The expected cash cost of construction at the time was $651 million. The government said then that, if inflation and other costs were factored into the deal's 25 years, the road would ultimately cost $849 million. But the leaked document shows Southern Way will get more than four times that amount, reaping $2.75 billion over two and a half decades. Peninsula Link on opening day in 2013. Credit:Gary Sissons The document detailing the payments made each year to Southern Way was obtained by The Age as part of an investigation into why Victorian transport projects cost so much. It shows taxpayers have already paid Southern Way $780 million – easily enough for VicRoads to have just built the road without any future obligations besides maintenance costs.

This financial year alone, $110 million will be paid to Southern Way for the road. The highest payment of $150 million comes the year before the consortium's contract expires in 2038. Details of these payments were redacted in the contracts previously released publicly by the government. The Andrews government plans to use the same “availability toll” system of financing – which sees the operator earn less money if the road's lanes are closed for too long – on the upcoming North East Link project. A spokeswoman for Mr Pallas said that construction costs for Peninsula Link were $29 million cheaper with the consortium than if VicRoads had delivered it under a traditional design-and-construct contract. And over the 25 years, if VicRoads had managed the road instead of the private consortium, the government believed there would have been an extra cost of almost $10 million.

Transport planner and engineer William McDougall has called for complicated financial deals surrounding big road projects to be fully public, rather than hidden behind confidentiality agreements, to show how much money was being handed to the private sector. Mr McDougall has led studies for the Victorian government on the East West Link, the Metro Tunnel and Doncaster Rail, and worked briefly on the Andrews government's $6.7 billion West Gate Tunnel. He said the state government could have built Peninsula Link itself via a straightforward contract with a construction firm for a fraction of the cost. “It would be much cheaper for governments to just build this sort of infrastructure rather than paying someone else to do it,” he said. Peninsula Link first appeared in government planning blueprints when Henry Bolte was premier, but got the go-ahead from former premier John Brumby in 2008 when the Australian economy was on the brink of succumbing to the global financial crisis.

Peninsula Link under construction in 2011. It was contracted to cost $651 million and Victorians will pay $2.75 billion for it, over 25 years. Funding the road was as much to do with creating thousands of construction industry jobs as it was about meeting Melbourne’s transport needs. One industry figure involved in the deal to build Peninsula Link acknowledged it would have been cheaper in the short term for the state to pay a contractor to build the road, especially as it was a low-risk job on an existing road reservation. But that was a short-sighted view, said the source, who declined to be named. They said if VicRoads had been put in charge of the road, it would have spent many millions on its upkeep over 25 years.

And they argued a private contractor working for the roads authority on such a major project would have cut every corner possible to maximise profits. Peninsula Link was built to a high standard because the consortium responsible for the build was also responsible for the maintenance, they said. Overheads to maintain the road are high. It is understood that just mowing the verges on the 27-kilometre road was costing $200,000 a year when it first opened. The industry figure compared Peninsula Link with the Geelong Ring Road, which was built using a more straightforward design-and-construct contract overseen by VicRoads.

The Geelong road opened its fourth section around the same time as Peninsula Link and has had several major maintenance issues since then. The government defended the way it was paying for Peninsula Link. A spokeswoman for Mr Pallas said the report obtained by The Age was “an old document with outdated numbers”. Peninsula Link had since been refinanced, the spokeswoman said, thereby reducing payments. But once again the government declined to reveal the new payment arrangements with Southern Way, arguing they were commercial-in-confidence. An industry source familiar with major road funding said the refinancing was unlikely to have brought down payments from the state by any significant amount.