My January article in this journal noted that the Planning Commission was likely to make the same adverse conclusion as the three earlier cost-benefit analyses of the Macquarie Point stadium. I also argued that all political parties should anticipate this result, and how they would react to it.

The Commission has now delivered its Interim Report. After accusing the Commission of relying on biased information, and claiming that the PoSS was taking too long, the two major parties in Liberal and Labor have reacted.

In lockstep, they came to same conclusion – to abort the PoSS process. In doing so, they hope Parliament will ignore the provisional recommendation of the Report – that costs exceed benefits by a wide margin.

This decision has been accompanied by a flurry of misleading claims.

Timeliness

From the start, the Commission has struggled with the absence of timely information. For example, in November 2023 it wrote to Premier Jeremy Rockliff noting that “would be assisted if a detailed description of the project could be provided”. It also noted that it would be helpful if there was an up-to-date precinct plan, and whether the proponent was the Macquarie Point Corporation, State Growth or Stadiums Tasmania.

Rockliff’s response provided little more than is contained in the AFL contract. He attached a copy of the contract for the information of the Commission. No mention of a roof, construction cost or associated infrastructure requirements.

The Commission was set a task akin to a potential homeowner asked to evaluate a contract where the only detail in a builder’s proposal is to ‘construct a three-bedroom house with access off the street. You can choose your own colour scheme’. Seriously?

It took months for the Commission to extract enough information to start its evaluation. (It only received its stormwater assessment report a week ago, on 5 May).

Even so, the Commission is working within the timelines set out in the Premier’s original direction statement. Despite this the government argues that the PoSS process is taking too long.

To which the obvious response is, who is at fault? Certainly not the Commission.

Funding

The latest version of funding for the stadium are that $375m will be recorded as capital expenditure by the Tasmanian government, $240m will be provided by the federal funding agreement, $15m by the AFL and the remainder borrowed by the Macquarie Point Development Corporation.

Take these components in turn, starting with the $375m capital contribution. It is described in these terms to distinguish it from ongoing running costs, the cost of building the training and administration facility, and the contracted annual payment of the team of $12m per year. Given that the state’s net debt is forecast to increase by three billion dollars over the next four years, the capital contribution is financed by issuing government bonds. In other words, by borrowing.

Initially, it was proposed that private investors were ‘queuing up’ to participate in funding in the project. On the face of it, this claim was implausible for a project where the final design was incomplete, uncertainty as to when it would be approved, and how the government was going to manage the risk to the investors’ expected return.

The only winners from the drawn-out expression of interest process for investors were the consultants who were paid to state the obvious: private investment in the stadium was never a good idea.

Instead, the Macquarie Point Corporation is going to construct the stadium and to borrow.  Borrowings are to be repaid by selling land not already occupied by the stadium or other commitments. The problem is that security against the loans is extremely limited. On the 2024 balance sheet, the valuation of the entire Macquarie Point site was $49m.

As for the proposal to repay the loans through land sales, the value of the saleable land is much less than the total recorded on the balance sheet. Much of the land is occupied by the stadium and other commitments. Values might rise after the stadium is complete. But it’s hard to see it raising the hundreds of millions that will be required.

In the long run, the only difference between the sources of finance is that some of the borrowing will be reported in the usual way in the annual budget statements, and some will be ‘off the books’, as a liability of a government business enterprise. It’s all guaranteed by the government. The difference is illusory.

The third major component of proposed funding is the $240m provided under the federal funding agreement. The agreement provides Commonwealth funds of $240m for the redevelopment of the Macquarie Point precinct. It makes no reference to the stadium itself – as far as specifics, it only refers to wharf upgrades and provision of housing at Regatta Point.

While the agreement provides some leeway as to the application of the $240m, it requires part of it to be spent on housing and wharf development. If all the funds are applied to the stadium, there is still an obligation to undertake those additional expenditures. In that sense, an ongoing liability remains.

If the past track record is any guide, the proponent and its boosters have no idea what that liability will be. But the Tasmanian Parliament is entitled to know.

To summarise the situation, almost all the cost of building the stadium and related infrastructure (which is not yet known) is to be met by government borrowing or taking on other liabilities. It is less than the full story to claim, as has often been repeated, that the government capital contribution will be capped at $375m, and not a red cent more.

Quite apart from the fact that the stadium fails the cost benefit test by a wide margin, appalling management of the approval process has broader economic consequences.

Investors considering projects in Tasmania need to be assured that major project approval will follow due process, and that decision-makers demonstrate a modicum of competence.

After the debacle over berthing for the Spirits one would have thought Rockliff would have tried to shore up Tasmania’s reputation by ensuring transparency and playing by the rules. Sadly, the reverse is the case.

Dr Graeme Wells is an independent economist, having previously had an academic career in New Zealand, North America and, more recently, as Associate Professor at ANU and UTAS. Since returning to lutruwita/Tasmania he has been a consultant and adviser to a range of private sector and government agencies.

Tasmanian Times (TT) is a community-based news and current affairs service covering the island state of Tasmania. It exists to provide a diverse view of Tasmanian issues. TT creates and supports independent media content utilising the best of modern technologies and tried-and-true practices of public-interest journalism.

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