Pro-business groups urge ACT Opposition to abandon plans to tear up light rail contracts

Three prominent pro-business groups have urged ACT’s Liberal Opposition to reconsider its plans to tear up light rail contracts if they win the 2016 territory election.

Earlier this year, the Canberra Liberals said they would cancel any light rail contracts signed by the current Government.

The move attracted a stern rebuke from then prime minister Tony Abbott, who said all contracts should be honoured.

But the Liberals went on to formally warn two consortia shortlisted to help construct it the light rail project that a change in government would put an end to the project.

Now the Business Council of Australia (BCA), the Australian Industry Group (AIG) and Infrastructure Partnerships Australia (IPA) have weighed in, asking the party to change its policy.

IPA chief executive Brendan Lyon said Australia needed investment to fill the infrastructure gap and grow the economy beyond the resources boom.

He said for this reason, voiding light rail contracts would damage the national interest, and cost Canberra dearly in compensation.

“Australia has a hard-won reputation as one of the world’s safest places to invest, but the axing of Victoria’s East West Link contract has already damaged that standing,” he said.

“We have no tradition of incoming governments using their lawmaking powers to dud businesses by avoiding their legal obligations under contracts.

“These sovereign-type risks are usually associated with countries with weak formal institutions, not modern global economies like Australia.”

Oragnisations lobbying on behalf of members

The ACT Opposition was quick to hit back at claims its plan to axe contracts would damage the territory’s reputation as a stable market for investment.

Opposition transport spokesman Alistair Coe said the groups represented private organisations, some of which were bidding for the light rail contract.

“Companies such as Downer EDI are members of the Business Council. The Bank of Tokyo Mitsubishi is a member of Infrastructure Partnerships Australia and companies such as John Holland or Oricon are members of the Australia Industry Group,” he said.

“So these organisations are lobbying on behalf of their financial members – and good luck to them.

“But we’re lobbying on behalf of Canberra voters.”

Contracts for the light rail project are likely to be signed early next year, with construction planned to start by the middle of the year.