Ms SACILOTTO - 2007-02-22
The Darwin City Waterfront Project will deliver a convention centre, wave pool, parklands, promenades, hotel apartments, retail and commercial property. Can you please advise the House what the Auditor-General’s February report said about the waterfront project?
ANSWER
Madam Speaker, I thank the member for Port Darwin for the question because it is an important one. This is the second report that the Auditor-General has provided to the House dealing with the waterfront. It was tabled yesterday. If you remember, the first report was tabled in August last year and it reviewed the appropriateness of the processes adopted in the tendering, assessment and selection of the successful consortium. The Auditor-General found no issue with that process.
The report tabled yesterday comes some 18 months into the project, and I believe it is very timely. Members and the public can see for themselves the progress that is being made in transforming what was an industrial wasteland into - and it is happening step-by-step – a world-class convention centre surrounded by high quality public and recreational facilities and, of course, the residential and hospitality development. The project is progressing well.
As mentioned many times before, the economic benefit to the Territory was the key driver in the decision to proceed with the waterfront development. In his report, the Auditor-General goes through a number of different elements of where we are today, and has indicated that the analysis conducted by PricewaterhouseCoopers assessed the value of the project to the Territory. They looked at incremental tourism spend and the impact on Gross State Product. Respectively, the tourism spend was $197m flow-on, and the impact on Gross State Product from the waterfront development was $350m,. It was these figures that provided a sound basis to proceed to tender for the project.
However, and this is a point that the Auditor-General makes very clearly, the decision to proceed with the project also included the use of a public sector comparator against the tenders received, which included a comparative assessment of the risk allocation arrangement between the Territory and the private sector for that PPP. Pleasingly, the Auditor-General concludes that this comparison was positive. It is very important that, with this PPP, the comparison was positive.
The Auditor-General also looked at the cost of the project. The estimated nett cost to the Territory of the contractual arrangements with the private sector, as I have previously said, was $144m in 2005 dollars at financial close in May 2005, not forgetting that the Territory investment would leverage some $900m in private sector investment over the life of the project. That is the really exciting component of this project; the Territory taxpayer investment leverages such a significant private sector investment. Of course, as we talked about at the time, there were also the additional costs associated with the remediation works and the external works to the project, such as decontamination and managing UXOs.
The Auditor-General’s summary of costs and returns, which he has adjusted to reflect values in November 2006, result in a nett cost to the Territory of $135.2m. A comparison of the cost previously recorded by my government with those of the Auditor-General shows that when you look at the detail of the figures, there has been an improvement in the Territory’s position of $45.1m, which is largely due to the increased expectation in relation to property returns. So we have actually seen a return to the Territory and an improvement in our position of $45.1m.
I want to talk a little more about those property returns. A key factor underpinning that nett cost is the property returns. The Auditor-General has calculated that total returns from Stages 1 and 2 could be expected to be in the order of $233m in future dollars or, if you translate them to November 2006 dollars, $112.8m. If you go back 18 months, that compares with the $62m in 2005 prices that we expected at financial close. That is a significant return in property value in just that 18 months’ time, and that is what the Auditor-General said.
Madam Speaker, this is an excellent outcome and underlines the value to the Territory being able to capture those increasing property values over time, in the way that we have done, which is through guaranteed percentages of gross revenue in the final sale prices, rather than just what the CLP opposition wanted us to do, just sell the land.
Members interjecting.
Madam SPEAKER: Order!
Ms MARTIN: … and look at that overall return, what an excellent way to proceed. I am very pleased, and I am sure this House is very pleased, to have received this comprehensive review. I look forward to further reviews of what, for the Territory and Darwin, is a great project.
ANSWER
Madam Speaker, I thank the member for Port Darwin for the question because it is an important one. This is the second report that the Auditor-General has provided to the House dealing with the waterfront. It was tabled yesterday. If you remember, the first report was tabled in August last year and it reviewed the appropriateness of the processes adopted in the tendering, assessment and selection of the successful consortium. The Auditor-General found no issue with that process.
The report tabled yesterday comes some 18 months into the project, and I believe it is very timely. Members and the public can see for themselves the progress that is being made in transforming what was an industrial wasteland into - and it is happening step-by-step – a world-class convention centre surrounded by high quality public and recreational facilities and, of course, the residential and hospitality development. The project is progressing well.
As mentioned many times before, the economic benefit to the Territory was the key driver in the decision to proceed with the waterfront development. In his report, the Auditor-General goes through a number of different elements of where we are today, and has indicated that the analysis conducted by PricewaterhouseCoopers assessed the value of the project to the Territory. They looked at incremental tourism spend and the impact on Gross State Product. Respectively, the tourism spend was $197m flow-on, and the impact on Gross State Product from the waterfront development was $350m,. It was these figures that provided a sound basis to proceed to tender for the project.
However, and this is a point that the Auditor-General makes very clearly, the decision to proceed with the project also included the use of a public sector comparator against the tenders received, which included a comparative assessment of the risk allocation arrangement between the Territory and the private sector for that PPP. Pleasingly, the Auditor-General concludes that this comparison was positive. It is very important that, with this PPP, the comparison was positive.
The Auditor-General also looked at the cost of the project. The estimated nett cost to the Territory of the contractual arrangements with the private sector, as I have previously said, was $144m in 2005 dollars at financial close in May 2005, not forgetting that the Territory investment would leverage some $900m in private sector investment over the life of the project. That is the really exciting component of this project; the Territory taxpayer investment leverages such a significant private sector investment. Of course, as we talked about at the time, there were also the additional costs associated with the remediation works and the external works to the project, such as decontamination and managing UXOs.
The Auditor-General’s summary of costs and returns, which he has adjusted to reflect values in November 2006, result in a nett cost to the Territory of $135.2m. A comparison of the cost previously recorded by my government with those of the Auditor-General shows that when you look at the detail of the figures, there has been an improvement in the Territory’s position of $45.1m, which is largely due to the increased expectation in relation to property returns. So we have actually seen a return to the Territory and an improvement in our position of $45.1m.
I want to talk a little more about those property returns. A key factor underpinning that nett cost is the property returns. The Auditor-General has calculated that total returns from Stages 1 and 2 could be expected to be in the order of $233m in future dollars or, if you translate them to November 2006 dollars, $112.8m. If you go back 18 months, that compares with the $62m in 2005 prices that we expected at financial close. That is a significant return in property value in just that 18 months’ time, and that is what the Auditor-General said.
Madam Speaker, this is an excellent outcome and underlines the value to the Territory being able to capture those increasing property values over time, in the way that we have done, which is through guaranteed percentages of gross revenue in the final sale prices, rather than just what the CLP opposition wanted us to do, just sell the land.
Members interjecting.
Madam SPEAKER: Order!
Ms MARTIN: … and look at that overall return, what an excellent way to proceed. I am very pleased, and I am sure this House is very pleased, to have received this comprehensive review. I look forward to further reviews of what, for the Territory and Darwin, is a great project.
Last updated: 09 Aug 2016