You can watch Roland’s presentation here or read the transcript below.
I’m going to make the first presentation in relation to the Agreement that was signed on 3 May 2023 by the Premier on behalf of the State of Tasmania. I know this is ground the Committee went over in its first series of hearings and its report, but I want to come back to it because it seems a little bit more is known about it since that time.
We have the Agreement of 3 May [2023], which was signed effectively in secret and was the product of 12 months of negotiation between the State and the AFL, which committed the State to payments totalling $375 million over the forthcoming seven years. That was, of course, based on an estimate. On top of that, the Agreement in clause 7.1 provides for operational funding on an annual basis. Again, Tasmania carries that. In clause 11.3, there’s the provision for additional, unidentified at this time, but additional funding. Then there’s a further $5 million per year in schedule 1, page 39. Then we come to the major component of the Agreement in clause 21.1, which is the construction costs of $715 million, identified then as an estimate.
Nowhere in that Agreement is there any room or acknowledgement of the need to project forward the likely or inevitable increases in the cost of building the stadium. In 2023, building projects because of the lack of resources, builders, engineers, building projects were increasing in cost at around 20 per cent per year. That was known in 2023.
By clause 20, Tasmania wears all the costs of the high-performance centre, it wears all the costs of the stadium construction. This is not a partnership between Tasmania and the AFL: this is a one-sided deal.
Cabinet approved it in September 2022, according to documents before the Committee, but we don’t actually know what the Cabinet approved. Cabinet could not have approved an expenditure of $700 million-odd because that wasn’t known at that time. The strategic business case wasn’t released until January 2023. What is very significant is that in the strategic business case document, at page 65 is a Statement by the author of that document that the funding for the stadium was based on what’s described as a request to the Commonwealth for $240 million.
This of course unravelled eventually in relation to the GST funds that wasn’t there for the stadium. I ask you to go back and look carefully at page 65. Richard will speak to that in a bit more detail.
The Tasmanian Government is solely responsible for funding of the stadium and I suggest the Committee would ask itself if it was reckless of the Premier to sign this Agreement where there been no planning and no accurate estimation of costs. Then of course, we push the fast forward button to the 2024 election campaign where the Premier announced a cap of $375 million in capital expenditure that would be put into the stadium by the State of Tasmania.
The position at the time of this Statement on the 15 February 2024 is this:
The Premier signed an Agreement saying the State is solely responsible for a minimum of $715 million for the construction cost of the stadium, based on $240 million that was meant to be extra to GST, which turned out not to be the case. The risk all falls to Tasmania and then we end up with the Premier saying on 15 February, the State’s only putting in a maximium payment of $315 million. Yet at the same time the Agreement stands with the Government and the State bearing all the costs of the construction of the stadium, however much it blows out. We’ve had statements that the cost is being flagged by representatives of the Government in their briefings with Council at somewhere between $1.4 billion and $1.6 billion. The Government can’t have it both ways. It can’t have a maximum amount it puts in, yet it stuck with this Agreement it’s made with the AFL.
The cost overrun is real. I’d like to briefly point out that the Government has not even been able to contain the cost blowout for the expansion of the Southern Outlet, with a significant shortfall on the $51 million project. Looking around Australia, the $2.7 billion Gabba Olympics rebuild has been abandoned because of costs blowout and heritage, the Commonwealth Games in Victoria were abandoned because the costs blew out from $2.6 billion to $7 billion, and another major project, Victoria’s Westgate Tunnel, blew out in 2021 from $3.3 billion up to $10 billion.
I want the Committee to be aware of a report from the Grattan Institute released on 1 October 2023 looking at infrastructure projects and I want to quote from this report. They say:
The first problem with doing things in a hurry is that the projects are riddled with risk. Premature announcements and a high price tag are two warning signs that a project is likely to have a cost blowout.
They refer to the Suburban Rail Loop in Victoria. Grattan research shows that bigger projects are riskier projects. Almost half of projects with projected costs of more than $1 billion have a cost overrun and the average increase in costs is 30 per cent. This is the kicker. They say:
Projects that are announced prematurely are also more likely to have a cost blowout. Major projects are complex. Cost estimates change as the project evolves through first announcement, strategic business case, to planning application, procurement and during construction.
That’s all I want to say in my address but I would like to pick up on a question that was put to the previous speakers. Should this project go ahead if it gets the okay from the Tasmanian Planning Commission as a result of the POSS process? My answer to that is a resounding NO because the POSS process leads to the Planning Commission wiping the slate clean for any planning controls that might relate to this project, and that includes height, heritage, location – none of that.
By any standard that exists at the moment, this stadium is the in the wrong place, is going to cost the community dearly – which other people will deal with – and it should not be built at Macquarie Point.
York Park is an excellent option for redevelopment and channelling funds into, at a location which has greater attraction because it’s more central.