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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2011-05-19 Daily Xml
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ROYAL ADELAIDE HOSPITAL

The Hon. I.F. EVANS (Davenport) (14:46): My question is to the Treasurer. How can the government claim that the new Royal Adelaide Hospital PPP offers taxpayers better value for money than the traditional build when private investors in the project, according to the Macquarie Bank document, will be earning between 12 and 15 per cent per year, but the government is borrowing at about 4.3 per cent?

The Hon. J.J. SNELLING (Playford—Treasurer, Minister for Employment, Training and Further Education) (14:47): It is quite a simple explanation, but it might stretch the opposition's abilities.

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: The simple reason is because the whole project is not financed by private equity, only a small proportion of it. There is a small proportion that is funded by private equity and that is to provide an incentive to make sure that the consortium delivers. When they are sourcing finance there is a small proportion which is private equity finance, which is at the most risk and therefore attracts a higher interest rate, but the overwhelming majority of the finance for the project will be at a much lower interest rate because it will be debt-financed rather than equity-financed.

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