Alan Tudge (Aston, Liberal Party, Parliamentary Secretary to the Prime Minister) Share this | Hansard source

If Mr Andrews does go ahead and honour the contract and build the road he will have overwhelming support from Victorians. Every single poll has indicated that. By honouring the contract, the road would be built. That would mean 7,000 jobs. It would mean a road that would finally link the Eastern Freeway to the Western Ring Road and the Tullamarine Freeway. It would take pressure off the Monash in the process.

The roads in Melbourne are not getting less congested. In fact, our population is growing very rapidly. It is growing by something like 100,000 people per year. The projections are that by 2030 there will be twice as many heavy vehicles on the road as there are today. So this is a project that is not just for today; it is to build for the future as well. We know what the population projections are. We know what the heavy vehicle projections are. People are not going to be riding their bicycles, as Daniel Andrews might suggest, to and from Ringwood or Wantirna or the member for McEwen's electorate. They are still going to be relying upon their cars and increasingly public transport as well to get around.

That is the first option—to actually honour the contract. His second option is to breach the contract and pay the compensation for this breach. Again, this option is a poor one, because the compensation itself will come to something like $1.2 billion. That has to be kept in mind, because the overall state contribution was only ever going to be $1.5 billion. It would seem bordering on insanity to throw $1.2 billion on the scrap heap in compensation when for $1.5 billion he could get the road built, 7,000 jobs created and a piece of infrastructure which will last for absolute decades.

The final option is the one that is under active consideration now and that I have mentioned—that is, to legislate away any compensation payable for breaching the contract. This is the catastrophic option for Victoria and Australia. It would mean, as I said at the outset, uncertainty for every single infrastructure project agreed to in the future. Uncertainty leads to higher costs as companies factor in risk premiums. In some cases, businesses will just not bid, because they believe it not worth their while. One national company CEO has already mentioned to me that his global board will not fund projects in Victoria, because of the risk of industrial militancy. This proposal would just add to that risk in Victoria.

The principle of honouring contacts, or having certainty about compensatory clauses if contracts are breached, goes to the heart of what makes countries wealthy. Every single developmental economist will tell you this. They say that two key ingredients absolutely underpin economic growth: one is property rights, and the other is enforceable contracts. Those two preconditions are so important and one of the reasons that developed countries are wealthy today.

It is very rare for infrastructure projects to be cancelled in First World countries. It is even rarer in democracies for a contract to be retrospectively annulled by a legislative instrument. It is, unfortunately, not uncommon in developing countries. The World Bank, in a report that they have produced, notes that this does occur much more often in developing countries. Many of those developing countries are struggling with their economic growth, in part because they cannot rely upon contracts which have been signed and cannot rely that they will be delivered upon. We do not want to join with those developing countries. We should honour contracts that are signed and we should get on with actually delivering them, and that is what Daniel Andrews should do.

Let me finish by mentioning the position of the Leader of the Opposition, Bill Shorten. Mr Shorten today is being a brother in arms with Daniel Andrews in threatening to destroy Victoria's sovereign risk profile. He did not always have that position, by the way. When he was the AWU leader, he strongly supported the East West Link. He said that it was absolutely vitally important for the economic growth of our state. He also said that when he was a member of parliament—along with many other members of parliament, including Julia Gillard, expressing their very strong support for the East West Link project. Even as recently as 2014 it was mentioned by Chris Bowen, the shadow Treasurer. He said:

Bill Shorten and I are of one mind, Labor honours contracts. Labor in Government honours contracts entered into by previous governments. Even if we don't like them for issues of sovereign risk Labor honours contracts in office signed by previous governments.

That was Chris Bowen on 11 September 2014. We are now in the position, though, unfortunately, where Bill Shorten has been asked at least five times whether he supports Daniel Andrews' proposals to tear up the contact and potentially legislate to remove any compensation. He is just squibbing it now. He is squibbing it. He should stand up for Victorians, and he should stand up for what he has said in the past—that is, honouring contracts and building the East West Link, because that is the best course of action for Victorians.

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