FINANCIAL responsibility was the big subject last week, as the state government and opposition sought to expose each other’s weaknesses on the fiscal front.
FINANCIAL responsibility was the big subject last week, as the state government and opposition sought to expose each other’s weaknesses on the fiscal front.
The government drew first blood after a scathing review of the Perth Arena development by Auditor General Colin Murphy, which found significant failings in the planning and management of the $483 million indoor stadium.
Mr Murphy’s report into the 14,000-seat indoor stadium found that the WA Department of Housing and Works under the previous Labor government had much to answer for, given the project had blown out from its original $160 million forecast.
With the delayed construction said to be putting the 2012 Hopman Cup at risk, Treasurer Troy Buswell did not shy away from laying blame for the cost overruns, which he expects will take the final cost beyond $500 million.
“The former government left us with a contract that is very open ended, where we’ll be having to defend and engage in negotiations under a whole range of claims from the builder,” Mr Buswell said.
Mr Murphy said the project was not properly scoped or planned, and that key parts of the normal processes were either skipped or rushed.
“The initial estimates of the cost and opening date for the arena were unrealistic and made before the project was well understood or defined,” he said.
“The effect of these failings has resulted in the arena project budget increasing to $483 million, three times more than originally budgeted and scheduled to open in November 2011, almost three years later than planned.
“There also remains a risk of further delays and cost increases.”
He said the final contract negotiated between the department and the successful tenderer, BGC Construction, differed from original requirements, with the state government taking responsibility for cost increases and delays resulting from design changes.
In the final contract, provisions were made for design changes that could not be costed including the car park, which had a provisional cost of $20 million but was now $54 million.
The final arena budget price also assumed that $34 million would be saved through “design engineering”, but only $2 million of savings had so far been achieved.
The changes were not reported in writing to the minister and cabinet.
Opposition leader Eric Ripper acknowledged there were shortcomings in the project.
“I acknowledge there were significant problems in the administration of the Perth Arena project during Labor’s time in office ...” Mr Ripper said.
“This was clearly a project where the scarcity of planning and project management resources were exposed.”
Budget woes
TREASURER Troy Buswell may have derived some pleasure in blaming cost overruns at Perth Arena on the previous Labor government, but he is the one who has to deal with the problem – at a time when the perception of his own financial skills is under fire.
Mr Buswell is under significant pressure to deliver a much-promised surplus in the May budget, an achievement that will look significant after a bungled effort last week to request $1.15 billion to pay the state’s bills.
Acting opposition Treasury spokesman Mark McGowan had something of a field day, not just noting that the need for extra funds was three times that of the last request by Labor, but also that it included a $210 million hole.
“The treasurer has failed the most basic test of accountability,” Mr McGowan told parliament.
“A mistake of this size is humiliating and symptomatic of a man who is unable to get across the detail of his portfolios.”
Earlier in the week in state parliament, Mr McGowan sensed the big political opportunity the state might present Labor.
One issue is the employment of additional public servants despite the cap on the number of employees that the state government said it would implement last year.
“As I recall, the treasurer indicated there would be a cap and it would be frozen at that point in time – perhaps it was halfway through last year,” Mr McGowan said.
“As far as I am aware, an additional 2,300 employees have been taken on since the cap was imposed, which makes the cap somewhat illusory, if that is the case.”
Mr Buswell, however, attempted the shrug off the financial issues that threaten his premier’s earlier promise to keep the budget in surplus.
“My challenge to anyone who says we’re spending too much money, when we’re constantly criticised for not spending enough money, is tell us where you would cut,” Mr Buswell said.
“Go through this treasurer’s advance and tell us would you not provide $235 million of funding to support for first homebuyers in Western Australia, would you not provide $77 million to help keep teachers in schools so that we had, for one of the first times ever, every classroom in the state manned at the start of the school year.
“Would you not provide $72 million to provide extra prison officers to keep the people who are breaking the law in prison?
“This is spending on supporting first homebuyers, and spending on providing essential services which the public of Western Australia expect from their government.”
