EY helps Victorian government reach North East Link agreement

At the end of last month, the Victorian government signed an $11 billion deal for the North East Link Program tunnels package. Professional services firm EY advised on the project throughout.

First proposed at the political level more than five decades ago, the North East Link is described as the largest ever public-private partnership undertaken in the history of the country. Consultants from EY have been supporting the government from the business case stage through to last month’s procurement agreement.

That agreement will see consortia Spark build and operate the 6.5 kilometre tunnels beneath the Yarra River and Banyule Flats, linking the Metropolitan Ring Rd to the Eastern Freeway at Bulleen in Melbourne’s Northeast. With completion slated for 2027, the detailed economic case developed by EY contends a $12.5 billion boon to the state’s real GDP along with the creation of 10,000 jobs during and 3,800 post-construction.

“A project the size of North East Link doesn’t come around very often. It’s been long talked about – and is the largest ever investment into Melbourne’s north-east,” said Victorian Premier Daniel Andrews on signing, with transport & infrastructure minister Jacinta Allan adding; “Half a million Victorians live within two kilometres of a North East Link interchange – this project will change the way people move around Melbourne.”

EY meanwhile noted the $11.1 billion, 25-year deal with Spark was the culmination of a massive team effort between key Victorian Government agencies such as the Major Transport Infrastructure Authority, the Department of Transport and the Department of Treasury and Finance, along with a core advisory team including members of EY’s Strategy & Transactions unit. Legal services firm Clayton Utz was also among the advisors.

“EY has helped the Victorian Government nurture this program from business case through to procurement and it is very satisfying to see the project now move into full scale delivery,” said Melbourne-based EY infrastructure advisory partner John Matthews, who noted that the transaction wasn’t just the largest ever public-private partnership in Australia, but one of the largest in the world.

“The project has attracted new participants into the Australian market and developed market leading approaches to the management of risk in delivery that could set the blueprint for future mega projects here and internationally,” continued Matthews. “Despite long periods of remote working during the pandemic, the team did their homework and was able to present a clear value proposition to the global market.”

Clayton Utz expanded on the unique nature of the agreement, which included developing and executing a world-first form of PPP framework that included innovative and collaborative mechanisms for the sharing of delivery risk. “The North East Link Program gave rise to a range of novel and complex commercial and legal issues, and I am delighted that our team was able to rise to those challenges,” said Clayton Utz project leader Steve Murray.