1
00:00:00,520 --> 00:00:03,600
Speaker 1: We know that Northern Territory taxpayers could be footing a

2
00:00:03,960 --> 00:00:07,920
Speaker 1: billion dollar bill is what's being reported for the controversial

3
00:00:07,960 --> 00:00:11,719
Speaker 1: shiplift project in Darwin. Now, as we know, the facility

4
00:00:12,000 --> 00:00:15,560
Speaker 1: is intended to support the marine industry, the maintenance of

5
00:00:15,600 --> 00:00:18,200
Speaker 1: the marine industry, and it is going to be operated

6
00:00:18,239 --> 00:00:22,439
Speaker 1: by Purling Giant Pass Payey. But concerns continue to be

7
00:00:22,520 --> 00:00:25,520
Speaker 1: raised about the time that it's taking to complete this project,

8
00:00:25,880 --> 00:00:30,800
Speaker 1: as well as the ongoing cost blowouts. Now, independent economist

9
00:00:30,880 --> 00:00:33,919
Speaker 1: Saul Slake spoke to the ABC a little earlier this

10
00:00:33,960 --> 00:00:37,159
Speaker 1: week and said the blowout is among the worst in

11
00:00:37,240 --> 00:00:40,720
Speaker 1: recent memory, warning that it could leave the Northern Territory

12
00:00:40,720 --> 00:00:45,159
Speaker 1: with the stranded asset and mounting debt. Now Saul joins

13
00:00:45,200 --> 00:00:49,080
Speaker 1: me on the line right now. Good morning to you, Good.

14
00:00:48,880 --> 00:00:50,920
Speaker 2: Morning Pai, Thank you for having me on your program.

15
00:00:51,040 --> 00:00:54,040
Speaker 1: Thank you so much for joining us. Now, sold this shiplift,

16
00:00:54,120 --> 00:00:57,040
Speaker 1: it was supposed to cost about one hundred million dollars

17
00:00:57,080 --> 00:01:00,360
Speaker 1: in the early days when it was first announced. I mean,

18
00:01:00,400 --> 00:01:04,200
Speaker 1: now we're talking the potential of a billion dollars. How

19
00:01:04,240 --> 00:01:05,679
Speaker 1: does something like that even happen?

20
00:01:06,760 --> 00:01:10,800
Speaker 2: Well, some of it is explained by the fact that

21
00:01:10,920 --> 00:01:15,560
Speaker 2: infrastructure projects across Australia and all over the world have

22
00:01:16,400 --> 00:01:21,360
Speaker 2: been subject to delays and cost blowouts. The Status Bureau

23
00:01:21,560 --> 00:01:26,319
Speaker 2: estimates that the average cost of infrastructure projects around Australia

24
00:01:26,800 --> 00:01:30,479
Speaker 2: since this one was first announced ten years ago has

25
00:01:30,640 --> 00:01:35,040
Speaker 2: escalated by around forty percent. That's ten percentage points more

26
00:01:35,080 --> 00:01:38,240
Speaker 2: than the Consumer Price Index, for example, over its own period.

27
00:01:38,520 --> 00:01:41,160
Speaker 2: That wouldn't explain the blowout in the cost of this

28
00:01:41,240 --> 00:01:45,560
Speaker 2: particular project, but it explains some of it. Some of

29
00:01:45,600 --> 00:01:47,960
Speaker 2: it may be the result of the fact that the

30
00:01:47,960 --> 00:01:50,600
Speaker 2: original estimate of one hundred million that was made in

31
00:01:50,640 --> 00:01:54,160
Speaker 2: twenty fifteen was an underestimate, and if there were to

32
00:01:54,200 --> 00:01:57,760
Speaker 2: be a public inquiry into this project, is at least

33
00:01:57,800 --> 00:02:02,760
Speaker 2: one former territory MLA is, then that might shed some

34
00:02:02,880 --> 00:02:06,559
Speaker 2: light on whether that was an underestimate. It may well

35
00:02:06,600 --> 00:02:11,360
Speaker 2: be that the complexity of the project was initially underestimated,

36
00:02:11,520 --> 00:02:13,720
Speaker 2: and there may be other factors involved as well. I mean,

37
00:02:13,760 --> 00:02:17,040
Speaker 2: my understanding is that when it was first announced there

38
00:02:17,360 --> 00:02:19,640
Speaker 2: was some kind of agreement with the federal government to

39
00:02:19,680 --> 00:02:22,240
Speaker 2: put in up to three hundred million dollars for this,

40
00:02:22,320 --> 00:02:25,560
Speaker 2: so that's the original estimate was closer to four hundred

41
00:02:25,600 --> 00:02:28,120
Speaker 2: million than one hundred At this stage we don't know.

42
00:02:28,400 --> 00:02:32,760
Speaker 2: But although there have been projects around Australia where the

43
00:02:32,800 --> 00:02:36,320
Speaker 2: total cost has increased by more in terms of billions

44
00:02:36,320 --> 00:02:39,119
Speaker 2: of dollars, and the most obvious one that people might

45
00:02:39,200 --> 00:02:43,120
Speaker 2: remember hearing of recently is Snowy two point not which

46
00:02:43,240 --> 00:02:46,320
Speaker 2: was originally estimated to cost about two billion, and the

47
00:02:46,360 --> 00:02:49,440
Speaker 2: most recent estimate, according to the Federal Government I think

48
00:02:49,520 --> 00:02:52,720
Speaker 2: just last week, was twelve billion. That's an increase of

49
00:02:52,760 --> 00:02:54,639
Speaker 2: ten billion dollars, which is of course a hell of

50
00:02:54,680 --> 00:02:58,160
Speaker 2: a lot of money, but it's a sixfold increase compared

51
00:02:58,240 --> 00:03:00,959
Speaker 2: with If it's true that the cost of the Darwin

52
00:03:01,000 --> 00:03:04,760
Speaker 2: Shiplift project has risen from one hundred million to over

53
00:03:04,960 --> 00:03:08,480
Speaker 2: one billion, which is speculation I've seen, then that's a

54
00:03:08,520 --> 00:03:12,000
Speaker 2: tenfold increase, which would make it proportionately one of the

55
00:03:12,040 --> 00:03:13,880
Speaker 2: biggest in Australia in living.

56
00:03:13,680 --> 00:03:16,760
Speaker 1: Memory and sol you know, the concern I suppose that's

57
00:03:16,760 --> 00:03:19,240
Speaker 1: been raised right from the get go as well, since

58
00:03:19,280 --> 00:03:22,000
Speaker 1: this project was announced, is you know, making sure that

59
00:03:22,040 --> 00:03:25,360
Speaker 1: we've actually got you know, I don't know whether client's

60
00:03:25,440 --> 00:03:27,520
Speaker 1: the right word or what the right word is that

61
00:03:27,600 --> 00:03:29,960
Speaker 1: are going to use it, so that you know, we

62
00:03:30,040 --> 00:03:34,400
Speaker 1: actually see some return for that investment, which is, you know,

63
00:03:34,520 --> 00:03:37,080
Speaker 1: it's it's difficult when then we've got a private operator

64
00:03:37,240 --> 00:03:39,360
Speaker 1: who's going to be operating it, But you would hope

65
00:03:39,360 --> 00:03:42,360
Speaker 1: that the impact to the rest of the economy and

66
00:03:42,480 --> 00:03:45,880
Speaker 1: other businesses around the Northern Territory, you'd hope that it's

67
00:03:45,920 --> 00:03:47,520
Speaker 1: going to be worth the spend.

68
00:03:48,400 --> 00:03:51,400
Speaker 2: Well. Indeed, then if I were a territory taxpayer and

69
00:03:52,240 --> 00:03:55,720
Speaker 2: this amount of mine and fellow territorian's money was being

70
00:03:55,720 --> 00:03:59,560
Speaker 2: put into a project for which all the returns were

71
00:03:59,600 --> 00:04:02,480
Speaker 2: going to a private operator rather than at least some

72
00:04:02,520 --> 00:04:05,040
Speaker 2: of them being returned to the government, I'd be asked

73
00:04:05,120 --> 00:04:07,400
Speaker 2: wanting to ask a lot of questions as well, and

74
00:04:07,520 --> 00:04:10,520
Speaker 2: to be getting some meaningful answers to this. I mean,

75
00:04:11,760 --> 00:04:14,600
Speaker 2: it may be that you wouldn't get the same return

76
00:04:14,640 --> 00:04:17,840
Speaker 2: on it that a commercial investor would get, because, for example,

77
00:04:18,160 --> 00:04:21,240
Speaker 2: there could be applications of a project like this for

78
00:04:21,480 --> 00:04:23,719
Speaker 2: the military. You know, it might be helpful for the

79
00:04:23,839 --> 00:04:27,560
Speaker 2: Navy to be able to repair naval vessels, or for

80
00:04:27,680 --> 00:04:30,800
Speaker 2: Border Force to be able to repair vessels or maintain

81
00:04:30,920 --> 00:04:34,680
Speaker 2: vessels that it uses, rather than having them sent way

82
00:04:34,720 --> 00:04:38,080
Speaker 2: down south, which would cost more and involve delays. Rather

83
00:04:38,160 --> 00:04:41,080
Speaker 2: than having that work done in the Northern Territory. You

84
00:04:41,120 --> 00:04:44,359
Speaker 2: wouldn't necessarily expect that to pass the same cost benefit

85
00:04:44,400 --> 00:04:47,960
Speaker 2: tests as a private investor would make for a commercial project.

86
00:04:47,960 --> 00:04:50,600
Speaker 2: But the thought that there would be a zero return

87
00:04:51,000 --> 00:04:53,120
Speaker 2: to taxpayers for the amount of money that they're being

88
00:04:53,160 --> 00:04:57,039
Speaker 2: put expected to put into this project does, I think

89
00:04:57,200 --> 00:05:00,640
Speaker 2: raise some questions that deserve serious answers opinion.

90
00:05:00,800 --> 00:05:02,599
Speaker 1: And you know, you've looked at a lot of different

91
00:05:02,640 --> 00:05:05,200
Speaker 1: projects in the ways in which you know different governments

92
00:05:05,400 --> 00:05:08,120
Speaker 1: are spending money over the years. Is it normal for

93
00:05:08,160 --> 00:05:12,440
Speaker 1: the public to pay this much while a private operator benefits.

94
00:05:13,839 --> 00:05:18,599
Speaker 2: It's unusual. I can't say it's never happened, but it's unusual,

95
00:05:18,640 --> 00:05:22,760
Speaker 2: and it's becoming far too commonplace for the details of

96
00:05:22,800 --> 00:05:25,159
Speaker 2: projects like this to be wrapped in a commercial in

97
00:05:25,200 --> 00:05:30,120
Speaker 2: confidence blanket. I mean, sometimes there may be a justification

98
00:05:30,200 --> 00:05:33,800
Speaker 2: for that, if there's a competitive process, for example, and

99
00:05:33,839 --> 00:05:37,120
Speaker 2: you don't want one competitor to be advantaged over another,

100
00:05:37,279 --> 00:05:40,839
Speaker 2: or where you don't want the government's negotiating position with

101
00:05:41,000 --> 00:05:45,400
Speaker 2: potential commercial bidders to be compromised by having their bargaining

102
00:05:45,480 --> 00:05:48,640
Speaker 2: position exposed to the public before any decision is made.

103
00:05:48,800 --> 00:05:51,680
Speaker 2: But after decisions have been made, I don't see why

104
00:05:51,760 --> 00:05:54,640
Speaker 2: things should be commercial in confidence. In the same way,

105
00:05:54,800 --> 00:05:59,919
Speaker 2: sometimes there might be legitimate security reasons for some decision

106
00:06:00,160 --> 00:06:02,360
Speaker 2: to be kept under wraps, but I don't see how

107
00:06:02,400 --> 00:06:06,479
Speaker 2: that applies in this particular instance, And especially given that

108
00:06:06,800 --> 00:06:10,120
Speaker 2: the territory now has a new government which wasn't responsible

109
00:06:10,160 --> 00:06:12,599
Speaker 2: for any of these decisions when they were made between

110
00:06:12,600 --> 00:06:15,440
Speaker 2: twenty fifteen, and by the time this government come to

111
00:06:15,440 --> 00:06:17,960
Speaker 2: op you kind of wonder what are they afraid of?

112
00:06:18,480 --> 00:06:21,440
Speaker 2: What are they trying to conceal? If indeed they are

113
00:06:21,520 --> 00:06:26,080
Speaker 2: intending to conceal, maybe they'll respond positively to the calls

114
00:06:26,080 --> 00:06:28,080
Speaker 2: that have been made from some quarters for there to

115
00:06:28,120 --> 00:06:31,279
Speaker 2: be a full and open public inquiry into this whole project.

116
00:06:31,640 --> 00:06:35,440
Speaker 2: And hopefully, even if nothing can be done about commitments

117
00:06:35,440 --> 00:06:38,800
Speaker 2: that may have been entered into by previous governments, lessons

118
00:06:38,839 --> 00:06:41,760
Speaker 2: will nonetheless be learned so that this doesn't happen again. Yeah,

119
00:06:41,839 --> 00:06:42,680
Speaker 2: I mean, do you.

120
00:06:42,760 --> 00:06:46,280
Speaker 1: Think from your experience with the Northern territories already, you know,

121
00:06:46,320 --> 00:06:49,840
Speaker 1: we're already dealing with rising debt levels. Could this project,

122
00:06:50,120 --> 00:06:52,080
Speaker 1: I mean, it's obviously going to make things worse, but

123
00:06:52,120 --> 00:06:54,000
Speaker 1: are we taking on too much risk here.

124
00:06:54,880 --> 00:06:57,760
Speaker 2: Well, I think the Northern Territory is in a pretty

125
00:06:57,760 --> 00:07:01,240
Speaker 2: precarious financial position to say, and I want to be

126
00:07:01,360 --> 00:07:03,320
Speaker 2: very clear about this, that the territory is in any

127
00:07:03,400 --> 00:07:06,000
Speaker 2: danger of going bankrupt or is going to need some

128
00:07:06,080 --> 00:07:08,880
Speaker 2: kind of federal bailout. We're not talking that kind of

129
00:07:08,920 --> 00:07:13,840
Speaker 2: extremist language. But the Northern Territory's financial position is up

130
00:07:13,880 --> 00:07:17,160
Speaker 2: there with Victorias and Tasmania's as the worst in the nation.

131
00:07:17,600 --> 00:07:20,520
Speaker 2: The Northern Territory has a relatively small population and a

132
00:07:20,600 --> 00:07:25,080
Speaker 2: much more volatile economy than Victoria or even Tasmania, so

133
00:07:25,520 --> 00:07:29,679
Speaker 2: it shouldn't be carrying as much debt as larger states

134
00:07:29,720 --> 00:07:33,680
Speaker 2: are more capable of doing. And yet he is. And

135
00:07:34,080 --> 00:07:37,640
Speaker 2: that's something that you would think the Territory government would

136
00:07:37,680 --> 00:07:41,520
Speaker 2: be worried about. I was a little surprised in their

137
00:07:41,560 --> 00:07:45,240
Speaker 2: first budget that the new government took decisions, as their

138
00:07:45,280 --> 00:07:48,520
Speaker 2: budget papers disclosed, that actually made the fiscal position in

139
00:07:48,560 --> 00:07:51,600
Speaker 2: the Northern Territory worse rather than better. They say that

140
00:07:51,760 --> 00:07:54,720
Speaker 2: was because they needed to pay for the commitments they

141
00:07:54,800 --> 00:07:58,200
Speaker 2: had made, particularly in the law and order space, during

142
00:07:58,240 --> 00:08:01,520
Speaker 2: the election campaign. But they hadn't funded those commitments by

143
00:08:01,600 --> 00:08:04,480
Speaker 2: raising additional revenue. The decisions they made in the lead

144
00:08:04,560 --> 00:08:07,160
Speaker 2: up to the territory's most recent budget actually made the

145
00:08:07,200 --> 00:08:11,040
Speaker 2: deficits worse in the next three or four years. And

146
00:08:11,120 --> 00:08:13,400
Speaker 2: if they have to tip more money into this project

147
00:08:14,040 --> 00:08:16,240
Speaker 2: in order to make it happen, then that's just going

148
00:08:16,280 --> 00:08:17,200
Speaker 2: to compound that risk.

149
00:08:17,320 --> 00:08:20,160
Speaker 1: Yeah, so I know they'll be listeners hearing you and

150
00:08:20,160 --> 00:08:22,400
Speaker 1: I speak this morning, and they might be thinking to themselves,

151
00:08:22,400 --> 00:08:24,360
Speaker 1: will is it too late to pull out? Or are

152
00:08:24,400 --> 00:08:26,640
Speaker 1: we at riskier of this being a wise elephant?

153
00:08:27,840 --> 00:08:31,040
Speaker 2: Well potentially yes, as I say, I can imagine that

154
00:08:31,120 --> 00:08:34,559
Speaker 2: there are reasons why you might want this project to

155
00:08:34,600 --> 00:08:38,600
Speaker 2: go ahead, both to assist the fishing industry and other

156
00:08:38,720 --> 00:08:42,640
Speaker 2: industries that rely on putting boats out into the waters

157
00:08:42,679 --> 00:08:45,319
Speaker 2: around Northern Australia and the Northern Territory, and there might

158
00:08:45,400 --> 00:08:50,040
Speaker 2: also be some military naval security type reasons for wanting

159
00:08:50,040 --> 00:08:54,360
Speaker 2: to proceed with it. But nonetheless, it's a financial decision

160
00:08:54,400 --> 00:08:57,080
Speaker 2: that's going to cost someone, and it looks like at

161
00:08:57,080 --> 00:08:59,920
Speaker 2: the moment, the Northern Territory government and Northern Territory Tax

162
00:09:00,559 --> 00:09:03,839
Speaker 2: a very substantial amount of money for a population that's

163
00:09:03,880 --> 00:09:06,640
Speaker 2: less than two hundred thousand and as I said before,

164
00:09:06,840 --> 00:09:10,760
Speaker 2: I think, you know, Northern Territorians are entitled to ask

165
00:09:10,880 --> 00:09:13,840
Speaker 2: some serious questions of the government and get some sensible,

166
00:09:14,080 --> 00:09:19,080
Speaker 2: credible and complete answers as to whether it is possible

167
00:09:19,480 --> 00:09:22,560
Speaker 2: and if so, whether it makes sense to extricate it

168
00:09:22,600 --> 00:09:25,400
Speaker 2: from this project, or if it isn't possible because of

169
00:09:25,480 --> 00:09:28,240
Speaker 2: contracts that have been signed and you know what some

170
00:09:28,280 --> 00:09:33,000
Speaker 2: people describe as sovereign risk of governments defaulting on decisions

171
00:09:33,040 --> 00:09:35,520
Speaker 2: that have been made or promises that have been made

172
00:09:35,520 --> 00:09:38,480
Speaker 2: by previous governments. If you can't get out of that,

173
00:09:38,840 --> 00:09:42,600
Speaker 2: then doing the best possible financial deal and being fully

174
00:09:42,640 --> 00:09:44,840
Speaker 2: transparent about it, I think of the least that can

175
00:09:44,880 --> 00:09:45,520
Speaker 2: be expected.

176
00:09:45,960 --> 00:09:48,960
Speaker 1: So, just in closing, I mean, what lessons do you

177
00:09:49,080 --> 00:09:51,920
Speaker 1: think should be learned from this, especially for a small

178
00:09:52,040 --> 00:09:53,880
Speaker 1: jurisdiction like the Northern Territory.

179
00:09:54,800 --> 00:09:58,600
Speaker 2: Well, I think the key lesson is that sunlight is

180
00:09:58,640 --> 00:10:03,280
Speaker 2: the best disinfected. Commitments like this shouldn't be entered into

181
00:10:03,440 --> 00:10:08,160
Speaker 2: before there's been a thorough arms length investigation of the

182
00:10:08,200 --> 00:10:10,880
Speaker 2: costs and benefits. And you know, sometimes they can be

183
00:10:10,920 --> 00:10:13,920
Speaker 2: difficult to quantify, especially if there is a sort of

184
00:10:13,960 --> 00:10:17,520
Speaker 2: security dimension to it. But these things need to be

185
00:10:17,640 --> 00:10:23,920
Speaker 2: considered seriously, fully openly, and transparently before decisions like this

186
00:10:24,040 --> 00:10:24,480
Speaker 2: are made.

187
00:10:25,040 --> 00:10:29,080
Speaker 1: Interesting you say that, I mean it makes absolute sense

188
00:10:29,120 --> 00:10:30,760
Speaker 1: to me, and it was something that I was asking

189
00:10:30,880 --> 00:10:34,160
Speaker 1: questions about, you know, of both former governments, saying have

190
00:10:34,200 --> 00:10:36,800
Speaker 1: we sort of got contracts locked in with defense or

191
00:10:36,840 --> 00:10:39,560
Speaker 1: with the navy? You know, are we sure that we

192
00:10:39,600 --> 00:10:41,920
Speaker 1: are going to have the industry to be able to

193
00:10:41,960 --> 00:10:44,680
Speaker 1: support this amount of money being spent and then we

194
00:10:44,760 --> 00:10:46,960
Speaker 1: know that cost is blown out. I know that there's

195
00:10:47,040 --> 00:10:50,280
Speaker 1: lots of Northern Territory businesses who, you know, once this

196
00:10:50,480 --> 00:10:53,360
Speaker 1: is up and running, are hoping that they will see

197
00:10:53,400 --> 00:10:56,080
Speaker 1: the benefit of that, and I hope they do as well.

198
00:10:56,120 --> 00:10:57,800
Speaker 1: But Jee, it's a heck of a lot of money.

199
00:10:58,760 --> 00:11:01,480
Speaker 2: Yeah. And the thing is is, Katie, if governments won't

200
00:11:01,600 --> 00:11:05,360
Speaker 2: or can't answer these questions reasonable questions, then people are

201
00:11:05,520 --> 00:11:09,000
Speaker 2: entitled to spell something furry with a tail running up

202
00:11:09,000 --> 00:11:13,240
Speaker 2: and down the corridor. So I like that.

203
00:11:14,040 --> 00:11:16,760
Speaker 1: Thank you so much for your time this morning. I

204
00:11:16,800 --> 00:11:19,120
Speaker 1: really appreciate you having a chat to us about this.

205
00:11:20,200 --> 00:11:21,880
Speaker 2: That's been a pleasure. Can you think thank you?

206
00:11:21,920 --> 00:11:22,680
Speaker 1: Thanks so much,