PM Tony Abbott advising Canberra Liberals to respect contracts
Following on from Wednesdays announcement that in the wake of the Victorian Government settling the East West Link contract fiasco with the consortium for $339 million, the Canberra Liberals would rip up the Capital Metro contracts if they formed government, there has been a great deal of media and commentary on the issue.
None of it more damaging for the Canberra Liberals than the intervention of Prime Minister Tony Abbott. When asked by a reporter about the Canberra Liberals policy of ripping up the light rail contract (if they formed government) he was emphatic:
"The position of this government is that contracts should be honoured."
This isolates the Canberra Liberals politically. The federal government has already promised $60 million for light rail. Now they are lacking federal political support for their position, and lacking support from any sector of the business community, their objection to the Capital Metro project surely needs to be revisited.
Read the ABC Online article "PM Tony Abbott rebukes Canberra Liberals over plan to tear up ACT light rail contract" here.
ABC Canberra television report with the Prime Minister from Thursday April 16.
ABC Canberra television report from Wednesday April 15
WIN Canberra television report from Wednesday April 15
Canberra Times Stoush over light rail contract reignited by East West Link deal
The ACT opposition has welcomed the Victorian government's agreement to pay $339 million to get out of a controversial road tunnel project, saying it proves Canberra's light rail project could be ditched at a "reasonable" price.
Liberal transport spokesman Alistair Coe said Premier Daniel Andrew's claim the state would pay just 3 per cent of the East West Link's total contract cost in compensation suggested ACT taxpayers could pay less than $30 million if a new government cancelled contracts for the $783 million Gungahlin to the city tram line.
The Liberals have pledged to pay their way out of the deal after the 2016 election but have never specified how much they would be prepared to spend.
But Capital Metro Minister Simon Corbell dismissed the claims and said a future Liberal government would instead face bills of "hundreds of millions" to exit signed contracts and would risk thousands of jobs.
Mr Coe's comments also left him at odds with Prime Minister Tony Abbott on Wednesday.
ABC News online Light rail contract will be torn up if the Canberra liberals win the 2016 election
"Should the Canberra Liberals win the October 2016 election we will tear up the contracts if they are signed," he said.
Mr Coe said the Victorian Government's decision set an important precedent
"It goes to show that the Canberra Liberals will be able to stop light rail if we win the next election," he said.
He said in the meantime, his party would do everything it could to try and stop the ACT Government from signing the contracts in the first place.
"But in the event that they do sign them we will cancel them if we're successful at the October election," Mr Coe said.
City News Liberals threaten to tear up light rail contracts if elected
ALISTAIR Coe says the Victorian Labor Government has set an important precedent for cancelling any contract signed by ACT Labor regarding light rail.
“Victorian Premier Daniel Andrews today announced that the signed contracts with the successful East West Link Consortium would be cancelled with a 3 percent penalty of the total contract price,” Alisair said.
“The announcement today includes that compensation for lost revenue will not be paid to the consortium.
“In the event that Andrew Barr and Simon Corbell sign a contract with a consortium regarding light rail, the Victorian decision provides an important precedent for cancelling such contracts.
City News Fighting breaks out over light rail cancellation costs
“The Liberals have highlighted a decision by the Victorian Government to pay $339 million to get out of a contract for Melbourne’s East West Link project as an important precedent in his quest to throw away ACT taxpayers’ money.
“A similar decision in the ACT would cost Canberra its reputation as a good place for private investment in public projects, like a convention centre.
“The successful Capital Metro consortia will also have commenced construction prior to the next ACT election.
“This would increase the amount of any payment needed to cancel that contract without reason.”
“A light rail line from City to Gungahlin delivered as a Public Private Partnership was an election commitment by ACT Labor during the last election.
“How many elections do the opposition want us to take this policy to,” Mr Corbell said.
Canberra Times Editorial ACT Liberals ransom over light rail is a risky business
The ACT Liberals' opposition to light rail and its threats to dismantle are a matter of public record. Mr Coe's preparedness to put a price on how far the Liberals will go to undo what the Labor government maintains is now a fact of life (the choice as to who builds, owns and operates the line has been whittled down to two consortia) is audacious, however. Parties of the centre-right rarely invoke the tactics of their left-wing political opponents as justification for their own plans. That business leaders and senior Coalition politicians have all condemned the Victorian government's "recklessness" in tearing up the toll road contract illustrate the extent to which the ACT Liberals have gone out on a limb.
Canberra Times ACT Liberals cannot ignore light rail mandate
Complicating this attempt to link the two dissimilar projects is the fact that by the time of the 2016 ACT election, construction on the Capital Metro project will have been under way for some months. Local jobs will have been created and significant investment already made locally by the successful consortium.
That is a far harder situation to reverse, and may make any election rhetoric by the Canberra Liberals quite difficult to walk away from if they do win the 2016 election.
A further complication for the Canberra Liberals is that the Victorian government had the ability to pass an act of parliament to nullify the contract. Capital Metro Minister Simon Corbell points out that the ACT does not have that constitutional power. It is specifically prohibited from passing a law that voids a contract.
This means that even if the Canberra Liberals won the 2016 Assembly election, they may not be able to cancel any contract in place between the ACT government and the successful consortium to build Capital Metro Stage One.
As much as the Canberra Liberals dislike the light rail project, they must have a light rail policy to put to the electorate by October 2016. They have only two choices: offer an alternative public transport policy that incorporates light rail, or explain how they can cancel a contract signed by the ACT government while lacking the legal authority to do so. This second option is electorally weak, and difficult to sell.
Australian Financial Review Liberal threat to scrap light rail escalates sovereign risk
The light rail project has been lauded frequently by federal Treasurer Joe Hockey as an example of the success of his asset recycling policy, in which the states receive extra Commonwealth funds towards projects paid for by the sale of assets.
Parliamentary Secretary to the Treasurer, Kelly O'Dwyer, told The Australian Financial Review that the recent uncertainty surrounding infrastructure in Australia was a bad look given Mr Hockey, who is in the United States, will this week be signing memoranda of understanding with other nations to establish a global infrastructure hub in Sydney. This would complete a deal the Abbott government engineered at the Group of 20 in November.
"Australia has a very good reputation when it comes to infrastructure development," Ms O'Dwyer said.
"It's absolutely ridiculous to think sovereign risk enters into the discussion now when people are thinking about infrastructure and investment.
"Any government that decides it's going to rip up contracts that have been signed by a legitimate government escalates this issue of sovereign risk."
For more frequent updates on Capital Metro and light rail related news, please visit our Facebook page 'Light Rail for Canberra'.