Source : ABC NEWS
It has caused outrage amongst stadium supporters and opponents alike.
On Monday, the ABC revealed the Tasmanian government had finalised its preferred funding method for the proposed Macquarie Point stadium, settling on a debt-funded model to pay for the project, which would include borrowing any shortfall of funds through the Macquarie Point Development Corporation (MPDC).
It came following a market sounding process which explored the possibility of a private-public partnership as a vehicle to pay for any funding shortfall not covered by state, federal and AFL money.
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The decision to go alone has raised the ire of not only the state Labor Opposition which supports the stadium, but also enraged those already opposed to the project.
It has also lead to angry claims the premier has broken a core promise: that Tasmania’s contribution to the stadium would be $375 million, and “not one red cent more”.
So, has the government really broken the promise made prior to last year’s state election?
Was its subsequent re-election — albeit in minority — based on a lie?
The answer? No. Yes. Maybe. Kinda. It’s complicated.
Assertion repeated many times
Predictably, the government has defended its position and claimed that borrowing money to fund the stadium build was always the intention, and that it has the receipts to prove it.
In a media release on February 15 last year, on day one of the 2024 state election campaign, Premier Jeremy Rockliff did indeed claim that:
A “re-elected majority Rockliff Liberal Government will cap Tasmanian government capital expenditure on the Macquarie Point Stadium at the currently budgeted $375 million — and not one red cent more”.
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The release did not contain the word “borrowings” or refer to them.
Labor claims that the premier has made the “not one red cent more” claim more than 100 times.
Devil in the detail
The government has, and will, continue to argue that capital expenditure is not borrowings.
It will also argue that borrowed money, that is then paid back via selling land to the private sector for development, does not result in a “red cent” and that it simply cancels out.
On ABC’s Mornings program on Thursday, Minister for Business, Industry and Resources Eric Abetz insisted that borrowings were always part of the plan, and that they were referred to in last year’s budget and in the stadium’s publicly available business case.
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Mr Abetz is correct that the publicly available business case outlines that there would be $375 million in capital expenditure, which would be complemented by borrowings.
That borrowings would be required to fund the stadium is also disclosed on the first page of the government’s licence agreement with the AFL, which was signed in May 2023, and made public shortly after.
The concept of borrowings has also been known to most parliamentarians for some time.
In his response to the premier’s state of the state address in March, Liberal member for Lyons Mark Shelton said:
“With the AFL’s input of $15 million and some private investment and borrowings, the Macquarie Point stadium will provide a plethora of jobs during construction and upon completion”.
A number of anti-stadium protest rallies have been held, with more planned. (ABC News: Loretta Lohberger)
The Greens have also quizzed Mr Rockliff about borrowings to fund the stadium.
In September last year, Greens deputy leader Vica Bayley asked the premier in parliament to confirm “his position in relation to borrowings and whether he accepts that borrowings do represent a cost to the taxpayer and public”.
A week later, during an estimates committee hearing, Greens leader Dr Rosalie Woodruff asked the premier whether he planned to “borrow more” to cover stadium expenses beyond $375 million, because the government’s summary report to the Tasmanian Planning Commission made reference to them.
On both occasions, the premier was evasive and did not refer to borrowings in his answers.
Borrowings likely to be high
If there are on-the-record references to “borrowings” from the government, then they are very hard to remember or to find.
And there has been further obfuscation.
The debate over the proposed stadium has divided Tasmanian opinion. (ABC News)
What Mr Abetz left out on ABC Mornings is that in the business case, only $85 million worth of borrowings has been referred to and budgeted for.
The problem is that MPDC is extremely unlikely to be borrowing a mere $85 million. The amount will be far, far higher.
Even on the stadium’s current cost estimate of $775 million, the MPDC would need to borrow $145 million to make up the difference between the $775 million target and the $630 million in state, federal and AFL funding it already has access to.
But even $145 million is a stretch.
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The cost of the stadium is only expected to rise, and external quantity surveyors have priced it closer to $900m. Even at an $850 million quote, that will mean borrowings of more than $200 million through TASCORP at an interest rate of about 4 per cent per annum.
While the MPDC will have about 17,000 square metres of commercially available land to play with, and the market value of that land is expected to rise as the stadium build progresses, it will be a tall task for it to recoup more than $200 million via selling it.
Even if it can sell commercial parcels for $150 million, that would still be about $50 million of outstanding loan that needs to be paid back.
There’s your red cent.
What about a private-public partnership?
If the premier has broken his promise by opting for a debt-funded model, then perhaps he may have been able to keep it by opting for a private-public partnership (PPP).
But if paying back a loan via private funds through the sale of land breaks a promised $375 million cap, then so would a PPP.
Under that model, a public infrastructure funder would have covered the funding shortfall, built the stadium and then maintained and potentially operated it for a period of 25 to 30 years.
It’s an attractive option and may have provided the government with a short-term win.
Nothing is for free, though.
Some say the money would be better spent on essential services and education outcomes. (Supplied: MPDC)
A PPP model would have seen a slice of the stadium’s revenues carved out for the private consortium, and it would have allowed the consortium access to develop the broader precinct as well.
It also would likely have seen the government on the hook for monthly, quarterly or yearly “availability payments” to the private consortium.
Plenty more “red cents” there too.
So, has the government broken its promise?
Simply, we don’t know yet.
That’s because we don’t yet know how much the stadium will cost, we don’t know how much will be borrowed and we don’t know how much money will be able to be recouped to pay off any loan secured by the MPDC.
It’s also up to the interpretation of what is capital expenditure, and what constitutes a red cent.
It would appear likely though that there will be some of those red cents, unless another non-government funding source reveals itself soon.
The only thing that is certain is that the government will defend, its opponents will attack, and the argument will continue for some time yet.
