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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2009-06-17 Daily Xml
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ROYAL ADELAIDE HOSPITAL

Mr GRIFFITHS (Goyder) (14:49): My question is again to the Treasurer. If a full public-private partnership option for the proposed rail yards hospital fails to eventuate, resulting in the need for public debt to fund all or part of the project, in what financial year do you anticipate that debt would need to be identified in the budget if the 2016 completion deadline is to be met?

On 24 March the Treasurer told the house that the market may not be able to deliver $1.7 billion in private sector debt and that the government was looking at:

...whether our financing authority plays a role in [that] provision, or, probably more likely, that we as a government may consider what contribution a government makes to lessen the capital requirement needed to be raised from the market.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:49): I just noticed a couple of people missing.

Members interjecting:

The Hon. K.O. FOLEY: Dream Team Mark III.

Members interjecting:

The Hon. K.O. FOLEY: You just worry about spending $2 million on a picture theatre. I mean, have you ever heard of a worse priority for public expenditure?

The Hon. M.J. Atkinson: It's all about re-electing Vickie.

Ms Chapman: That will win the Hartley campaign, that quote, thank you.

Ms Portolesi: I don't think so. We support the Treasurer.

The Hon. K.O. FOLEY: $2 million to buy a picture theatre—you think that's good expenditure?

Members interjecting:

The SPEAKER: Order!

Mr GRIFFITHS: Point of order, Mr Speaker: my question was quite specific and relates not at all to the commentary going on.

Members interjecting:

The SPEAKER: Order! Perhaps the member for Goyder might have a word to his deputy leader. The Deputy Premier.

Members interjecting:

The Hon. K.O. FOLEY: I know there is tension opposite.

Mr Pengilly interjecting:

The Hon. K.O. FOLEY: Well, look at him. He couldn't get on the radio early enough to talk about leadership today.

Members interjecting:

The SPEAKER: Order! Perhaps the Deputy Premier might turn to the question which was about debt financing of the hospital.

The Hon. K.O. FOLEY: I tell you what, when the member for Finniss becomes your cheerleader on radio you know you're in strife.

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: In fact, the expressions of interest have gone out for the hospital, and we have made it clear in that documentation that we are open to advice from the market as to what will be the best way to fund this.

Members interjecting:

The Hon. K.O. FOLEY: There's a little bit going on there. I'm not sure what's—five or six? Got the names? At this stage, we are presuming that it will be a public-private partnership. It is too early to tell. This bidding process will take at least a year as they go through documentation, design work and all of that. One would hope that the world capital markets have returned to some normality by this time next year or thereabouts and that access to private funding is both available in quantum and competitive in price.

Mr Griffiths interjecting:

The Hon. K.O. FOLEY: Okay, I'm working through this with a diligent answer. You should try to learn diligence when presenting stuff. If that is the case, I think we take the keys in the 2016-17 budget year. That is when the PPP payment would come onto the budget sector, and the debt would be recognised on balance sheet. If we do a part payment or if indeed we choose to do what is essentially a DBOM—that will be the public sector financing it but the private sector taking construction risk and management and operational risk of the asset—I am waiting on some accounting advice, to be honest, in terms of just how that will be treated.

We would assume that you would start to account for that as and when you started to make payments to the project, but it just depends. If it is a part contribution from the state, let us say that the market puts $1 billion in and we put $700 million in, I would envisage that our $700 million—

Members interjecting:

The Hon. K.O. FOLEY: At least we are enjoying it. Let's say for example we put $700 million in.

The SPEAKER: Order, the member for MacKillop!

The Hon. K.O. FOLEY: Let us assume we put $700 million into the project. I would envisage that we would do that by way of grant and that we would still want the project construction risk and all the risk to sit with the consortia, and we would grant them that money. We would probably grant that money at the end of the project, so that it would still be a 2016 hit or, if we fully finance it, I would assume that we would start to account for the money as we make those payments.

The grant concept is one where you acknowledge that it is prudent for the state to put a proportion of capital into the project. You make that as a capital grant to the project and that would then discount down your income stream to the value of that contribution.

Mr Griffiths interjecting:

The Hon. K.O. FOLEY: Well, let's say that the payment that we had to do for the PPP (if it was fully private sector provided) is X; then X minus the value of the $700 million would become your monthly payment or your yearly payment. So, it does not affect the value of the project.

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: We could go into a little bit more detail, if you would like.

Mr Pengilly: No.

The SPEAKER: Order!

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