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Legislative Council - Fifty-Second Parliament, First Session (52-1)
2011-05-18 Daily Xml
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Question Time

ROYAL ADELAIDE HOSPITAL

The Hon. D.W. RIDGWAY (Leader of the Opposition) (14:22): I seek leave to make a brief explanation before asking the minister representing the Minister for Health a question about the new Royal Adelaide Hospital.

Leave granted.

The Hon. D.W. RIDGWAY: Members will be well aware that the Development Assessment Commission recently gave planning consent to the new Royal Adelaide Hospital but, in doing so, identified 30 issues it would like resolved before progressing. One of the issues was a concern that the building being proposed is a four-star energy rated building, unlike the government's stated policy of a minimum of five stars and, wherever possible, six stars and, in fact, the Premier announced that overseas with much fanfare.

Members will be well aware of my concerns, having been raised for some two months now, about this attempt to, if you like, pick some very low-hanging fruit and build a hospital that is only four-star rated. At the time it was announced the South Australian Executive Director of Service Strategy, David Panter, said that these revisions would not delay the contractual negotiations or affect the cost of the project.

I have spoken to two independent practitioners within the development industry over the past few days and, while they are ballpark figures, the first one said lifting it from four star to five star could be between $500 and $1,000 extra per square metre, which would be somewhere between $80 million and $160 million. The other practitioner said it was a little hard to guess but he thought it could be between 10 and 15 per cent. Given they were not able to get the design brief, they are accurate guesstimates of what the cost could be. That, of course, would include things that need to be changed such as services, electricity, airconditioning, water, heat reflection, windows, insulation, and even fire control.

Members would also be aware that when you sign a building contract, even if it is for just a simple house, and then you have alterations after you have signed the contract with the builder, you are exposed to significant risk when it comes to extra costs. In fact the Macquarie Private Bank document says, on page 37, that the modification process of the South Australian health partnership will be compensated by the state for any modifications that cause an increase in costs. So the full costs will be charged on top of the $2.73 billion that is now the figure that the hospital will cost. My questions are:

1. What is the real cost of these modifications?

2. Will the brief be changed prior to financial close so as to minimise and eliminate the risk of price gouging by the consortium?

The Hon. G.E. GAGO (Minister for Regional Development, Minister for Public Sector Management, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for Gambling) (14:25): I thank the honourable member for his important questions. I will refer those questions to the Minister for Health in another place and bring back a response. However, in very general terms I would like to draw the chamber's attention to the fact that the Minister for Health, John Hill, has said, in relation to the hospital project, that it will be a very good deal for taxpayers. Minister Hill stated:

We are absolutely satisfied that this is good value for money and if we compare the overall life cycle costs, the 35-year costs of this contract with what it would cost us as a government if we were to do it, we're getting a [really] good deal.

The Hon. D.W. Ridgway interjecting:

The PRESIDENT: Order!

The Hon. G.E. GAGO: We know that all members opposite ever do is knock. This government has come up with one good strategy and one good project and program after another to build South Australia into a prosperous state—the tramline extension, the Adelaide Oval, the new Royal Adelaide Hospital—and all the opposition ever does is knock, knock, knock. Our political commentator for The Advertiser, Greg Kelton, even wrote an article that talked about the knockers.

If I remember correctly he said, in his press article, that he could not believe that any other state here in Australia, nowhere else in the world, would you find people knocking a brand-new, state-of-the-art hospital, a fabulous tramline, and a wonderful design for our new oval. Nowhere else would you ever find people knocking such fabulous programs. However, that is what the opposition does: it just goes ahead and knocks, knocks, knocks.

The other information I have been advised of, and that I am happy to share with this chamber, is the fact that the SA Health Partnership will design and build, finance and maintain the new Royal Adelaide Hospital and provide non-clinical support services over a 35-year period. I have been advised that the state is currently in the final stages of negotiation over that partnership, but the financial details of that project are obviously confidential until contract negotiations with the consortium are complete, the contracts signed and the financial close reached.

I have also been advised, as the honourable Minister for Health has already mentioned in another place, that, consistent with other PPP projects in South Australia, the government will release the details of the new Royal Adelaide Hospital PPP contract within 60 days of the contract being signed, including the total value of the signed contract. That will provide full information to the public about the final cost of the project over the 35 years.

I am also advised that it will include the construction cost, finance cost, transaction cost, facilities maintenance cost, and equipment lifecycle cost and that the cost of risk will be built into that costing process. The government will release all information that is not financially sensitive and confidential. I am advised that I can assure this place that the government will not pay a single dollar until SA Health deems the hospital is ready for use.

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