The Auditor-General John Parkinson’s report on the redevelopment of Bruce Stadium was published yesterday. Its findings reveal horrible short-comings in a major construction project. Though the auditor concluded no minister or departmental head benefited financially through fraud or corruption, his report details a litany of incompetence, unfulfilled expectation, ignorance of the law and therefore breaches of it, and general failure to attend to getting good value for taxpayer’s money.
It seems that Chief Minister Kate Carnell set her heart on having an absolutely first-rate Stadium for the ACT to host Olympic soccer. From that point it seemed that all involved became blinded to prudent project management.
The best that can be said that there is something to show for all the taxpayers’ money that was poured into it — the ACT has top-rate stadium. Alas, it will be too big and expensive for ACT needs and will probably never pay for itself. Governments often build large public works and infrastructure that never pay for themselves. No; the difficulty here is that this is a Government which has prided itself on fiscal discipline and financial prudence. And a greater difficulty for this Government is that it was not open with the electorate and the Assembly. Had it begun with the proposition that it would spend $64 million on building the best possible stadium for the ACT, it was in a defensible position. Instead, it put the input of public money at a mere $14 million and made hopelessly fanciful projections of private sector money pouring in to met the rest.
The Auditor thought it would cost $64 million by next year and the economic benefits would be significantly less than that. The problem for the Government is that it put the case to the Assembly on an economic basis, not of the subsequent basis of the importance to the ACT of having a world-class stadium for morale and status reasons.
The Government cannot have it both ways: on one hand argue that it is economically prudent and on the other defend the neo-Keynesian squandering of public money on infrastructure in the name of making us all feel good during the Olympics or when local football teams make the grade nationally.
All the private-sector hype and marketing failed to deliver the returns expected. In 1996 they expected 40,000 spectators at each Olympic game. Only 11,000 attended on Sunday night. A lot of the cost blow-out went to facilities for the “”premium end of the market”, not the punter in the stalls. The Government hoped to recoup things like naming rights which were never sold and corporate suites and passholder memberships which were hopelessly undersold. Target revenue for sale of stadium products was $13.9 million. Only $420,000 was raised and the consultants did not carry any risk. Getting football codes to agree to use the stadium failed unless the taxpayer guaranteed the revenue.
The Government said one thing: a best-practice, user-pays, vibrant, largely private-sector funded stadium upgrade. And it gave us another: a government-funded, grandiose, expensive, stadium that will never pay for itself.
That is a political sin and the voters will make their mind up about that. It will be one factor of many.
Then there is the other question of ministerial responsibility. The Auditor found breaches of the Financial Management Act, since rectified, largely through ignorance. If there is a motion of no-confidence in the Chief Minister, Independents Dave Rugendyke and Paul Osborne will have to weigh up whether that constitutes sufficient moral turpitude to warrant her being thrown from office. Labor, Greens MLA Kerrie Tucker and former Liberal Trevor Kaine have already made up their minds. Breaches of the technical clauses of the Financial Management Act through ignorance, however, are a long way from breaches of the law that involve dishonesty. And there has been no corruption or conflict of interest.
Another judgment to be made is whether Mrs Carnell, as Treasurer, should bear the blame for cost blow-outs and lose her ministry for it. If so, many other Ministers whose departments engage in construction better look out.
No; the deficiencies highlighted by the Auditor are better suited to ultimate judgment by the people at election time. The Government made a foolish misjudgment about how to finance a stadium redevelopment. The taxpayers have been saddled with high expenditure for a world-class stadium. They will have to make a judgment about the Government’s priorities in October.