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House of Assembly - Fifty-Fifth Parliament, First Session (55-1)
2024-02-21 Daily Xml
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Ministerial Statement

Proton Therapy in South Australia

The Hon. S.C. MULLIGHAN (Lee—Treasurer) (14:03): I seek leave to make a ministerial statement.

Leave granted.

The Hon. S.C. MULLIGHAN: In May 2017, the then Turnbull coalition government announced a $68 million grant from the commonwealth to the South Australian Health and Medical Research Institute (SAHMRI) to procure Australia's first proton therapy unit and establish South Australia as the home of proton therapy treatment for the nation.

The grant funding was provided for the purchase and delivery of proton therapy equipment. SAHMRI sought to establish a new facility, known now as the Australian Bragg Centre, or previously referred to as SAHMRI 2, in the North Terrace health and biomedical precinct adjacent to the existing SAHMRI building, to house the new proton therapy system.

Further to the commonwealth contribution, the state government contributed $10.6 million in a grant together with state land to the side of the former train control centre for the Australian Bragg Centre to be constructed. SAHMRI partnered with commercial property developer Commercial & General to deliver the project. Due to its nature, this proton therapy equipment is bespoke, large in scale and has specific building design specifications and requirements.

Commercial & General's role included being the developer of the Australian Bragg Centre building, including the building design tailored to house the proton therapy unit, and for eight levels of space for the commercial tenancies to underwrite the cost of building the facility. Commercial & General also advised SAHMRI on a procurement strategy and was included in SAHMRI's selection of ProTom International to deliver its Radiance 330 proton therapy system to be located within the building.

The project's success was contingent on both the successful installation and commissioning of the proton therapy unit, as well as the successful completion of the building and it being leased on a commercial basis. Following the March 2018 state election, SAHMRI entered into a formal sale and purchase agreement with ProTom International. The proton therapy system, supported by ProTom International, operates at one other site globally, within the Massachusetts General Hospital, Boston, in the United States.

In late 2018, Commercial & General approached the former Liberal state government advising it was facing challenges in leasing the building tenancies on a commercial basis. In April 2019, it proposed to the then government a lease for the commercial space to government tenants. After the outbreak of COVID-19, Commercial & General's request of the former Liberal government expanded significantly. In addition to the government taking commercial tenancies, Commercial & General also requested various commitments to support the project securing finance. This proposed the exposure of the state to building costs, time lines and interest rate movements.

I am informed that in April 2020, the former Treasurer, Rob Lucas, agreed to provide several forms of security to Commercial & General to support its private interests in the Australian Bragg Centre. The support agreed by the former Liberal government provided Commercial & General construction and financing cost risk sharing, commitments to office accommodation leases for five floors, and step-in obligations to complete the proton therapy unit should the Australian Bragg Centre for Proton Therapy and Research (ABCPTR) be unable to complete the project. I am informed by Treasury this decision in 2020 by the former Liberal government exposed the state to a liability of many, many millions of dollars for these obligations.

Over the last three years, ProTom International has advised SAHMRI that its progress has been delayed due to COVID-19 and also the war in Ukraine. In the past 14 months, SAHMRI has agreed to amend project milestones and advance payments to support ProTom International deliver the proton therapy unit. This has been approved by me on two occasions during my time as Treasurer and only for agreed milestones and payments with the existing contracted amount.

While the construction of the Australian Bragg Centre building achieved practical completion in September 2023, SAHMRI has been increasingly concerned with the progress of ProTom International to deliver the proton therapy system. ProTom International has now requested additional time and a significant increase in funding to deliver upon its contracted agreements with SAHMRI.

To that extent, in late January this year, representatives from SAHMRI, ABCPTR, the Department for Health and Wellbeing and the Department of Treasury and Finance travelled to Boston to meet with ProTom International and some of its suppliers. This was to meet with them in person and understand firsthand the progress being made.

Following the visit by officials and the request by ProTom International, there is now significant concern over the capacity of ProTom International to deliver Australia's first proton therapy unit. The Minister for Health and I have met with the commonwealth Minister for Health and Aged Care to discuss these concerns. We have now jointly written to SAHMRI that no further funding from the state or commonwealth government will be provided for this project while the concerns with ProTom International remain unresolved.

While the contracted arrangements between SAHMRI, ProTom International and its subcontractors are commercially sensitive, I can advise the house that SAHMRI has provided less than two-thirds of the contracted amount to ProTom International and its subcontractors at this stage. While all project partners, including the state and commonwealth governments, continue to work towards the successful delivery of this project, I must be clear that the project is now at significant risk. I will keep the house informed of developments on the project.

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