Legislative Council, Thursday 1 June 2023

Ms FORREST question to LEADER of the GOVERNMENT in the LEGISLATIVE COUNCIL, Mrs HISCUTT

Noting the Commonwealth Cost Benefit Analysis (CBA) guidelines state, ‘The value of land should be determined by its opportunity cost, that is, what it could produce in its best alternative use’. Thus, the land at Macquarie Point is not ‘free’ land:

1. Was the opportunity cost assessed in the stadium proposal; and
a. If the opportunity cost was assessed, please provide details of the assessment and costs.
b. If it hasn’t been assessed and factored in:

i. Why wasn’t it; and
ii. Does this therefore indicate that the CBA undertaken by government mean the costs are understated:
iii. If the response to 1(b)(ii) above is no, please include a full explanation of why the costs are not understated.

ANSWER:

The Department of State Growth engaged appropriately qualified consultants to undertake a cost benefit analysis (CBA) of a proposed new stadium in Hobart and to produce a report in line with industry standards and provide comparability with other CBAs prepared for sporting stadia and social infrastructure.

The consultants confirm that the CBA applied a consistent methodology across both costs and benefits of the stadium to reflect the additional benefits that would be delivered to Tasmania through outcomes such as 28 net new events, and the additional costs that will be incurred through developing the stadium.

Consistent with this methodology, no explicit allowance has been made for land cost. However, the applied real discount rate of 7 per cent reflects the long-term opportunity cost of capital and resources considered in the study.