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Liberals say they will challenge any 'extortionate' tram cancellation fees in the courts

The Liberals will challenge any "extortionate" pay-out fee to cancel light rail contracts in the courts, transport spokesman Alistair Coe says.

Mr Coe has refused to say what he regards as reasonable compensation to be paid to Canberra Metro if the Liberals win government and tear up the contract to build and operate the tram line to Gungahlin.

But he called on the Labor government to act in the best interests of taxpayers and keep the cancellation payment low, rather than drive up the fee for political purposes. 

Despite the release of a contract price this week, of $698 million, plus or minus 5 per cent, Mr Coe said the full costs remained unknown, making it difficult for the Liberals to name a figure they were prepared to pay to scrap the project. 

"The unreasonable thing is that the government knows how much it's going to cost to operate because that's what the bid was, they know what the embedded interest rate was because that had to be included in the bid, they know what the cost of the Russell extension was because that was included in the bid, yet they're not releasing that information.

"So how is it possible for the opposition to say what a reasonable termination fee will be if the government is not actually releasing the details of the cost?


"And I'm concerned  that most of this detail we will never know because they will say it's commercial  in confidence come the signing of the contract."

The party would challenge an unreasonable fee in the courts, he said.

Capital Metro Minister Simon Corbell said the cancellation payment would be anything from "tens of millions to hundreds of millions", depending on what commitments the winning consortium had made at the time of cancellation.

"The way termination for convenience operates is it's based on the amount of funding that has been committed by the contractor at the time that termination is sought. So it would depend entirely on the amount of  financial commitment that's been made by Canberra Metro should such a reckless action be taken by a Liberal government," Mr Corbell said. 

Chief Minister Andrew Barr said the pay-out would be "a huge amount of money".

"They may as well go into the middle of Northbourne Avenue and set fire to piles of money, it would be that destructive a decision."

Mr Coe described the government as "grossly irresponsible" for planning to sign such a significant contract so close to the election, and said it should ensure a reasonable termination pay-out.

"I fear we're going to have the opposite, I fear we're actually going to have an ACT Labor government advocating to drive up the cost of terminating this contract. We could have a perverse situation whereby the government is actually advocating the best interests of the consortium rather than the best interests of taxpayers."

But Mr Corbell rejected the suggestion, saying the termination clause would be the standard clause used in every government contract.

By the time of the election, work would have started on relocating pipes, wires and services and on the depot in Gungahlin. There would also be contracts with Canberra businesses.

"He's not just ripping up a contract with Canberra Metro. He's ripping up a contract with tens and tens of Canberra businesses because those contracts will have to be cancelled as well and that's local jobs and local businesses suffering pain because of this reckless blank cheque that Alistair Coe is writing," Mr Corbell said.

The consortium would also order equipment early in the project, including the multimillion dollar order for 14 trams, being built by Spanish company CAF, Mr Corbell said, but he could not say whether that order was due to be made before the election.

He also hit back at the suggestion that the government should not begin the project before the election, saying it went to the last election with a clear commitment to start work on the line by 2016.