Legislative Council, Thursday 28 September 2023

Ms FORREST (Murchison) - Mr President, I am pleased to rise and speak on the Interim Report of the Joint Standing Committee on Public Accounts into the feasibility planning for the new sporting and events stadium in Hobart at Macquarie Point. This project has been broadly referred to as the new AFL stadium, which I will also use to refer to it, rather than the whole long-winded title.

I state at the outset to ensure all who may be listening now, or reading this at a later time who may wish to quote me out of context, to ensure they have a clear understanding of my position. Whilst this is not entirely related to the actual motion to note the report, this is important to say, as my comments often get taken out of context by some.

I fully support our own Tasmanian team. I come from the north-west of Tasmania with a deep and lasting tradition of AFL football. I played the game myself even kicking a goal when I was at high school. It was a good goal, I might say.

Mrs Hiscutt - Can we see a replay?

Ms FORREST - They did not have video cameras in those days.

Mr Valentine - Did you win the game? That is the important thing.

Ms FORREST - I cannot remember. The goal was all that mattered to me. I am a somewhat disillusioned North Melbourne supporter as far as AFLM teams go; AFLW is a different story. They did get knocked off by Brisbane last week, but other than that we have won every game so far.

I have been to many AFL games in Hobart, Launceston, Melbourne and Sydney, and I have also visited the Adelaide oval a number of times before and after its redevelopment. I am also not averse to the construction of a new purpose-built stadium and recognise the need for quality facilities for elite levels of sport, along with real support for grassroots sport for boys, girls, men and women.

I state those comments because there are many who seek to misrepresent some of my views and comments on this, particularly in my role as the independent member for Murchison and Chair of the Public Accounts Committee. That stated, I still remain deeply concerned about the use of Macquarie Point as a site for the stadium due to a range of factors, some of which are outlined in this interim report and some which will be subject to further inquiry. Some of these matters relate to heritage matters, traffic management, visual impact, including particularly on the Cenotaph, land conditions and cost concerns, to name a few.

I am also disappointed by the Government's handling of this as it has led to deep divisions in our community when the opportunity for our own Tassie team after years and years of trying for it should have been uniting to us all. It has created great division in this community and state.

I am aware of claims this is a highly political matter and some are suggesting the inquiry has been biased. All members of the committee have made public comments about this proposal and it is a matter of significant public interest. One would expect members of parliament to speak publicly and engage with our local communities about such an important matter where there is such significant capital expenditure. Members have all acted appropriately in committee hearings and deliberations, fully assessing the information provided.

As members here would know and perhaps members of the public do not, the committee can only report the evidence it gets. The committee cannot make stuff up. It cannot make assumptions that are not based on evidence received by the committee. If there is more evidence provided in one particular point that is not counted by somebody else, we cannot report information we do not get. It is important to state that.
This interim report provides a summary of information predominately received prior to the release of the club funding and development agreement signed by the Crown in right of Tasmania and the Australian Football League, or the agreement, which I will call the agreement hereafter. As noted in the executive summary, significant developments have occurred with regards to the proposed new facility and the agreement signed by the Premier on behalf of Tasmania and Mr Gil McLachlan on behalf of the AFL, which has been partially publicly released.

Matters related to the agreement will be a key focus of the ongoing inquiry and as members would be aware, the Public Accounts Committee's remit is to look at the expenditure of public money. There is a lot of detail about the likely expenditure of public money in that agreement, including penalty clauses and things like that.

I am focusing on the initial terms of reference that are the subject of this report. This inquiry was in direct response to significant community interest in the proposed facility at Macquarie Point and allegedly as a requirement of the agreement with the AFL. It is a matter of significant public interest and thus, important to receive full scrutiny.

The terms of reference that guide the work of the committee in the preparation of this report are as follows:

It was to inquire into and report upon the Tasmanian Government's process into the feasibility planning for a new sporting and events stadium in Hobart, with a particular emphasis on -

(1) The process used to select Macquarie Point as a site for the proposed new stadium.

(2) How a new roofed stadium became a condition of the Tasmanian licence to enter the Australian Football League.

(3) The figures and assumptions contained within any state government-commissioned reports and economic impact assessments of the proposed Macquarie Point stadium, including any subsidies required and assessments of ongoing operating costs.

(4) The Tasmanian Government's expectation regarding financial contributions from the Australian Government, AFL and third parties.

(5) The level of borrowings and costs on the assumed $375 million Tasmanian Government contribution to the construction of the proposed new stadium.

(6) The future of Blundstone Arena and UTAS Stadium, including state government ownership and future capital and operational expenditure.

(7) The role of the Major Stadiums Business Unit within State Growth and the newly established statutory authority Stadiums Tasmania in relation to the proposed new stadium and any other matters incidental thereto.

This interim report focuses predominantly on the processes and decision-making related to the decision to select the Macquarie Point site for the new stadium, and to understand how the condition of our own team licence being granted was conditional on a new 23 000 seat, fixed roof stadium at Macquarie Point.

Mr President, the evidence was clear this was a decision of the Government, a decision made without engaging with key stakeholders - including RSL Tasmania, Vietnam Veterans Association Tasmania, City of Hobart and TasWater - until a fortnight after the Cabinet decision was made on 5 December 2022, and predominantly after the official announcement made on 18 December 2022. This is described in finding 1.

Finding 2 states the determination that the proposed stadium should have a fixed roof was initiated by the Government and not the AFL.

Finding 3 noted the PricewaterhouseCooper report does not account for the fact that test cricket is not being played and is unlikely to be played under a fixed-roof stadium. This was revealed by Cricket Tasmania representatives in the public hearing.

Finding 4 notes the MI Global Partners report indicated the proposed new stadium might benefit from having a retractable roof. As we know, the agreement was for a fixed-roof stadium with 23 000 seats at Macquarie Point.

Finding 5 noted the AFL Taskforce report does not state a new stadium was essential, nor should it be a condition of a Tasmanian AFL team.

Mr President, I do note, the AFL Taskforce report suggests a new stadium is likely to be needed and would be a benefit. That is an important distinction. The witnesses before the committee, particularly government representatives, basically tried to tell the committee that it was a recommendation or a condition the task force made. They suggested that a new stadium is likely to be needed and of benefit.

Mr Willie - Long-term aspiration.

Ms FORREST - It should not be a condition of the team, basically. It is important that we read the words in context and not make meaning from them that really is not there. The AFL Taskforce is not saying we need a new stadium; they are saying we would need a new stadium or new facility.

Mr President, I fully appreciate the desire to see our own team and our new stadium proceed. Many ardent AFL supporters suggest I look at the business case that they claim stacks up incredibly well. Unfortunately, there are differing views on that. I seek to disagree that the business case as presented to us stacked up incredibly well.

Many of the assumptions contained in the various reports provided to Government, including the PricewaterhouseCoopers report, the MI Global Partners report are not comprehensive or detailed enough to enable a meaningful cost benefit analysis to be determined.

These reports do have significant gaps. For example, the absence of assumptions related to opportunity costs, and some would suggest implausible event attraction details. The Government were not able to provide a basis for the events that were either provided by the Government to those companies to assess or how those lists of proposed events, particularly in addition to the AFL matches, are actually determined as the ones that are likely to attend. There was no information provided that supports that.

Mr President, the inquiry is ongoing, so obviously there is still time for the Government to do that. The purpose of the cost-benefit analysis is to assess whether a stadium is a socially desirable investment and whether the costs are greater than or less than benefits, including social benefits. That is the purpose of those sort of assessments.

In addition, the Tasmanian Government's policy requires major infrastructure investments to have a cost-benefit ratio greater than one; that is, where the benefits need to exceed the cost. The MI Global Report forecasts the cost-benefit ratio between 0.3, as in the worst-case scenario, and 0.75 as the best-case scenario. Both are below one. The cost-benefit analysis also assumed that projected occupancy of almost one major event per fortnight of 10 000 people or more would be achieved in the first year. This suggestion is not supported by evidence received by the committee.

Again, the committee reports the evidence it gets. If there had been evidence provided that supported that claim, the committee would have reported it. Assuming the cost-benefit analysis was undertaken without the knowledge of the agreement that had been signed between the state and the AFL, which, as I have said, is under the committee's consideration under our new refocused terms of reference, then that is a matter that can, and will, no doubt, be more fully considered.

One of the things that it does not actually look at, but I do acknowledge it was probably prepared before access to the agreement was available - if indeed the agreement was available at all to PricewaterhouseCoopers, MI Global Partners and any other organisation that undertook such assessments - is the potential and the not unlikely costs associated with penalty payments that are included in the agreement for failure to meet deadlines or not meet attendance targets, are not considered in that assessment. Therefore, the ratio with all the impacts considered is actually likely to be lower, all things considered. This is something that the committee will continue to look at.

As I mentioned, the cost-benefit analysis is used to assess whether the stadium is a socially desirable investment and generally includes an assessment of what are referred to as opportunity costs. This involves an assessment of where or what the opportunity is, if the resources are used elsewhere or a different purpose is used for that particular site or build or whatever it is, and how they are actually valued. Finding 8 notes MI Global Partners Report in its cost-benefit analysis does not take into account the opportunity costs associated with the land at Macquarie Point. If opportunity cost had - and this is the cost you have to assess how else we could use this land - even though I acknowledge it is public land, it does not remove the responsibility to consider how else the land could be used, particularly in light of the fact that there was a plan for that land. Yes, things have been pretty slow, and we have talked about that in this place before.

However, if the opportunity cost had been considered, we would have seen an assessment of how the resources used to build the stadium could possibly have been used elsewhere. Was there a better way to spend this money to create the social benefit and desirability? If you want to stick to the same train track, you can talk about how else the money could be used to support grassroots football, for example, or the engagement of young people in sport, or whatever it is, as well as alternative uses for the site.
Opportunity cost is not difficult to measure. We all know that Macquarie Point is valuable land; it is prime waterfront. It has had a number of uses. We also know that the area is quite heavily contaminated and there has been a lot of work done to decontaminate the site over many years. It is prime waterfront, it is close to the CBD, and this is one of the reasons that it was seen as a possible location for the new multipurpose sports and events facility, or the stadium. Even though the area is owned by the state, it should not be considered free land. When considering opportunity cost, ignoring this opportunity means actual costs are understated. So, you are actually understating the cost and potentially over-emphasising the benefit.

When we are considering the financial implications of this proposal and the agreement, these matters are within the remit of the Public Accounts Committee. Finding 6 states that no evidence was received that identified the basis of the assumptions provided by Government to the consultants to inform the business case modelling, in particular the number and nature of expected events and attendance at the events at the proposed stadium. That was my point. If the Government had been able to provide that to us, we would have reported it.

If the economic case is to actually stack up, we need a far more comprehensive, accurate and evidence-based assessment of likely events and realistic crowd numbers. We also need more detail on design, a realistic estimate of costs and clear modelling to support assumptions, particularly as the Macquarie Point cost-benefit analysis was undertaken before likely cost blowouts have been factored in.

Since those reports were done there have been significant other projects that either were completely cancelled or had to be rethought because of significant cost blowouts. We saw the Penrith stadium pulled. We saw Dan Andrews - who stood down as premier yesterday or the day before - cancel the Commonwealth Games. A lot of that was related to the blowout of costs of facilities, stadia and others. We know that there are significant costs and cost blowouts with these type of facilities. This is very relevant, as we have seen other infrastructure investments escalate in their costs.

In terms of the amount of public money that is being invested in this facility, again, I acknowledge that we will need a purpose-built facility at some stage, but it needs to be done in a way that ensures that the people of Tasmania are taken on that journey and the relevant stakeholders properly consulted. Most of the people in the construction industry I have spoken to about this are quite convinced that the suggested total of $715 million is farcical. There has been evidence in the public more recently about the condition of the site and how you are likely to have to do a lot more ground work if you are going to build anything on that site and whether you can actually build something as heavy as a stadium on that site.

Mr Valentine - It is basically reclaimed.

Ms FORREST - Yes, a lot of it is reclaimed. There is also the seawall there that supports the TasPorts port area. These matters of cost and how that will be determined are subject to the ongoing review of the Public Accounts Committee.

I know there are many who desperately want our team in our state, and state that if we have to have a stadium as well, then that is okay. Some of these people have actually asked me to forget about the cost and think only about the benefits. If I am not concerned about where the money is coming from and what impact it would have on the state's financial position, I too may have the luxury of taking such a position. But I do not.

1 am not elected to overlook such key and important matters. My role on the Public Accounts Committee also is not to be a rubberstamp for government spending. It is to scrutinise the management, administration and use of public sector finances. Like a lot of Tasmanians, I want to see our AFL team sooner rather than later. I want to see the women's team run out before the men. We have more chance of getting that up. As I said, I am not averse to a new stadium, but I am averse to being dictated to by those outside our state putting us under significant financial pressure without proper process.

The committee notes that it is expected the new facility will be debt funded. The Australian Government funding to support the York Park and Macquarie Point developments is likely to result in reduced GST payments in the future. There has been a bit more commentary on this since we tabled this report. I have said consistently that when you listen to the Prime Minister's comments, previous and more recent, and you read the federal budget papers where the funding for these two projects is outlined, it is pretty clear the use of their language is very deliberate.

If you go to the Commonwealth Grants Commission website, it is a complicated process and formal. They have a lot of documents and information there. But if every project like this around the country were quarantined from GST - every stadium, every new facility, every new hospital, every new school, every new infrastructure project - then you would completely decimate the whole fiscal equalisation scheme. That is what the Prime Minister was basically saying the other day when he said people do not understand it. I do not expect the average punter to understand it. It is a very complicated process. We have an obligation here to understand it

… understand it. It is a complicated process, but we have an obligation here to understand it and not to make interesting comments suggesting that by writing to the federal Treasurer it will all be tickety-boo. You saw what happened with the Royal Hobart Hospital. That was not quarantined, and rightly so. It should have been part of the knowledge at the time. Some projects are not quarantined; some are partly quarantined and some fully. Works on major highways, like our national highway, are nearly always fully quarantined because they are part of our national highway. It is all laid out on the Commonwealth Grants Commission website. It is not hidden. We have an obligation to understand how a very complicated system works, as best we can.

The report notes that these payments are unlikely to be quarantined and will lead to reduced GST payments in the future, because we know there is a three year lag. These are very particular and important financial implications for the state which has, as I have said, [11.36.18 TBC ] to understand how that would impact on us.

Mr Valentine - Did you say it is unlikely to be quarantined?

Ms FORREST - Absolutely.

Mr Valentine - I wanted to make sure it was unlikely, not likely.

Ms FORREST - Unlikely; that is what the report says. With increased borrowings to fund such a project that could deliver an intergenerational asset - and that is part of the benefit of an intergenerational asset; interest payments to service this debt will be required from the same bucket of money that we need to fund health, education, and other infrastructure around the state. The state does not print its own currency. We have to manage our budget; and if we are going to take on a debt, there are repayments involved that come out of the bigger bucket of money to pay for all the things that the state needs to do to deliver the services. That is the reality.

There are matters the Public Accounts Committee must consider in our scrutiny, on behalf of all Tasmanians, and these matters will be the ongoing focus of the committee. On the basis of the evidence received to date, and the more recently available information, the committee resolved to amend the terms of reference, and continue scrutiny of government decision-making and financial implications related to the Tasmanian AFL team and the proposed new stadium.

As the report notes, there was one recommendation, which is a confirmation of the resolution of the committee to revise the terms of reference. We now pretty much understand how the decision was made and how Macquarie Point was tagged as the site, so we revised the terms of reference. They now state, as in the report recommendation:
[TBC]
The terms of reference will focus on the inquiry into, and to report upon, the Tasmanian Government's process into the proposed arts, entertainment and sports precinct in Hobart with a particular emphasis on -

(1) Matters related to the Club Funding and Development Agreement signed by the Crown in right of the Tasmanian Australian Football League;

(2) The suitability of Macquarie Point as the site for the proposed arts, entertainment and sports precinct;

(3) The financial risks associated with the agreement;

(4) Matters related to the financing and delivery of the entire proposed arts, entertainment and sports precinct. [TBC]

That brings in the federal funding and other potential AFL funding and anybody else who puts funding in. At this stage I am not aware of any other private investors.

(5) The future of Blundstone Arena and UTAS Stadium.

When we tabled our interim report there was some criticism about the finding it was not clear about their future. There is a lack of clarity about how many games will be played there in the future. That is what the committee was referring to. The committee is talking about the future in terms of an AFL venue and what that will mean. We know there are commitments to play games at UTAS Stadium in Launceston; what does it mean for Blundstone Arena? Blundstone Arena might become the home of cricket only, and that is okay; but it is not clear. The Government says that it is clear; however, it was not clear to us as a committee and that is why we have made the finding we did.

Therefore, matters related to the treatment of the Australian Government funding and the future of Blundstone Arena and UTAS Stadium will form part of the ongoing inquiry, because we have not come to a clear understanding on those matters. On the Australian Government funding, we will not know until at least the end of the year - because it is then that the federal Treasurer will make a decision about whether he writes to the Commonwealth Grants Commission and asks them to quarantine, or partially quarantine; or does not even write. We do not know those factors but, as I have said, if you understand how the system works, it is highly unlikely that it will be quarantined.

The key ongoing focus is on the financial implications that the state will be reported on more fully in due course. I reiterate the role and function of the Public Accounts Committee. Section 6 of our act says:

(1) The Committee must inquire into, consider and report to the Parliament on any matter referred to the Committee by either House relating to -

(a) the management, administration or use of public sector finances; or

(b) the accounts of any public authority or other organisation controlled by the State or in which the State has an interest.

(2) The Committee may inquire into, consider and report to the Parliament on -

(a) any matter arising in connection with public sector finances that the Committee considers appropriate; and

(b) any matter referred to the Committee by the Auditor-General.

If a matter is referred by the House, we have to consider that as a committee. This matter was not a referral from the House. It was an own motion of the committee, so it fits under the 'may inquire' area. The committee is master of its own destiny in that regard, and has chosen to amend its terms of reference, noting that the agreement was not available when those terms of reference were first put forward and agreed by the committee.

I reiterate, the committee can only report the information received by way of submission, verbal evidence, responses to questions on notice or other information received by the committee. The inquiry was established by an own motion of the committee and, as such, the committee has determined the way forward. It is important to me that such large amounts of public expenditure be subject to full and proper scrutiny. The committee has the important task of gathering this information and appreciates the input from key stakeholders and interested parties. Any interested parties are quite welcome to make themselves known to the committee - it is not hard to find - if they have information that they wish to provide to the committee that would support the work.

The work of the committee will continue with a renewed focus on the financial implications of the agreement, as I outlined in terms of the committee's recommendation on the terms of reference. These matters are of great public importance and involve significant public funding. The people of Tasmania deserve to know the details and implications of these spending decisions, and I note again the majority of Tasmanians do want and expect an AFL team. There are some who do not; but I believe the majority do. Certainly, the people that I represent in my electorate want a team. We have a strong footy culture. We have produced some of the finest AFL players up there. As I said in a recent article that people might have read, I delivered a few of those boys who are now men playing in AFL, including the current Fremantle captain, Alex Pearce. [OK]

Mrs Hiscutt - Through you, Mr President; you are talking along the coast, not just your electorate?

Ms FORREST - Yes, he is from Ulverstone. I did that as a midwife, not as an elected member. There are also many others from Burnie and around that region. I feel very connected to some of those players, and I am sure as AFLW continues there will be more of the women involved in that, and I may have had a part in their lives in other ways. I have had people say I know nothing about football. That is an insult. It is the nature of some of those people. They like to pull you down and suggest you do not know anything. However, I do know what my role and responsibility is in this place and I will continue to take that seriously.

I look forward to other members' contributions on this motion and the opportunity to reply to the debate.

 

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