Schools project shows South Australia's PPP reputation being rebuilt under Liberal Government
Friday, 10 January 2020
The Marshall Liberal Government has begun repairing South Australia’s reputation for successfully managing Public Private Partnerships (PPPs), with strong and competitive market participation in the recent tender for two new state-of-the-art Birth to Year 12 schools in Adelaide.
The contract to design, construct and maintain the schools, in Aldinga (southern suburbs) and Angle Vale (northern suburbs), has been awarded to TESA Education, a consortium of Tetris Capital, South Australia-based Sarah Constructions, ISS, DIF Capital Partners and ANZ Bank.
Treasurer Rob Lucas said the project represented exceptional value-for-money for taxpayers, with the PPP model saving $150m (24%) when compared to a traditional government procurement model over 30 years.
The net present cost of the total project over 30 years is $469.4m (including the construction component of $233.8m over 2 years) – well below the Public Sector Comparator of $619.8m.
“The Government welcomes the strong market participation in the schools tender, which shows there’s clearly a new-found confidence in South Australia and its ability to successfully manage PPP projects,” said Treasurer Rob Lucas.
“The Government strongly supports the opportunity of partnerships with the private sector in the provision of public infrastructure if it can be clearly demonstrated to be in the public interest.”
Treasurer Lucas said he acknowledged the state’s reputation within the financial industry and the broader national PPP market had been negatively impacted by the former Labor government’s mishandling of the new Royal Adelaide Hospital project.
“There’s no question the state’s reputation for managing PPPs took a massive hit as a result of the nRAH project, which was plagued by a litany of long-running disputes and opened 17 months behind schedule and more than $600 million over budget, largely due to the financial incompetence of the former Labor government.
“In stark contrast, we have devoted resources to a specialist PPP unit within the Commercial and Economics Branch of Treasury, who will ensure all projects are centrally coordinated, supported by advice from other relevant agency or departmental personnel - in this case, Education.
“We are confident this approach, coupled with the Government’s reputation for responsible fiscal management, will result in successful projects in the years to come.”