Federal Treasurer Joe Hockey is continuing to insist the East West Link should be built as the Andrews government ramps up negotiations to dump the multi-billion dollar contract.
Premier Daniel Andrews on Monday declared he would not be breaking his promise to scrap the contract, claiming he had been in discussions with Prime Minister Tony Abbott about redirecting $3 billion of Commonwealth money earmarked for the road into other projects.
“I’ve had very positive discussions with Mr Abbott, respectful, positive discussions about how we can work together,” Mr Andrews said.
The comments came as state Treasurer Tim Pallas confirmed discussions to scrap the contract for the project were entering a critical phase.
Leading financial adviser John Wylie and leading commercial litigator Leon Zwier are advising the government over negotiations with the consortium to scrap the contract.
“Mr Wylie and Mr Zwier have agreed to work towards a fair and appropriate outcome for Victorian taxpayers in the circumstances where the government has decided that the project will not proceed,” Mr Pallas said in a statement.
“At the appropriate time, the government – subject to the views of consortium members – will release the scope of the East West Link agreement.”
Mr Abbott is adamant that Commonwealth money will not be set aside for commuter rail projects, only roads.
As a result, Labor is believed to be canvassing several alternative options for the $3 billion, including a suggestion that the money could be redirected into its $2.4 billion pledge to remove 30 level crossing over the next four years, and its $500 million plan to build a new ramp to remove trucks from the Westgate Bridge.
Asked whether a deal was close following discussions with the Victorian government, Mr Hockey said: “Not that I am aware of.”
“There are certain criteria that need to be fulfilled as part of any negotiation or discussion. The focus has to be on jobs and strengthening the economy.”
He said he had been encouraged by recent talks with Mr Abbott about federal funding for other Victorian infrastructure projects.
The Premier also said the government was still working on how it would release the contracts for the East West Link and was still negotiating with consortium about ending the project.
The Abbott government has long warned that any move by Labor to scrap the contract for the road will result in the withdrawal of $3 billion of Commonwealth money set aside for the project.
But privately Victorian federal Liberal MPs are fearful that denying Victoria the funding could cost the party seats at next year’s federal election, with published opinion polls showing the federal Coalition languishing in Victoria on 40 per cent to Labor’s 60 cent in two-party-preferred terms.
