Mr BAYLEY – Treasurer, you repeated again just now that the equity funding into this project in the Budget is $354 million of a total government commitment of $375 million. That’s what you said, in your opening statement and, obviously, it has all the hallmarks of the Premier’s commitments around ‘$375 million and not one red cent more’. Of course, we know now that, through Macquarie Point Development Corporation, there is $490.7 million to be borrowed to pay for the construction, and if there are further cost blowouts there will need to be further borrowings. Can you detail the plan around security for that loan, security for the borrowings, and debt servicing of that loan?
Mr ABETZ – Right, in relation to the 375, that was the initial injection and, as part of the business case we said that is what was going to be provided, and the rest would need to be made up of borrowing, so that was always on the agenda. Of course, the people of Tasmania will be the beneficiaries of both the loan and the stadium. When you talk about what the borrowings might be and the interest payments, don’t forget on the other side of ledger, there is going to be this transformative stadium that will deliver many good economic results and be transformative and be a huge economic enabler.
Mr BAYLEY – The question was about security and debt servicing though, what security is put up against –
Mr ABETZ – It is the state government that is the security. The state government will be the owner of the stadium, which one assumes, will be a substantial asset for the benefit of the people of Tasmania.
Mr BAYLEY – You’d have to agree then, that the statement of $375 million being a total commitment from the state government, is not entirely true if you take into account the fact that Macquarie Point Development Corporation is a state entity and it will borrow $490 million. Do you accept that the State Government’s total commitment is the $375 million, plus at least the $490 million?
Mr ABETZ – Look, that is the total commitment. Let’s be clear, the very initial business case said, 375 and borrowings.
Mr BAYLEY – Borrowings were part of the capital, though.
Mr ABETZ – Yes, and borrowings. That’s always been in the public domain, and people have been playing word games. I think the 375 – which was a discreet figure – and borrowings, I think most people understand what this meant.
Mr BAYLEY – Just for the record in this committee, I know it has been talked about in other committees, but could you detail the annual debt servicing obligations of the government to meet the servicing costs of that $490.7 million?
Mr ABETZ – I have read this into the record previously, for 2025-26 $7.2 million, then 2028-29 $7.2 million and then 2029-20 it goes to $21.9 million and then to $30.7 million and then to $32 million in the year 2031-32.
For the record, can you confirm that Macquarie Point Development Corporation or indeed Stadiums Tas, if they own this asset, they won’t be servicing that debt going forward? Can you confirm that it’s coming out of the general government sector and that that $30-plus million a year will be an operational expense to the budget going forward?
Mr ABETZ – It will be an operational expense to the budget going forward, keeping in mind that the delivery of the stadium will also be providing income for the budget offsetting that operational expense.
Mr BAYLEY – But we’ve established already in other committees, you don’t know how much that is.
CHAIR – Mr Bayley, we’ll go to Mr O’Byrne and then Ms Johnston.
Mr BAYLEY – Treasurer, the Premier has repeatedly said, and I quote from a media release from 15 February this year:
We will open private sector investment options for the Macquarie Point precinct to ensure the government’s contribution to the project is capped.
In a couple of quotes from the Premier in budget Estimates last year, he said similar things, such as:
We’ll be investing $375 million and the rest will be coming from private resources.
He has said this numerous times and this is the ‘not one, red cent more’ promise, but the private sector investment was supposed to replace the need to borrow to fund the stadium. Is it still the government’s position that you’re willing to repeat here that the government would only invest $375 million into this project?
Mr ABETZ – At all times it was $375 million and borrowings from the very beginning. There was potentially an opportunity for private sector involvement and it was determined that to leverage the maximum benefit we should proceed with the government doing the lot, as we had stated. Ms Beach, do you have anything further to add to that?
Ms BEACH – I just note that the government did a market-sounding process to test what was the best option and found that there wasn’t any financial or time savings in seeking a private sector partner to do that delivery.
Mr BAYLEY – Was there much interest? There was a lot of speculation publicly in relation to the level of private sector interest.
Mr ABETZ – There were 42 expressions of interest that I indicated in answer to Mr Jaensch’s question, and then they were around 30 briefings with private sector companies in relation to the potential opportunities, so, there is genuine interest in the precinct and we will develop that further.
Mr BAYLEY – But you maintain it as the government’s position and prerogative to take the private-public option off the table and do it purely with public investment, notwithstanding the fact that that makes a mockery of the Premier’s commitment to not spend ‘one red cent more’ than $375 million.
Mr ABETZ – You can repeat that as much as you like. The explanation is on the record and debunks that which you assert in relation to that. We have not taken off the table private investment; the correct terminology might be ‘deferred’ it.
Mr BAYLEY – In the site, not the stadium, though, to be clear.
Mr ABETZ – Yes.
Mr BAYLEY – So you’ve taken it off the table in relation to the stadium.
Mr ABETZ – They’re related. It’s all related.
Mr BAYLEY – Minister, just in relation to the question Ms Johnston was asking before, the $490 million and how that gets paid down, I’ll give you the benefit of the doubt. You seem to say that that would be paid down by the government, so I’ll give you the opportunity to correct that. I would assume means you either give some sort of debt relief to Macquarie Point Development Corporation or the general government sector assumes responsibility for that debt. Is that what you were explaining to us earlier?
Mr ABETZ – As part and parcel of the development, we’ve said we’re looking at the commercialisation and getting private sector involvement and any monies received from that we would seek to put to the reduction of the debt, but that which might remain will be part and parcel of the Government’s overall debt, which ultimately will need to be repaid.
Mr BAYLEY – With respect, I mean the elements of the site that remain able to be commercialised are relatively small compared to what it was earlier, without a stadium at least. It’s impossible to think that enough could be earned to pay down a huge portion of that $490 million debt. I guess it begs the question, if the general government sector is going to be paying annually to service the debt, as you have confirmed up to $32 million a year, if the government is ultimately going to assume that debt, why doesn’t the Government just borrow it outright as they are doing as you are doing with the $375 million?
Why are you going through the charade, it seems, of enabling Macquarie Point Development Corporation to borrow this money? It just seems to fit the narrative around ‘$375 million, not one red cent’. Now there’s borrowings, but at the end of the day, you are the Government. You’re going to be borrowing the lot. We the taxpayer are going to be paying for the lot. Why don’t you just fess up and acknowledge that that this is no longer a ‘$375 million and not one red cent more’ project, this is going on to a significant amount more.
Mr ABETZ – You can spin it however you like, but the language is clear as to the initial equity injection and then the borrowings which was in the very initial business case so that is there for all to read and see. The short answer is that paying down the debt for MPDC will depend on decisions made as the precinct is activated and these decisions will be made having regard to the level of risk that the state wishes to retain balanced against the return that MPDC wishes to secure from the site. A lot of these decisions will be made in due course as we ascertain how much can be leveraged out of the private sector.
