The builders of Melbourne's West Gate Tunnel have been accused of "over-egging" the costs and danger of toxic soil to compensate for underbidding on the troubled project.
A settlement to the long-running dispute has been signed off by the Victorian government after months of negotiations with project manager Transurban, as well as builders John Holland and CPB Contractors.
Under the terms of the deal, the tolling giant will pay an extra $2.22 billion and the building sub-contractors have agreed to waive $1 billion in revenue and possibly more.
The government will chip in another $1.9 billion of taxpayers' money to restart digging for the project, now set to cost more than $10 billion in total.
It estimated that ripping up the contract and finding another builder would have cost $6.8 billion, while pushing out the completion date to the second half of 2027.
The major project, which will offer motorists a second crossing to and from the city's west over the Yarra River, was originally scheduled to be finished in 2022 but was halted after contaminated soil was discovered at the site.
A new completion date has been set for late 2025.
Treasurer Tim Pallas described the negotiations as "fractious" and insisted the deal was the government's best option, limiting costs and delays.
He blamed the cost blowout on Transurban and its builders "massively" underbidding on its original contract, rather than the discovery of harmful per- and poly-fluoroalkyl substances (PFAS) in the soil.
"The so-called soil remediation costs around PFAS are a very, very small proportion of this cost," Mr Pallas told reporters on Friday.
"The construction partners and Transurban realised that they had a problem.
"If they had been a little more co-operative with the state in declaring what the problem was, rather than pretend and try (to) dupe the community ... then we could have moved efficiently to resolve the issue."
Transurban ran the tender process, with John Holland and CPB making the successful $6.7 billion bid.
Mr Pallas said Victoria's Environment Protection Authority had advised him there was between zero and 0.7 micrograms of PFAS in soil extracted from the digging site.
"To put that into context, that is safe enough to swim in on a regular basis," he said.
"This was well and truly always an issue that was over-egged by people who were pushing an agenda."
Mr Pallas apologised for the inconvenience of the project's delay, but suggested the extra costs would not further burden the state's $19.5 billion budget deficit and rising debt.
Although provisioned within the 2021/22 budget, Opposition Leader Matthew Guy said the extra costs would leave less funding for areas such as education and health.
"The extent of the blowout in this project is bigger than the entirety of the government's mental health budget in one year," he said, questioning whether Mr Pallas should keep his job.
"It's their fault. It's their responsibility to manage these projects. It's a massive bill that we're all going to have to pay."
Victorian Greens transport spokesman Sam Hibbins has called for a parliamentary inquiry into the cost blowouts, saying the tunnel has been a "scandal from go to woe".
Tunnel boring on the project is set to restart in March 2022, subject to Bulla's Hi-Quality site being approved as a dumping ground for the contaminated spoil.
In a statement to the Australian Stock Exchange, Transurban confirmed to shareholders the settlement would not impact its tolling arrangements with the state.
AAP has contacted Transurban for further comment.
Australian Associated Press
