Mr BAYLEY (Clark) – Honourable Speaker, a vote will be required. I move –
That the House:
- Understands when the latest stadium cost estimate was developed nobody would have foreseen the Middle East war.
- Acknowledges ABS figures show the construction industry relies more heavily on diesel than any other sector.
- Notes
(a) the Civil Contractors Federation and Australian Constructors Association have warned of the war’s impact on construction, with the latter saying ‘skyrocketing material costs and supply shortages triggered by the conflict in the Middle East are putting businesses and major projects at risk’;
(b) economists and industry analysts are raising similar concerns, with Rider Levett Bucknall saying ‘Projects that have not yet been awarded are the most immediately exposed. Rising fuel prices, higher freight costs and material price increases are already flowing through supplier pricing. This means early cost plans and budgets may need to be revisited, with greater allowances for volatility and risk than would typically have been required prior to the conflict.’;
(c) CBRE forecasts construction cost inflation in Australia will rise to 18.5 per cent next financial year; and
(d) Altus Group’s analysis of impacts on Australian construction states ‘contractors are actively adjusting their commercial approach, with major contractors (including Tier 1 and Tier 2 builders) flagging potential cost increases on current and upcoming projects’.
- Given warnings about rising constructions costs, calls on the Rockliff Government to either:
(a) table any revised stadium construction cost estimates developed in response to the current fuel crisis; or
(b) develop a new cost estimate as soon as possible and table it by 11 August 2026.
I rise to talk about this cost escalation notice of motion, and note that it goes to the heart of what we all already know: the stadium will cost more than $1.13 billion. This is not because of all of the nowknown uncosted and unallocated enabling infrastructure and debt servicing elements that need to be paid for. As I understand it, not included in the $1.13 billion includes additional siteworks, road and pavement upgrades, concourse and landscaping, Aboriginal cultural informed zone, TasNetworks substation and upgrades, and the annual $40plus million that will need to be paid from the general government sector for the $865plus million borrowings that the government and the Macquarie Point Development Corporation will need to enter into.
It’s not going to be because of these elements, but because of the inevitable cost escalations from the collapse of global order. We know the stadium is a highly political issue and we know where all members in this House stand. This motion is not about reprosecuting the argument about the merit or otherwise of the project, because agree or disagree with this project, we should all agree that scrutiny of it is an important responsibility for the parliament. We know the Premier himself has welcomed scrutiny of the project.
With that in mind, we Greens have carefully crafted and constructed this motion to be something that we feel is supportable by all members. We’ve taken an approach that considers some really genuine issues that are facing not only Tasmania, but Australia, and of course the world, and we’re seeking to make sure that the government is fully considering them when it comes to this stadium. This is one of, if not the largest infrastructure project that Tasmania has entered into. Everyone knows that the Greens are staunchly opposed to it and will continue to oppose it, particularly given the budget crisis.
We do not think that this is a priority. A third AFL stadium in this state is simply not a priority; but that’s not the point of this motion. The point of the motion is, whatever your view, this is a huge amount of taxpayer money. The $1.13 billion figure was announced on the day that the Tasmanian Planning Commission released its report into the project. There was no real transparency to the TPC about the full cost implications of this project so that they could weave it into its assessment. The recommendation that the project does not proceed, which is what the TPC came up with, was based on the third cost estimation that this project has suffered under, the $945 million cost estimation, and it was the second cost blowout. The first cost estimate was $715 million; that was up to $775 million. It then went to $945 million, which is what the panel assessed, basically. Given that figure, the panel found that that claim was unbelievable. They said:
There is substantial evidence that final costs are likely to be significantly greater than conceptdesign stage costs – as has particularly been the case in recent years for major public construction projects, both in Australia and overseas. A reminder that that finding of the TPC was based on the $945 million cost estimate and the expert panel found that the stadium would diminish the economic welfare of Tasmanians.
Meanwhile, just about every other project around has been subject to significant cost blowouts, whether it be Marinus Link, whether it be the North West Transmission Developments, the Hydro dam upgrades, the Devils’ High Performance Centre, or the Cradle Mountain Cableway. Admittedly, the government has acknowledged that the stadium project has blown out from the original $715 million to $1.13 billion. But I ask you this: do you trust them? Do you trust them that it hasn’t gone further? Of course, the Spirit of Tasmania shemozzle gives you the answer, and that’s no. As we drive past the Devonport wharf, it demonstrates that the government has not been able to demonstrate that if they’re left on their own and left to their own devices that they’ll be able to deliver it as promised. The stadium continues to be a slow moving trainwreck that we cannot afford. We don’t support the stadium and we think the commitment to build it should be pulled. There’s plenty of projects that have been approved only to not proceed because they become cost-prohibitive.
But this motion is not about stopping the stadium. If it was, the call to action would be for the government to walk away. This motion is about transparency and as the motion acknowledges, nobody could have seen this global crisis coming. It’s completely unreasonable for anyone to suggest – and certainly we Greens are not suggesting – that the Macquarie Point Development Corporation or the quantity surveyors could have or would have accounted for Donald Trump launching a war on Iran, nor the massive surge in prices that it has caused.
But we can debate how rigorous or otherwise the cost estimate for the stadium was, but again, that’s not the point. The point is that even the most rigorous and the most diligent cost assessment and risk modelling process could not and would not have accounted for what has happened this year. This isn’t just the Greens pulling ideas out of thin air. Construction organisations, economists, industry analysts and major companies are saying loud and clear that the cost and contingency planning done before this crisis will no longer reflect what the true costs will be.
There are way too many statements out there on the internet to this effect for us to read today, let alone put into the motion, but we did want to put some directly into the motion because they make a strong case and give a flavour of the situation. I’d like to take the opportunity to table some of those key documents and read them in to the Hansard in more detail. I seek leave to table documents relating to this motion. These documents have been circulated to all members, the Speaker and the Clerks.
Leave granted; papers tabled.
Mr BAYLEY – Thank you, honourable Speaker, and I thank all members for that. I will take a moment to read some of these documents into the Hansard because they are really important and they are really telling. The Australian Constructors Association is the national voice of Australia’s construction industry, representing the country’s leading contractors. In a media release on 27 March, as is in paragraph (3)(a) of the motion, they said:
Australia’s construction industry is facing an immediate and escalating threat, with skyrocketing material costs and supply shortages triggered by the conflict in the Middle East putting businesses and major projects at risk.
The Civil Constructor’s Federation of Australia also commissioned Saul Eslake to report on the impact of the Middle East fuel crisis on Australia’s civil construction centre. Mr Eslake, a highly regarded economist, had these points to make in his report:
Within the construction sector, heavy and civil engineering construction accounts for almost two-and-a-half times as much consumption of diesel as the residential and nonresidential building sectors combined, according to the ABS inputoutput tables.
Mr Eslake also says:
As previously noted, the construction sector is more dependent on diesel as an energy source than any other sector of the Australian economy – including agriculture and transport – and civil engineering is more dependent on diesel than the other major construction subsectors namely residential and non-residential building. And finally, he goes on to say:
There have also been substantial increases in the prices of many other products used in civil engineering work, including bitumen and asphalt, explosives, PVC and polyethylene pipes, electrical conduits and geo-textiles for all of which downstream petroleum products are a significant input. Anecdotal evidence suggests that prices of many of these products have increased by between 35% and 50% since the outbreak of Gulf War III.
Mr Eslake has been clear. Ryder, Levitt and Bucknell is a leading independent global construction property and management consultancy with over 4500 employees across 120 offices specialising in quantity surveying, cost management and project management and advisory services. On 1 April they said:
Higher fuel and freight costs have lifted delivery prices for imported goods and locally transported materials. Many freight providers, building material suppliers such as concrete, steel and sand and manufacturers have added surcharges over the past few weeks, with fuel charges typically in the 10 to 25 per cent range. Higher diesel prices have also increased the costs of running plant and equipment such as earthmovers, cranes and other heavy machinery.
Some of the publicised price increases for products and materials include 30 per cent increase for polymer-based products such as plastic pipes and fittings, PVC profiles. For public and private developments, the effects of the Middle East conflict are likely to be felt across projects, both in planning and projects already under construction. [tbc]
This is what I have in the motion – projects that have not yet been awarded the most immediately exposed. This speaks directly to the Macquarie Point stadium. Rising fuel prices, higher freight costs and material price increases are already flowing through supplier pricing. This means early cost plans and budgets may need to be revisited with greater allowances for volatility and risk than would typically have been required prior to the conflict.
Lastly, I’ll read in Altus Group from 31 March. It’s a multinational company offering valuation, quantity surveying, development advice and financing advice:
The current environment demonstrates that fuel does not just move vehicles, it moves every component of the construction industry. As fuel prices rise, the effect cascades through the entire project lifestyle, amplifying overall cost pressures.
They go on to say:
Contractors are actively adjusting their commercial approach, with major contractors (including Tier 1 and Tier 2 builders) flagging potential cost increases on current and upcoming projects.
Finally, we’ve already seen significant pricing uplifts on PVC, concrete, plumbing services and trades. Concerns also exist about furniture, fixtures and equipment, particularly items sourced from Europe. Lead times for major equipment such as transformers and generators are also of concern.
This is an issue that is affecting the full supply chain and production chain, and that’s just a few select bits from some respected voices, but I’d encourage members to have a look more deeply if they’re interested because there is plenty out there.
What’s clear and accepted across the board is that assumptions made before this crisis no longer stand, and what’s crucial to understand about this fact is that it applies not just to construction costs outright, but to the contingencies too. We know the stadium project has contingencies and escalations built into the current cost estimate. We understand the MPDC and their quantities surveyor undertook a risk assessment process to reach that figure. But what construction figures and entities are saying is that these won’t be enough given the serious effects of the global fuel and supply chain crisis.
On that basis, we feel that there’s a compelling case for the government to update their cost estimates for the stadium to reflect this new reality. I’d be interested to hear if that work has already been done or has already started. I’d certainly hope it has because at the very least I would have thought it had and if it was, it should be on the table. If it’s the case, it’s pretty uncontroversial to suggest that any updates to price information that should be in the public domain are put in the public domain. On this, I want to go to some evidence put before the Public Accounts Committee where questions were asked about this. I’ll lead with a question from Mr Winter who, when talking about the adequacy of the $1.13 billion estimate, asked:
You mentioned in your presentation that you’d be continuing to report on costs. How would you report on the cost? Is that directly to the government or publicly or through the Public Accounts Committee?
Ms Beach, the CEO of the Macquarie Point Development Corporation, said, ‘All of those things’. Mr Evans, the chair of the Macquarie Point Development Corporation, said, ‘All of the above’. So, it’s an expectation that was set in PAC, on our behalf – PAC is operating on our behalf that any cost-estimate escalations would be reported not just to the government, not just to the Public Accounts Committee, but, indeed, to the public. That’s what we are seeking to have happen.
I think this is reasonable because the public, at the end of the day, are paying for this project. It is taxpayers’ money that is paying for this project. It is taxpayers’ money that is annually going to be paying to service the debt for this project, which is going to go up no matter what. Not just because our credit ratings have been downgraded, but because interest rates themselves are going up because of this crisis.
If this work hasn’t been done, it needs to start straightaway. This motion is written without making any assumptions about what has or hasn’t been done – it’s giving the option. It’s written with the expectation that an updated cost estimate is required, and it’s written with the commitment of both the CEO and the chair of Macquarie Point Development Corporation that they would ultimately be made public. If the process hasn’t already started, the motion provides plenty of time for that work to be done. More than three months, in fact, because we set the date that if the work needs to be done, it gets submitted on 11 August 2026, which is the first day of sittings following the winter break. Let me repeat this, we’ve drafted the motion so that everyone in this place feels as if they can support it and we set the timeline with an appropriate amount of time in place for that to be delivered.
At the fundamental level, I cannot see how a responsible government would look at the crisis caused by the war in the Middle East and think that they didn’t need to update their cost estimate for one of the most consequential projects our state has ever seen. If that cost estimate is done, I cannot see any reasonable argument that it’s not in the public interest for that information to be made public. After all, there’s already been a number of budget blowouts for the stadium, totalling about $400 million. All that information has been put in the public domain, so why wouldn’t the same happen now?
The $1.13 billion figure was detailed in the government’s response to the Tasmanian Planning Commission report. It was broken down into a number of different sections, including construction costs, contingencies, et cetera. Those figures were repeated to the Public Accounts Committee upon questioning. So, it begs the question, why wouldn’t the same happen now? It’s taxpayers’ money that’s going to be paying this bill and it’s in the interest of the public and the taxpayer to see the issue.
I reiterate what I said at the very top, which is: agree or disagree with the stadium, scrutiny is essential. We all know that that is our job in this place and parliament has a significant responsibility to oversee this project to make sure that we do not see a repeat of the Spirits fiasco. There’s a clear case for a new cost estimate, and for it to be publicly released. There’s a clear case that the $1.13 billion figure does not stand given the current global crisis in not only fuel and transport systems, but product pricing as well. There is a demonstrable public interest for that information to be released.
With that in mind, I urge all members to consider this motion. I commend it to the House and I hope we can get support from all members across this Chamber.
