Financing of the proposed Macquarie Point AFL stadium looks increasingly difficult after two hammer blows today.

Labor Shadow Minister for Sport, Josh Willie, confirmed that the $240 million pledged by the federal government is allocated for the Macquarie Point urban renewal project, not the stadium.

“The $240 million the federal government has put forward is for the precinct’,” he stated to interviewers Brent Costelloe and Tim Paine on radio this morning.

“It’s not tied to the AFL team. To dispel a myth from the Premier’s office, the $240 million is not tied. Neither is the UTAS (stadium, in Launceston) upgrade.

“I know that his office on social media is going around saying ‘well why you would waste all of this opportunity?’ That money is coming anyway.”

The clarification means that the cost estimates as put out by the Tasmanian government don’t add up. The regularly-repeated sliced-pie breakdown is Tasmania $375 million, federal grant $240 million, ‘borrowings against land sales’ $85 million and the AFL itself $15 million for a total stadium build cost of $715 million.

With the federal contribution being for the site, not the stadium, the Tasmanian government is on the hook for at least $615 million.

Willie’s clarification accords with the statements made by three federal ministers on the day of the funding announcement, where none of them tied the money to the stadium.

“This exciting precinct plan will provide real affordable housing for Tasmanians, real jobs and new transport solutions,” PM Albanese declared in regard to the project priorities. “This sets up Macquarie Point as the future jewel in the crown for Hobart. A place where people can live, work and come together.”

The Tasmanian government contribution may also increase if the ‘borrowings’ revenue falls through, or the AFL invokes financial penalties if the 2028 completion date is not met.

It appears the $240 million will fund various other aspects of the project, including preliminary works removing 10,000 cubic metres of contaminated material, demolition of existing buildings and relocation of certain infrastructure. It can also fund other site works including a park, housing, public art works and an Antarctic and science precinct.

Building Costs Skyrocketing

Meanwhile inflation continues to batter cost estimates in all sectors of the building industry. Master Builders Australia today released figures showing that material costs are still soaring.

Despite the rate of inflation appearing to ease, “there has still been a sizeable increase of 7.4 per cent over the past 12 months,” said MBA Chief Economist Shane Garrett.

“The outlook is bumpy as even though the general trend in building materials prices is a favourable one, there has been a worrying acceleration in the cost of concrete, cement and sand products, a category where prices are now 16.2 per cent higher than a year ago.”

Given that such materials will make up a large portion of the built cost, the $715 million cost estimate would already appear to be unachievable.

Tightness in labour supply is also impacting building costs, and Tasmania will not be immune due to its current low level of unemployment.

“Total building construction prices rose 1.0 per cent in the June quarter and 6.5 per cent over the past twelve months predominately driven by labour shortages,” Garrett said.

With construction unlikely to commence for several years, the stadium build cost could well blow-0ut towards $1 billion.

The $750 million estimate was, as revealed by the ABC over a year ago, just a ‘ballpark figure’ with no proper costings behind it.

Even the guidance used (see below) to prepare that guess indicates that the cost will rise 5% per year, and that there is a 20% premium on construction in Tasmania compared to the mainland.

Josh Willie also pointed out that there are still some unknowns related to site remediation at Macquarie Point, and that these could also add to the overall cost of the stadium and precinct development.

SEN interview with Josh Willie: Megaphone