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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2011-06-08 Daily Xml
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ROYAL ADELAIDE HOSPITAL

The Hon. I.F. EVANS (Davenport) (14:24): My question is to the Treasurer. Following the Treasurer's claims that the new Royal Adelaide Hospital contract transfers risk away from the taxpayer, is it the case that the contract exposes the taxpayer to increases in interest rates and labour costs which may result in the government payments of more than $1.1 million a day increasing, and are there any other contract provisions that may expose taxpayers to increased costs?

The Hon. J.J. SNELLING (Playford—Treasurer, Minister for Employment, Training and Further Education) (14:24): I inform the house that the two Ernst & Young reports which we relied upon for the information I provided yesterday are on the website. The systemic risk report and the operational expenditure comparison report are on the website, I have been informed by my office, so the information is all there. You just go on the internet—it's the computer; it's that thing sitting on your desk. Perhaps google Health SA and you might find it.

Members interjecting:

The Hon. J.J. SNELLING: Well, don't come in here making accusations that things are not on the website that are. In regards to—

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: You are just creating silly mischief. With regard to the service payments—

Members interjecting:

The SPEAKER: Order!

The Hon. P.F. CONLON: Point of order, Madam Speaker: we cannot hear the Treasurer, there is too much noise.

The SPEAKER: Yes, I am having similar problems. Treasurer.

The Hon. J.J. SNELLING: With regard to the service payments, the service payment is $397 million a year, on average, over the 30 years of the contract. That will vary slightly from year to year. There is a periodic refurbishment of the hospital, which is all part of the deal, which means that the hospital is kept in as-new condition. So, in the years of those intervals—I think they are about 10 years—the payment is elevated in that year, but through the whole 30 years the payment is, on average, $397 million a year.

There is a clause in the service payments which provides for some flexibility, because the government would not want to find itself in a position where the consortium was sort of creaming off a profit over and above what it was costing them to provide the ancillary services to the hospital, so those are subject to periodic review. Of course, while it can go down, it could potentially go up a little, but the clause in the contract says that, if the consortium want to increase that component of the service payment for those ancillary services, then there has to be an opportunity to go to market to make sure we get a market price.

So, the reason for that clause is simply to make sure that we are paying a fair price and that the consortium are not ripping us off over the course of the contract. Likewise, if the cost of providing those ancillary services goes beyond what you would normally expect over the life of the contract, there would be an opportunity for them to raise it, but the government would also have an opportunity to go to market to make sure we got the best value for money. I think that is all the information that I have to hand. But in terms of the risk, the interest payments and paying the capital off, those are all set in the contract; those cannot vary.

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