Tony Abbott has warned that the cancellation of the controversial East West Link road project in Melbourne would harm the “national interest”, prompting an angry rebuke from the Victorian premier Daniel Andrews.
The prime minister has written to Andrews to urge him to push ahead with the $6.8bn first stage of the East West Link, a proposed 6.6km cross-city toll road and tunnel in Melbourne.
Abbott said the Victorian government’s plan to tear up contracts for the project risks setting a “dangerous precedent” and would “damage investor confidence and jeopardise further private sector investment in important national building projects around the country”.
Abbott’s letter to Andrews claims that other state and territory governments, as well as businesses, are “already raising their concerns about your actions”.
“Any legislation to abrogate contractual rights would raise sovereign risk issues and have implications for not only Victoria, but the rest of the nation,” Abbott wrote. “I urge you in the national interest to reconsider your plans to cancel the project and introduce such legislation.”
Abbott added that the project would generate 6,700 jobs at a time when Victoria’s unemployment level is uncomfortably high.
The prime minister’s attempt to increase the pressure on Andrews over the issue was met with a curt rebuke.
The Victorian premier’s reply to Abbott notes that while the federal Coalition has “broken significant election promises, including savage cuts to health and education and changes to the aged pension”, the Labor government in Victoria would stick to its pledge to scrap the East West Link.
“I look forward to working with you on important infrastructure projects, but no amount of hysteria or attempted bullying or blatant politicking will change the result of the 2014 Victorian election,” Andrews wrote.
Andrews pointed out that the business case for the road, which was kept secret by the previous Victorian Coalition government when it signed up to the project, showed that the state would lose 55c for every dollar invested.
The business case has also shown that claims the East West Link would reduce traffic congestion are largely inaccurate, with congestion actually increasing on some key Melbourne roads.
The federal government has pledged $3bn towards the East West Link and has said it will not reallocate the money towards other transport projects in Victoria, such as Andrews’ preferred option of a Melbourne Metro rail link.
The situation is complicated by the level of compensation paid to the consortium tasked with building the road. The figure paid out could be anything from $200m to $1bn, depending on various estimates and negotiating positions, a scenario that Abbott has called the “midsummer of madness”.
Andrews said on Thursday that he would not be pushed into building the road.
“I’ll tell you one thing though, I’m not taking lectures from Tony Abbott on breaking promises,” Andrews told 3AW.
“And I’m not taking lectures from the prime minister on our international good name.”
