Mr BAYLEY – Treasurer, in the committee this morning, you’ve said that the $375 million cost cap for the stadium is specific to and limited to funding through equity contributions. This is yet another change in definition from the government. Nothing was ever said about the cap only applying to equity contributions when this promise was made, nor in the months afterwards.
We’ve had a few versions of the story, but the last definition from the government was that the $375 million cap was a cap on capital expenditure, not a cap on equity. Isn’t this latest change in definition just more evidence that the cost cap is and always was just a fiction? The whole ‘not one red cent more’ was always just made up?
Mr ABETZ – No, because when the business case was put out, there was talk of the 375 ‘and borrowings’. If the 375 is not considered to be ‘and borrowings’ as a separate element, how on earth would you describe the 375 other than as an equity injection? You don’t have to say it’s an equity injection for everybody to know that it would be an equity injection.
Mr BAYLEY – But Treasurer, I have the business case here, and it says ‘cashflow capital funding.’ Under it, it limits both the Tasmanian government’s $375 million contribution and borrowings as part of the capital investment. Don’t you agree that the business case that the borrowings are a form of capital investment? They always were a form of capital investment. And so, the cap of $375 million ‘and not one red cent more’ was always a furphy, because there was always going to be borrowings included as part of the capital investment. That’s what the business case says.
Mr ABETZ – And that is why it has to be read in the context of which it was said ‑ namely the business case ‘and borrowings’, so nobody could misinterpret. Why would you say 375 ‘and borrowings’ if you’re saying it’s only going to be 375? It was always on the table that there would be that initial cash injection of 375 followed up with borrowings, and that the ‘and’ is joining word to combine the borrowings with that initial cash injection.
Mr BAYLEY – But you consistently tried to cap the $375 million, or claim that the $375 million of capital funding was capped at $375 million, and ‘not one red cent more’.
Mr ABETZ – No, I reject that, because why else would you borrow for this project other than to help build it? So the borrowings, clearly, were going to be part of the capital input to build the stadium.
Mr BAYLEY – But you previously explained it as ‘capital plus borrowings’ ‑ that the Tasmanian government’s contribution would be $375 million capped, capital investment, plus borrowings, but the borrowings have always been part of the capital calculations.
Mr ABETZ – Yes. It is like if you buy a house, you make a deposit on the house, and that is if you like just as much a capital investment as the house mortgage which, combined, allows you to proceed with the project.
Mr BAYLEY – So, are borrowings a form of capital investment?
Mr ABETZ – Yes, of course they are.
Mr BAYLEY – They are as per the table –
Mr ABETZ – As are equity injections, if you like.
Mr SWAIN – This is a political discussion, but there’s one additional point of potential confusion that I will just deal with.
When funding was first put in the Budget, it was put in as a capital payment to State Growth because at that time there hadn’t been a decision that MPDC would be the delivery agent.
Mr BAYLEY – That’s the $375 million.
Mr SWAIN – Yes, which was then changed over from a capital contribution in State Growth in the department to an equity contribution to the business. But that was just because the decision had been made as to who the builder was and the status of the builder. I’m sorry, I’m not meaning to –
Mr ABETZ – No, thank you for the clarification.
Mr SWAIN – It’s just a factual backdrop on the reason why at some periods of time it’s been referred to as ‘capital’ and at others as ‘equity’, because there was a change –
Mr BAYLEY – But for the avoidance of doubt, borrowings which have always been on the table. Back in the day, it used to be only $85 million of borrowings. Now it’s $490 million. That’s the scale of the cost blowouts here. But for the record, you’re saying borrowings were always part of capital investment, capital funding?
Mr ABETZ – Well, it goes to the cost of the construction of the infrastructure project which we refer to as the multi-purpose stadium.
