[COM] New Royal Adelaide Hospital | $2.1b

[Aidan]

If it's good enough for Labor then it's good enough for Liberals.

It may be good enough for political parties, but the people of South Australia deserve better!

[stumpjumper]

As usual, the main mouthpiece for the misleading $1.7 billion was former Treasurer K Foley.

[Waewick]

If it's good enough for Labor then it's good enough for Liberals.

It may be good enough for political parties, but the people of South Australia deserve better!

that's the pint isn't it.

you can justify your position because someone elses is worse

I'm sick of pollies answering enquiries into their behaviour by responding their opposites are worse.

I couldn't give a crack about the Liberals plan - we are dealing with the State Government one - that is the one that is happening and that is the one that needs details.

[AtD]

Guys, this is a construction project thread. Please keep political philosophy in The Pub.

[rhino]

It's not a blow out. The govt. has just only referred to construction costs when talking about the cost of this project.

That's a bit misleading, as the average Joe won't think about the cost of finance etc, but you'd have to expect there to be more to the cost of a project than just the cost of building it.

As to whether those additional costs represent value for money, I'm not so sure.

Of course they don't. And if the government has only referred to construction costs when talking about the cost of this project then they've been deliberately misleading the people of SA. It's the total cost we will pay that matters, not the construction cost.

If you want to build a house and a builder tells you it will cost you $295,000 and you decide to go ahead and do it, but then 10 years later discover that you have paid a further $80,000 in interest that the builder never told you about, and you still haven't paid your house off, do you sue the builder? Or do you accept that you don't have the cash up front and you are going to have to borrow it and pay it back over a number of years, and interest is part of the deal?

Get real Aidan, no project is paid for in cash, every project involves paying interest on a loan, and everyone accepts that. Can you cite one project, from any political party, that has included the cost of the loan repayment in the headline anouncement?

[Aidan]

It's not a blow out. The govt. has just only referred to construction costs when talking about the cost of this project.

That's a bit misleading, as the average Joe won't think about the cost of finance etc, but you'd have to expect there to be more to the cost of a project than just the cost of building it.

As to whether those additional costs represent value for money, I'm not so sure.

Of course they don't. And if the government has only referred to construction costs when talking about the cost of this project then they've been deliberately misleading the people of SA. It's the total cost we will pay that matters, not the construction cost.

If you want to build a house and a builder tells you it will cost you $295,000 and you decide to go ahead and do it, but then 10 years later discover that you have paid a further $80,000 in interest that the builder never told you about, and you still haven't paid your house off, do you sue the builder? Or do you accept that you don't have the cash up front and you are going to have to borrow it and pay it back over a number of years, and interest is part of the deal?

Even f you borrow the money from the builder at double the interest rate the bank would charge, you're unlikely to have legal grounds to sue the builder - especially if this was your idea in the first place!

Get real Aidan, no project is paid for in cash, every project involves paying interest on a loan, and everyone accepts that. Can you cite one project, from any political party, that has included the cost of the loan repayment in the headline anouncement?

Are you happy that governments keep the public in the dark about it?

[AtD]

^ Putting construction costs and finance costs together in the budget is a violation of accounting practice. Construction is an asset, financing is a liability. The asset is expensed down over its life as depreciation. Debt principle is never expensed, interest is expensed as it is incurred. Different kettles of fish.

Furthermore, governments don't use mortgages - they use bonds. Forecasting the lifetime cost of this debt is not possible as it's dependant on the budget decisions of future governments.

[rhino]

Aidan, you said: "if the government has only referred to construction costs when talking about the cost of this project then they've been deliberately misleading the people of SA. "

I'm saying that if that is the case, then every government, of every persuasion, has, each time they've announced a project, deliberately misled the people. I consider this not to be the case, and I consider your argument ridiculous.

[Waewick]

I don't think the Finance cost is the major issue here.

I thought the highe running costs are what has got people wondering?

Given we haven't got a comparison I guess the term huge is debatable however.

That being said - we don't know the running costs of the Northern Express way or the to be duplicated Southern Expressway either.

[Prince George]

^ Putting construction costs and finance costs together in the budget is a violation of accounting practice. Construction is an asset, financing is a liability. The asset is expensed down over its life as depreciation. Debt principle is never expensed, interest is expensed as it is incurred. Different kettles of fish.

Furthermore, governments don't use mortgages - they use bonds. Forecasting the lifetime cost of this debt is not possible as it's dependant on the budget decisions of future governments.

Does the state own the hospital as an asset in the RAH's PPP model?

[stumpjumper]

From Premier Rann's media release 6th June 2007:

"A new medical facility in Adelaide will cost $1.7 billion and be called the Marjorie Jackson-Nelson Hospital."

That is the only mention of cost in the release except for an indirect reference:

SA Treasurer Kevin Foley says the health plan is affordable. "That's the feedback I got today from Standard & Poor's. Modest borrowings to reinvest in the capital of our state," he said.

Note the careful choice of words - there is no verb relating to Foley's 'modest borrowings'; not 'we will make...' or 'there will only be...'. In fact, under the PPP, the only borrowings possible would be for an annual payment to Macquarie Bank - for decades. This payment, which represents the yield to Macquarie's investment consortium, is based on an interest rate of about 15%. Only the annual payment of a few hundred million dollars, not any capital amount, will appear on the state's balance sheet.

The theory is that this arrangement will help SA to keep its AAA credit rating and allow it to borrow capital at about 6%.

There are only two justifications for doing this. The respectable one is that preserving the AAA will save us money in the long run.

The other justification is that hiding the true cost of the project behind a PPP is worth whatever extra it costs the taxpayer because it increases the government's chances of re-election on the basis of financial responsibility.

The government is claiming the first justification; the Opposition the second.

[stumpjumper]

An Advertiser poll is not the be all and end all of polls, but when the result for the simple question of whether or not the new RAH should go ahead yields 90% against building the new hospital and only 9% for it with a sample of around 800, you have to give it some credibility.

The alternative was to continue the upgrade of the present freehold RAH, where over $1 billion has been spent and where spending continues.

What is the mindset of Rann and his government as they forge ahead with the project?

Are they visionaries? Do they know things the electorate doesn't? Has the government become so welded to the idea of any development at any cost that it is blind to alternative views?

I'd really like to know. After all, I and my fellow taxpayers will be paying in the order of $10 billion over the years for facilities which we can have, at this stage, for another $700 million to complete the upgrade of the present RAH to provide the same number of beds as the proposed new RAH.

[iTouch]

question, what's happening with the old Royal Adelaide Hospital space?

[mattblack]

An Advertiser poll is not the be all and end all of polls, but when the result for the simple question of whether or not the new RAH should go ahead yields 90% against building the new hospital and only 9% for it with a sample of around 800, you have to give it some credibility.

I would garantee that liberal staffers would have been on top of that poll all day to turn those figures. I would give those polls no cred at all. What is the point of continually asking the same inane questions. Its like the bloody twilight zone or another meeting of the SACA members who were opposed to the oval redevelopmnent.

What is the mindset of Rann and his government as they forge ahead with the project?

Are they visionaries? Do they know things the electorate doesn't? Has the government become so welded to the idea of any development at any cost that it is blind to alternative views?

I'd really like to know. After all, I and my fellow taxpayers will be paying in the order of $10 billion over the years for facilities which we can have, at this stage, for another $700 million to complete the upgrade of the present RAH to provide the same number of beds as the proposed new RAH.

Okay, I cant help myself, Im going to have to ask how you can spend $700m and get the same infrastructure as $10 Billion ................ This should be entertaining.

[stumpjumper]

The 'RAH Project' changed mid-stream from being an on-site renovation project to a rebuild on a new site project.

Around $1 billion of a $1.7 billion renewal program has been spent over the last decade, and it's still not certain which buildings will be retained and which won't.

For example, Adelaide Uni has ideas of expanding its medical school and using some of the buildings as student accommodation.

Not much of the RAH is heritage listed. The residential wing at the north of the site, the Hone wing and the East Wing have the best views but are new(ish) and supposedly will be demolished. The Botanical Gardens has claimed back much of the land on which these newer buildings stand. The gardens gave the land to the hospital some years ago in return for the land at the far east end of the Botanic Gardens.

The fate of the non-heritage listed Edwardian Margaret Graham building, and the Moderne style Eleanor Harrald buildings on Frome Road is unknown. They were residential (nurses' quarters) but they'd require a lot of work to bring up to compliance, and quite frankly this government has an aversion to working with existing structures.



On the other hand, if the site were rezoned for saleable residential use, then the private sector would be likely to be interested in converting anything with a good outlook to dwellings.

The new parking block will be retained, no doubt.

In other words, other than the heritage listed buildings which will stay, it's not an easy question to answer.