Australia's independent infrastructure adviser has backed away from a threat that any move to dump the East West Link contract could jeopardise its funding recommendations for future Victorian projects.
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In September last year, acting Infrastructure Australia chief John Fitzgerald warned any move by state Labor to scrap the contract for the road would hurt business confidence.
In a press release issued the day after Fairfax Media revealed Labor planned to scrap the contract for the road, Mr Fitzgerald signalled such a move would negatively influence his recommendations about future projects because of a loss business confidence.
He said Victoria had maintained its reputation as a place to invest because contracts had been honoured across changing governments, citing City Link and the myki ticketing system as examples.
"Historically, incoming governments have honoured the contracts of their predecessors, and a divergence from this established approach could adversely effect investor confidence," he said.
"I will certainly monitor any changes to delivery of the East West West Road Link very closely, and consider any subsequent changes to investment practices when preparing advice … on future projects."
But as the new Labor government ramps up efforts to wrangle its way out of the multibillion-dollar deal, Infrastructure Australia confirmed on Tuesday that the warning no longer applied.
When asked whether he continued to be concerned about the impact of Labor's decision on business confidence, and whether it would influence Infrastructure Australia's future recommendations, Mr Fitzgerald said through a spokesman the concerns had not been "further considered".
Infrastructure Australia – charged with providing independent advice ostensibly to depoliticise major project funding – also confirmed it had dumped an assessment of the full business case for the first stage of the project, despite the Abbott government's insistence that the project should still go ahead as vital infrastructure for Melbourne.
"As the project will not be continued by the Victorian government, there is no requirement for Infrastructure Australia to finalise the assessment," the spokesman said.
Fairfax Media revealed in September last year that the former government had agreed to pay the consortium a substantial "kill fee" if a future government were to dump the contract, which was signed just weeks before the state election. It also revealed a so-called "side-letter" had locked Victoria into a payout even if a court rendered the contract for the road invalid.
Premier Daniel Andrews is continuing to insist he will not pay compensation for lost future profits, only costs already incurred by the consortium. Even so, the bill for taxpayers is still expected to run to hundreds of millions of dollars.
Labor has hired financial adviser John Wylie and commercial litigator Leon Zwier to help scrap the contract.
The federal government has vowed to withdraw $3 billion of Commonwealth funding for Victoria if the road project does not go ahead. But it has also signalled a willingness to consider alternative projects, including the new government's $500 million truck ramp to remove heavy vehicles using the port from the Westgate Bridge and its pledge to eliminate 50 level crossings.
