Berejiklian short of stadium cash with Land and Property sale under threat
NSW Premier Gladys Berejiklian’s promise to use the $2.6 billion sale of the state’s Land and Property Information service to fund two stadium rebuilds is under threat, with the revelation she might have to borrow to build the stadiums because of her own government’s rules around capital spending.
According to the rules, the government cannot transfer money from its capital works building fund Restart NSW, which includes Land and Property Information service sale proceeds, unless the benefit-to-cost ratio for a proposed project is positive — or greater than one.
And yet when the Premier announced the $2 billion stadium builds, cabinet was told the BCR of both projects at that time was around 0.8.
The BCR refers to the calculations on whether a project’s benefit outweighs its cost. It is a measure of the value for money of any project.
This fact sets the scene for some furious working of numbers before the Premier releases the business cases for the planned knockdown and rebuilds of Allianz and ANZ stadiums soon — or it means the government will have to borrow the money to build the stadiums.
It could also pave the way for a backdown on one of the stadiums, although this seems unlikely given the ANZ rebuild and knockdown already includes agreements between Sports Minister Stuart Ayres and the National Rugby League around the staging of grand finals in Sydney. Mr Ayres has also made it clear he believes safety issues require the rebuild of Allianz.
Admitting the situation yesterday, Mr Ayres told
The Australian: “The source of funding for major infrastructure projects are a matter for the NSW government. There is no do-nothing option at Allianz Stadium or ANZ. Labor has refused to acknowledge the real safety, security and compliance issues at Allianz.
“After a final investment decision is taken, a summary of the business case will be publicly released.”
Restart NSW was set up by former premier Barry O’Farrell after his election in 2011 to pay for infrastructure projects such as the metro rail lines and West Connex and other motorways.
Proceeds from major asset sales, such as the $30 billion sale of half the state’s electricity poles and wires, have been placed into the fund. The initiative is known as “asset recycling” as proceeds from the assets deemed surplus to requirements are placed in the fund and then spent on new assets, without an effect on the state’s balance sheet.
The initiative has allowed the government to achieve zero net debt.
But all of the money coming out of the fund is strictly tied to the BCR test.
Under the government’s stadiums policy, $1.25 billion has been promised for the ANZ Stadium knockdown and rebuild at Sydney Olympic Park in the west of Sydney and $705 million for the knockdown and rebuild of Allianz Stadium in the city’s east, after much lobbying from the Sydney Cricket Ground Trust, which includes on its board 2GB broadcaster Alan Jones and Mr O’Farrell.
Opposition Leader Luke Foley has used Ms Berejiklian’s stadium announcements to launch a “schools and hospitals, not stadiums” campaign.
He has also protested that with the Allianz rebuild, which he steadfastly opposes, scheduled to be first off the rank, it appears the government’s intention is to have the work well under way before the March 2019 state election, to stop him overturning the decision should Labor win.
