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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2011-05-05 Daily Xml
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ROYAL ADELAIDE HOSPITAL

Mrs REDMOND (Heysen—Leader of the Opposition) (14:51): My question is again to the Minister for Health. Will the minister confirm that under the new Royal Adelaide Hospital PPP the profit paid to investors in the project averages about $54 million per year for 30 years?

The Hon. J.D. HILL (Kaurna—Minister for Health, Minister for Mental Health and Substance Abuse, Minister for the Southern Suburbs, Minister Assisting the Premier in the Arts) (14:52): I cannot confirm that at all because the details are yet to be completed. Of course—

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: Can I just make this point: profit in any enterprise is not guaranteed. I am sure that the member for Unley would understand that. You cannot be certain if you embark on an enterprise—

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: —you cannot be certain—

Mr Pisoni interjecting:

The Hon. J.D. HILL: I congratulate the member for Unley for being interested in small business. He started off with a big business and he worked his way to a small business—

Members interjecting:

The SPEAKER: Order!

Mr Pisoni interjecting:

The Hon. J.D. HILL: Well, good on you.

Mr Pisoni interjecting:

The SPEAKER: Order, the member for Unley!

The Hon. J.D. HILL: I am sure it will still be there for you in due course. Sorry, I should not make reflections on the member for Unley's problems. The reality is that nobody can ever guarantee a profit on an enterprise. Profit is a reflection of risk. The more risk you take, the more the profits might be, but the more the losses might be as well. In relation to the prospectus that I understand members opposite were talking about yesterday, as the Premier said, we got our copies today. It was obviously part of a conspiracy to make sure we got it late, but we will talk about that later if I am asked a question about it. I would like a question on that.

There is no guarantee of profit, but the prospectus yesterday was looking for some equity investors. They are looking for high wealth people who are prepared to take the highest part of the risk of the project. That is about 10 per cent of the enterprise, and that 10 per cent is a high risk element—the equity element. The rest is debt. As members would understand, I assume that the debt has a lower risk associated with it so the element that is at the higher level would attract a higher rate of return if the project is able to be delivered by the contracting parties successfully and on budget over the course of that 35 years.

If there are things that occur which mean that they cannot deliver it on time and they cop a loss of some sort, that will be borne by that group of people first off. Those people they are trying to attract into it are obviously the ones who are prepared to take the risk and who can afford to take the risk.

Ms Chapman interjecting:

The SPEAKER: Order, member for Bragg for the second time!

The Hon. J.D. HILL: Obviously Mr Katsaros is in that category. I find it interesting that Mr Katsaros has campaigned against this, and yesterday he said on radio that he actually has a copy of the prospectus. Presumably he wants to invest in this project because, despite what he says, he understands that it is a good project and he thinks it's worth putting his own money into.

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: I wouldn't want to reflect on him.

Members interjecting:

The SPEAKER: Order!

The Hon. J.D. HILL: I wouldn't want to reflect unduly on Mr Katsaros. I assume he got the prospectus so that he could consider making an investment in it. Nonetheless, profit, of course, is something that may or may not occur in the future, and those who are prepared to invest in a project and put their money on the line are entitled to profit. The reality is, of course, that if you do something through a public-private partnership the private sector expects to make a profit. The further reality is—

An honourable member: That's called privatisation.

The Hon. J.D. HILL: No, it's not.

Members interjecting:

The Hon. J.D. HILL: No, it's not. The further reality is that they take the risk and the government transfers the risk to the private sector so that we get the hospital we need for the price that is fixed, and we know it can do what it is supposed to do, and if there is no profit to be made then they don't make any profit. I can point to a number of PPPs around the world where that has been the case and that's because the government has properly entered into an arrangement where they are protecting the public's interest and the private sector takes the risk. That's why it's a good deal.

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