and fails to demonstrate that they're prepared to honour the contractual terms that they strike with the state in the past, we will look at alternative models."
The Regional Rail Link, the City Loop and the West Gate Bridge are among many infrastructure projects that have been managed by the state government rather than a private consortium.
But the Andrews government has keenly adopted public-private partnerships (PPP) in building its multibillion-dollar infrastructure pipeline since taking office.
This article first appeared on www.theage.com.au
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