The Legislative Council Budget and Finance Committee and the Auditor-General would need to investigate growing concerns about the Rann Government’s mishandling of the State Aquatic Centre Project, Liberal MLC Rob Lucas said today.
“In June 2008 Cabinet approved and Premier Mike Rann announced that an agreement had been reached with Aqua43 (comprising Candetti Constructions and Macquarie) to build the new State Aquatic Centre and GP Plus centre at Marion,” Mr Lucas said.
“However in the last month the proposed operator of the Aquatic Centre – Macquarie Leisure – has indicated it has withdrawn from the project.
“Whilst Mr Rann is trying to blame the global financial crisis as the sole reason for Macquarie Leisure withdrawing, it can now be revealed that a significant factor has been the Rann Government’s mismanagement of the State Aquatic Centre contract process.
“Sources with a detailed knowledge of the Macquarie position have revealed they were angry that the Rann Government sought to change critical undertakings and agreements given by government negotiators after Mr Rann announced Aqua43 as the successful consortium on 26 June 2008.
“The reason for the Rann Government breaking its commitments were because serious questions about the probity of the tendering process had just been raised in the Budget and Finance Committee meeting on 30 June 2008. Subsequently the Crown Solicitor, Simon Stretton, and senior Crown Law officers had expressed serious concerns in meetings with senior public servants about the probity of the Rann Government’s handling of the process.
“For example, a comparison of the Premier’s public announcement and documents held by the Marion Council (as partner in the project with the Rann Government) show that the Rann Government had committed to increasing its $15 million component by $5 million, or 33 per cent – by giving about $5 million worth of State land to the project. This land comprised Rail Reserve land and Warradale Triangle land.
“Evidently, the Rann Government had further ‘sweetened the deal’ for Aqua43 by also giving further undertakings which led to prospective financial benefits for Aqua43,” he said.
“The problem for the Rann Government is that these additional financial inducements were not discussed with, or offered to, the other two consortia bidding for the project.
“The end result of these concerns being raised about the probity of the process is that on 8 September 2008 (more than a month after Mr Rann announced agreement with Aqua43), Chief Executive of the Department for Transport, Energy and Infrastructure (DTEI), Jim Hallion, wrote to Aqua43 outlining the Government’s new position, which differed significantly from Macquarie’s understanding of agreements already reached.
“What we now see is that soon after receiving this letter Macquarie Leisure has withdrawn from the project.
“It should also be noted that the Rann Government had refused to release this letter under Freedom of Information,” Mr Lucas said.
“This withdrawal is critical to the project as a key requirement of the Rann Government was that the private sector accepts ‘demand risk’ for the project. If the State now has to accept ‘demand risk’ it will mean taxpayers will face potentially large ongoing losses if there are insufficient users of the facility or the facility is poorly managed.
“Senior executives of DTEI, including Jim Hallion and Rod Hook, will be appearing before the Budget and Finance Committee in March to answer questions on this project.
“It is also imperative in the interests of transparency and accountability that the Auditor-General reports publicly on the Rann Government’s mishandling of this project and process.”