Announced by Pallas and Andrews soon after the pair dumped the East West Link in 2015, the project was meant to be a good news story in comparison to Denis Napthine’s disastrous money-pit.
Now, the entire West Gate Tunnel project may collapse as the builders signed up by Transurban threaten to walk.
It isn’t just an idle threat from the two contractors, CPB and John Holland, who are facing hundreds of millions of dollars in extra costs from soil contamination issues if they plough on.
Pallas, Andrews and Transport Infrastructure Minister Jacinta Allan are overseeing what they advertise as the “Big Build” to address the state’s infrastructure challenges.
It is rapidly turning into a big mess, with troubles mounting on their Metro Tunnel rail project and one bidder for their biggest road project, the North East Link, having walked away.
The West Gate Tunnel though, already close to a year behind schedule, is their most acute headache.
Transurban has said little about what it is going to do to get the project back on track – but has made it clear they will not be handing the builders bundles of extra cash.
Instead it has lawyered up, telling the stock market it expects the builders to continue their work under the contract they had struck.
The only likely way construction will begin again in some semblance of what was planned is if more cash is put on the table. Insider tip – there is one party that will now come under incredible pressure to pony up: the Andrews government, in a bid to save its reputation.
Wednesday’s events were a very different reality to the glittering promise made by Transurban chief Scott Charlton in 2015. “No state funds are required, freeing up investment for other vital infrastructure projects, including public transport,” he said at the time.
But today, even before Wednesday’s mess was revealed, Victorian taxpayers were on the hook for $2 billion for this road.
And as of last April, motorists who use CityLink are paying higher tolls to help Transurban pay its share of the West Gate Tunnel’s $6.7 billion budget.
Just how many times do Victorian state governments have to be taken for a ride by Transurban to realise it is usually Transurban that walks away the winner?
Or, as former NSW auditor-general Tony Harris put it in 2016: “When [Transurban] leave a negotiating room nothing is left on the table, not even the Laminex. They just have this reputation for being superb negotiators at the taxpayers’ expense.”
If the John Holland-CPB Contractors consortium does walk away from the project as they have threatened, a protracted legal battle will ensue over whether they did or did not encounter force majeure.
In the absence of the builder being forced back on the job, Transurban and the Andrews government would be forced to re-tender the contracts – and the cost of building the road would escalate exponentially.
On Wednesday, Jacinta Allan assured reporters work was continuing despite the latest blow on many aspects of the project, including freeway widening, piling near the Maribyrnong, and off-ramps continuing to be built.
Yet one key thing is not happening on the West Gate Tunnel: tunnelling. Not quite the good news Tim Pallas promised Victorians.