Let’s not play Clintonesque semantics over the meaning of the words compensation, promise or contract. That $420 million ka-ching Victorian taxpayers heard yesterday is the sorry sound of Premier Daniel Andrews caving in and breaking an election promise.
The Victorian government struck a deal to pay the developers of the East West Link tunnel in Melbourne $339m for costs incurred plus $81m for financing fees for a loan. Not only is this a tragic waste of scarce dollars for Victoria, this utterly foolish move by Labor — cancelling a contract signed by the former Napthine government — puts a stop to any new major infrastructure project in the nation’s fastest growing city. It signals to foreign investors that the Andrews government — if not Australia — is a riskier proposition, vulnerable to political whim and partisan expediency.
To appeal to Greens-inclined inner-city voters, the Labor leader sounded a tough, if reckless, note before last November’s poll. Yet it did Labor no favours in those vulnerable seats. Mr Andrews is now a chastened figure. Reality bites, Mr Premier. You can’t declare you will tear up a contract and get off scot-free. Federal Social Services Minister Scott Morrison was on the mark in labelling this deal to not build a road — that would plainly ease congestion and support thousands of jobs — an “obscenity” at a time of fiscal constraint. An almost limitless list of worthy social projects would benefit from that money, including disability services and housing for the homeless. The waste goes even deeper if land acquisition, public service and other costs are added in. There are other consequences, too. Recently, both the French and Spanish governments made representations on behalf of companies involved in the $6.8 billion project. Why give potential foreign investors the needless whiff of scandal or sovereign risk? Through free trade agreements, the Abbott government has tried to sell the message that Australia is “open for business”. Mr Andrews has damaged such attempts to enhance our global reputation and the prospects of more growth and jobs.
The Coalition also risks sending the wrong signals on foreign investment in agricultural land. At The Australian’s Global Food Forum yesterday, National Farmers Federation president Brent Finlay flagged problems with the reduction in the foreign investment review threshold for farmland from $252m to $15m. Such a low threshold could become a “choke” on foreign capital, he said. Our history of reaping the benefits of a vast land mass and in building the amenity of our cities is simple: we need foreign capital, at lowest cost, for development. Valuable investment opportunities have always run well ahead of our national savings.
As Tony Abbott argued yesterday, we must not discourage the private sector from building the infrastructure our country needs — governments alone cannot afford to do so. Our future is compromised by the feckless actions of an inexperienced leader such as Mr Andrews. Cancelling the East West Link project will retard Melbourne’s progress and hurt Victoria’s standing.