Mr HIGGINS - 2012-11-29
Labor’s budget papers are now only a few months old and quickly becoming reclassified in the fiction section in public libraries as a result of the scrutiny being applied by this incoming government. The budget papers identified a project called the Darwin correctional facility at a cost of $495m. Can the minister confirm this cost and expand on the benefits which are expected to come from entering into a PPP for this project?
ANSWER
Madam Speaker, the starting point for this answer is that the justification for going down this path was that it would cost Territorians less. I will put it into terms so average people like me can understand it more readily. What they said is, ‘We want a house built and will spend $495 000 on it rather than spend $51 000 more on building this house because it would cost us more to do’. That seems fine, on the face of it, and an attractive proposition, and that is what they brought to the people of the Northern Territory.
However, when they went into the partnership with the organisation that was going to build their house for them, what they did not make public about that partnership was that the cost blowout would reach, according to the Auditor-General of the Northern Territory, $521 000. When you scratch below the surface, arranging the contracts doing the administration and all of the work to enable this to occur would make the house cost $621 000.
If you follow that logic then you find yourself in a situation where you are asking yourself why we are paying $60 000 a year in repayments for a $621 000 house? The reason I placed it in those terms is so people can say, ‘Hang on, that does not sound right’.
Change thousands into millions and we are talking about a $495m prison which, according to the Auditor-General, will cost $521m and, in reality, when you add on all of the other associated non-construction costs, will cost $621m and we will be paying back $60m a year for the next 30 years.
The next seven governments of the Northern Territory will be paying this back. That is the enormity of the trap they have fallen into. This is not a good arrangement for the people of the Northern Territory. The only difference with this house they have built is the promise of the people they are borrowing the money from to come and sweep the driveway, change the light bulbs, and put a lick of paint on it from time to time, that is it. The fact is, the end result of this arrangement is the house will end up costing $1.8m. That translates into the cost of the prison to $1.8bn. So, for a prison of $495m, we are paying $1.8bn ...
Madam SPEAKER: Your time has expired, minister.
ANSWER
Madam Speaker, the starting point for this answer is that the justification for going down this path was that it would cost Territorians less. I will put it into terms so average people like me can understand it more readily. What they said is, ‘We want a house built and will spend $495 000 on it rather than spend $51 000 more on building this house because it would cost us more to do’. That seems fine, on the face of it, and an attractive proposition, and that is what they brought to the people of the Northern Territory.
However, when they went into the partnership with the organisation that was going to build their house for them, what they did not make public about that partnership was that the cost blowout would reach, according to the Auditor-General of the Northern Territory, $521 000. When you scratch below the surface, arranging the contracts doing the administration and all of the work to enable this to occur would make the house cost $621 000.
If you follow that logic then you find yourself in a situation where you are asking yourself why we are paying $60 000 a year in repayments for a $621 000 house? The reason I placed it in those terms is so people can say, ‘Hang on, that does not sound right’.
Change thousands into millions and we are talking about a $495m prison which, according to the Auditor-General, will cost $521m and, in reality, when you add on all of the other associated non-construction costs, will cost $621m and we will be paying back $60m a year for the next 30 years.
The next seven governments of the Northern Territory will be paying this back. That is the enormity of the trap they have fallen into. This is not a good arrangement for the people of the Northern Territory. The only difference with this house they have built is the promise of the people they are borrowing the money from to come and sweep the driveway, change the light bulbs, and put a lick of paint on it from time to time, that is it. The fact is, the end result of this arrangement is the house will end up costing $1.8m. That translates into the cost of the prison to $1.8bn. So, for a prison of $495m, we are paying $1.8bn ...
Madam SPEAKER: Your time has expired, minister.
Last updated: 09 Aug 2016