The strife the ACT Government is in over the Bruce Stadium is more political than legal. And the consequences are more likely to be political rather than legal. However, the political and legal issues have become intertwined. Moreover, questions of public perception will be ultimately more important than legal niceties.
The public perception is probably as follows: the Government set out to upgrade Bruce stadium in late 1996 at a cost of $27 million. The Government would put in $12.3 million and the private sector would put in the rest. The public probably presumed that the public and private money would go in concurrently as the stadium was constructed and that after construction the private-sector partners would get reasonable profits.
The stadium would be suitable for Raiders and Brumbies games and Olympic soccer which would be great for the territory.
And that was the big public message put out by the Government. Though, in fact, the Government had made public in a more low-key way via the Estimates Committee and financial statements tabled in the Assembly that the territory was exposed for financing costs, like interest and set-up, beyond the $12.3 million.
The government got appropriation for its $12.3 million, but before the end of the 1997-98 financial year its $12.3 million had been spent on construction. More critically, the private sector partnership fell through and new partner was needed. The falling through of the private-sector partner was not the Government’s fault.
The Government could hardly leave the stadium half-complete. It had to do something.
With hindsight the Chief Minister and Treasurer, Kate Carnell, should have made a special statement in the Assembly that the private financing had fallen through and extra appropriation was needed.
Instead, it pushed ahead using its own money, relying on three methods which it thought were legal, proper and reasonable to support more taxpayers’ money going to Bruce than originally appropriated. All of these methods have proven shaky.
The first was the theory of net appropriations. In theory you could spend over the appropriation during the year in the knowledge you would get the receipts in before the end of the year. That theory might be fine for things like running a hospital with assured revenue, but is not appropriate for major capital works.
The second was that once the costs overran, the Government could borrow money overnight on June 30 and repay on July 1. The Government did this. And even now with all the retrospective fixing up, there is a QC’s opinion stating that the July 1 repayment was illegal.
The third was that the Government could spend unappropriated money on Bruce by calling it a loan to a department or a territory-owned entity which would then do the capital works. The loan would be an investment under the new Financial Management Act. The Government did this, but it did not follow every detail of the procedures required by the Act, so it was illegal, even though it followed the procedures earlier set in place under the old Audit Act, which would have been enough, but for the replacement of the Audit Act by the Financial Management Act.
On the Government’s side of the argument, it was a technical breach. It was done in good faith following established procedures and the defect in the Bruce funding was also true of other financing arrangements. More to the point, no money has gone astray. All the money is accounted for and was spent at Bruce. It was not siphoned off corruptly.
Against the Government, though, is the argument that a venture like Bruce should have been supported by a separate Act of the Assembly or some better legislative base than the provisions of the Financial Management Act that are generally used for roll-over type investment. (Even if Labor used a similar formula for the International Hotel School.)
The damning thing for the Government should not be the illegality discovered by the QC and later fixed retrospectively – though if Mrs Carnell is forced out that will be the ground the MLAs rely on. The level of illegality was not huge. It was more procedural or at misdemeanour level. At the end of the day no money went missing. So if Mrs Carnell is forced out on this ground, it will set a very high standard of compliance to financial and legal requirements.
No, the damning thing is that the Government trumpeted its magnificent plan to upgrade Bruce, but when it unravelled, it did not state it openly to the full Assembly. Rather it pushed ahead with the financing and ever since it has engaged in post-hoc justifications and post-hoc substantiation. It seems as if the Government has attempted after the event to fit whatever helpful law, procedure or doctrine it could find to fit its paper trail and transactions, rather than before the event addressing the transactions to the relevant law and process.
The Government has now got its private-sector financing. The Government’s difficulty all arises out of its failure to secure that financing earlier. It could have done that, but probably at some cost to the taxpayers. It preferred to wait.
The sin of the Government is that it did not come out at the end of 1997 very publicly and say, “”Look the Bruce deal is not working out as well or as quickly as we hoped. We are asking the Assembly to agree to a rescue in the interests of sport in the territory.”
But then there was an election around the corner. And questions would have been asked about value for money, bums on seats and whether the public was benefiting or would the corporate team owners and sponsors get the big benefits.
Those questions remain. And to judge them, the Assembly resumes sitting later this month and there is an election in two and a half years.