Why new stadium will cost $1.4b

Colin Barnett told Nova FM on Tuesday that Budget estimates, which have occupied the Legislative Assembly this week, is his “most boring day of the year”.

While it might be a bit tedious for the Premier, for people who have an interest in how WA taxpayers’ money is spent (likeInside State for example) it’s a fascinating week indeed.

The opportunity to forensically examine Government decisions through the Budget process is one that allows the Opposition, on behalf of voters, to get to the bottom of all sorts of issues that governments have previously been reluctant to reveal.

Like the true cost of one of the Barnett Government’s most high-profile projects, the 60,000-seat stadium beginning to take shape at Burswood.

The Government has put a range of price tags on the project over the years as it has evolved, and there are different prices for different components of the project, not all of which have been reported together.

Of course, given the Budget position, the price tag of a “nice-to-have” like a stadium is all the more politically sensitive.

Complicating factors is the structure of the project itself, which has complicated financing arrangements embedded in a 28-year design, build, finance and maintain contract entered into with a private-sector consortium led by Multiplex.

In theory, the Government is providing 60 per cent of the capital cost and the consortium is providing 40 per cent of the capital cost, with the Government to pay back the private sector with 25 years’ worth of monthly service payments which also cover the interest and maintenance costs.

This helps the Government get a large portion of the capital cost off its books up front, but efforts to learn the true liability for taxpayers have to date been obscured by the Government’s insistence that all financial details of the contract are commercial in confidence and will not be disclosed.

Labor’s Bill Johnston tried to crack the nut on Tuesday, asking Barnett: “What is the total cost, including the obligations to the contractors?”

Barnett replied: “I refer you to media announcements that detail the cost and timing of the stadium. That information has been in the public arena for months.”

Well, no, it hasn’t.

The most recent mention of the stadium’s cost in a Government media statement was 21 stadium press releases ago, in July 2014, which stated the project budget was $902.4 million.

In fact it is much more than that, as became apparent as Labor had another go yesterday at teasing out the detail from Treasurer Mike Nahan and his strategic projects guru Richard Mann.

While there was significant and confusing discussion about accounting treatments, which seemed to momentarily befuddle even the Treasury officials, what emerged was a picture that looks something like this.

The cost of the Government’s 60 per cent capital contribution is $489 million.

The liability to Government for the 40 per cent capital cost to be met by the consortium is $423 million.

The cost of the public transport package to make the stadium work is $358 million (of which $22 million is being met by the consortium contract), so call it $336 million.

And the cost of the stadium plaza, precinct and management costs which are not covered by the consortium contract are $131 million.

Add all that together and the true capital cost of the stadium emerges: $1.379 billion.

That figure does not include the value of the maintenance payments which will be rolled into the monthly service payment to the consortium once the stadium is up and running. Those are, surprise surprise, commercial in confidence.

But another key revelation from Mann yesterday was that the Government assumes that the stadium will be able to generate sufficient revenue to meet those costs.

If that assumption holds, it means taxpayers will be inoculated, but the size of the pie for stadium users (primarily West Coast and Fremantle footy clubs) will be smaller. But that’s another set of negotiations altogether.