Page 2896 - Week 07 - Wednesday, 29 June 2011
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Which one is correct? Why was the saving churn that was supported in the consultants’ reports suddenly being ditched? And before I go to more of the contradictions in their claimed savings, remember this was put to us and this was what they said to us, effectively. We said, “What are your savings?” The former Chief Minister and the current Chief Minister went to the budget breakfast and said, “This will save us $19.3 million a year. We will be $19.3 million a year better off.” So we said, “Where are those savings? They are not in any of your reports. They are not in any of the consultants’ reports.” So we asked them and that was when they produced this dodgy A4 piece of paper.
The dodgy A4 piece of paper, apart from being contradicted by later documents, actually only talks about the savings. It does not talk about costs. So they are claiming that if you build this shiny, new $430 million office building there are no costs. There are only savings. They said, “Wouldn’t it be wonderful if we built this building for ourselves and we owned it, because we would save $12 million a year in rent.” That is wonderful but if you borrow that $430 million, that will cost you about $30 million a year in interest. They did not take account of that.
So you have got this situation where it would be like a couple saving for a house and saying, “Okay, we are paying $500 a week rent now and if we take on this $400,000 mortgage we will be $500 a week better off.” That is not taking into account the fact that they would be paying interest on the mortgage. This is the level of analysis that is being provided.
So we go on. The savings that were listed on the A4 piece of paper did not match the savings assumptions that were in the costs and feasibility reports. The dodgy A4 sheet of paper has staff turnover costs at $13,600 in terms of savings. The consultants say $5,000. Which is correct? The A4 sheet of paper has staff savings at one per cent, consultants at 1.2 per cent.
The claimed efficiency savings of $15.2 million are based on numbers that are not included in the $5 million worth of savings in the consultants’ reports. For example, the 10 per cent reduction in office consumables is based on information received from a number of organisations who had recently relocated to a single location but no report explicitly refers to this; similarly with the five per cent reduction in ICT. The case studies that these savings are based on have not been provided.
This is where the committee got to:
The committee recommends that the ACT government provide the correct analysis conducted by the consultants with savings assumptions that match the savings sheet provided to the Committee and that the Government report to Legislative Assembly before the project proceeds.
An earlier recommendation was:
The Committee recommends that the ACT Government provide the ACT Legislative Assembly with additional information to support a decision on the Government office building.
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