ANALYSIS: The Gunner Government has announced it will release a $145 million tender to design and build the next part of the State Square project, with federal government figures showing close to $200 million in Territory Government money could be spent in total, for what original figures estimated to be a roughly $20 million project when it was first announced in the middle of 2017.

The tenfold increase for the project comes amid the Territory’s contribution to the Darwin City Deal increasing from $100 million to potentially about $340 million, if newly proposed spending on the current museum is taken into consideration as an alternative to the previously scrapped plan for a new one.

The redevelopment was originally announced on April 24, 2017, as part of the bigger City Deal on which the Federal Government would spend $100 million, with the Territory Government saying it would also spend $100 million over four years.

However, the State Square project has expanded over time, with the inclusion of nearby Civic Park but with no real public acknowledgement that it had. The Federal Government’s 2021 City Deal progress report published in November showed there was $194.5 million in Gunner Government spending that had already been spent or allocated for works.

This is despite a Gunner Government press release from June that year – after the budget had already been released – still referring to their entire City Deal contribution as being $100 million, a figure that would in actuality be more than $300 million. The total amount to be spent by the Territory and federal governments and Charles Darwin University could now be up around $540 million dollars, by NT Independent calculations.

It also took more than three years for the Territory Government to put out a tender to create a business case for the project, which only came after it had already spent close to $40 million.

That press release came exactly seven months before the Gunner Government announced they would be putting out the $145 million tender for the Civic and State Square project, and then just six weeks later, the government put out a tender for the development of a masterplan that could see up to $100 million spent on the Museum and Art Gallery NT.

All of the spending, apart from the $26.7 million for the underground carpark, has, and will, come after the damning report by the former WA under-treasurer John Langoulant, which was commissioned by the government and released to the public in April 2019.

On its release, then-treasurer Nicole Manison said the government had accepted the majority of the recommendations and aimed to reduce spending by $11.2 billion over 10 years.

In the December prior, the NT Government had said if it continued spending without restraint that the net debt would reach $35.7 billion by 2029-30.

The NT Government’s Mid-Year Financial Report published in December 2021, showed the Territory’s net debt was still on track to top the $10 billion mark by 2023, and will hit nearly $8 billion by the end of this financial year, albeit $1 billion less than was forecast in the budget.

The report also shows that despite forecasts of less than expected net debt this year, the Territory is now at 106 per cent net debt to revenue ratio, with that figure anticipated to rise to 153 per cent by 2024-25.

How the Territory spending actually breaks down

The Northern Territory government originally announced it would spend $100 million on moving part of the CDU campus into the city, building a museum at Myilly Point, building a 400 space underground carpark in the State Square area, building an art gallery, moving the city bus terminal, demolishing the old Chan Building, and moving the NTG computer centre which was housed there, refurbishing the Old Reserve Bank, and removing the old Naval fuel tanks at Stokes Hill.

At the time, the government estimated the museum, that was later scrapped, would cost $50 million. The NT Government ended up spending $14.5 million paying for Darwin Council land for the new CDU campus, with the federal government coming in to gift $97 million and the university spending $125 million in borrowed funds through the North Australia Infrastructure Facility.

An industry insider has told the NT Independent it would cost about $5 million to get rid of the Naval fuel tanks and to rehabilitate the contaminated soil, and $2 million in civil works to level the site out, which a developer may have potentially picked up the tab on.

That would mean there would have been about $18-to-$20 million of the original $100 million projection for the Civic and State Square development, even though the CDU campus may have cost less than originally envisaged.

Remember, the federal government figures show $194.5 million has been allocated to the project.

The demolition of the Chan building cost $2.8 million, and there was a $7 million contract awarded in 2019 to move the move the NTG computer centre that was housed in the building.

That would leave between $10.2 and $12.2 million from the original estimate for the rest, which is now projected to cost about $181 million.

Civic State Square master plan

One variable is that when the government axed the idea for the $50 million museum in April 2018, after already spending $3.8 million, it said the rest of the money would be transferred to the State Square project, giving it a $56.6 to a $58.6 million budget based on those original figures.

However, in early March, the Gunner Government put out a tender for a consultant to develop a masterplan for the Museum and Art Gallery NT for up to $100 million in spending over ten years.

If this is included speculatively, a $100 million announcement in 2017 will become close to $315 million in Territory Government spending in reality.

While city cooling was mentioned in that press release, and the need to link the Waterfront to Cullen Bay, there was no specific mention of cooling projects and spending, which came later.

However the cost of cooling projects – which run under the City Deal banner by the Gunner Government – include the infamous $2.7 million Cavenagh St shade structure, and work on Austin Lane and Spain Place, as well as work in Cullen Bay, have added an extra $18.7 million in spending that the NT Independent is aware of, plus at least an extra $50,000 of jute for the shade structure and an annual upkeep bill for it, that the government puts at about $50,000.

That would put the Territory Government spending at about $335 million.

The breakdown of the spending and Opposition criticism

Infrastructure Minister Eva Lawler – who is being investigated by the Office of the Independent Commissioner Against Corruption over an alleged cover-up of safety issues at TIO Stadium – did not respond to questions and a request for a full break-down of the Territory’s expected costs under the City Deal, but she was provided with the NT Independent’s estimate of spending.

Ms Lawler was also asked to explain why in June last year the total cost was still being referred to as $100 million when the government had already spent at least $60 million and the art gallery alone was slated to cost about $50 million.

She was also asked why exactly seven months later they would be announcing a $145 million tender, and then just six weeks later calling for a master plan that could see up to $100 million spent on the Museum and Art Gallery NT.

The Darwin City Deal 2021 progress report stated that in May of that year the NT Government had announced a further $105 million to be spent over the next five years to go towards realising the ‘Central Heart’ (a small partly covered water feature space) and the remainder of the master plan.

A budget press release mentioned only the $30 million to be spent in that financial year, and gave no indication what the total spending had been already, and would be in total.

The progress report said there was $15.8 million for Civic and State master plan Stage 1, $23.3 million for the underground car park, $30 million for Stage 2, and $75 million for future stages, for a total of $144.1 million.

The car park, which was finished in late 2020, actually cost $26.7 million.

The report also states the Gunner Government would spend an additional $47 million on the State Square art gallery.

That would take the the total cost to $194.5 million but the true cost could be higher if there was an individual break-down of costs publicly provided, and most likely will be higher based on the budget blow-outs so far.

The report does not indicate there is anything extra to be built in the Civic State Square development that would have increased the price tag from the original announcement, than what has been publicly announced, and there has been no update to the masterplan to show anything extra is planned

Opposition infrastructure spokesperson Gerard Maley said the CLP was not surprised the cost of the development had ballooned so significantly since it was first announced, citing that the cost of the Chan building demolition blew out by $1 million and was 12 months late. There was a $1.5 million overspend on the Myilly Point playground, $800,000 on the scrapped Myilly Point museum, and the State Square underground carpark was $7 million over budget.

“The Gunner Government has been in power almost six years and is yet to deliver a project on time, or on budget,” he said.

“What do you expect when the Infrastructure Minister’s attitude towards budgets is ‘sometimes they go over and sometimes they go under’?

“Labor is recklessly squandering taxpayer funds with no regard.”

No business case until almost $40 million spent

It was only in June 2020 the Gunner Government started work on developing a business case for the State Square project, which came more than three years after first announcing it, and more than a year after commencing works.

Government documents showed the contract to produce the business case for the now $194.5 million project was awarded to Deloitte for $265,000 through a private select process rather than through a public process.

The consultancy will also include creating a business case for the proposed art gallery at State Square, which had already gone to tender for its design in last April.

Before developing a business case for its “critical” project, the government hired a company to demolish the Chan building for $1.5 million – which blew out to $2.8 million – move the data centre at a cost of $7 million, build the car park for $26.7 million, which was originally supposed to cost $19.4 million, and pay for the $500,000 “masterplan”, and awarded tenders to contractors for a variety of associated works since 2018.

It is not known what total construction cost that business case was based on, as at the time the Gunner Government was still referring to a whole City Deal contribution of $100 million. The 2020 progress report did not give financial figures for the State Square project.

With the latest announcement this week, Ms Lawler also said the government had awarded a $305,000 tender to Clouston Associates for the design of Liberty Square, “a place within the precinct that commemorates significant civic and cultural history.”

The major work to completed is the new art gallery which the government said would cost $50 million, leaving about $95 million to be spent of the design of the gallery and the following features:

• Central Heart – a centrally located shaded area with a water feature;
• Tropical tree walk – traffic to be blocked on part of Smith Street with tall trees for all year sun and rain protection;
• Events lawns – lawns for festivals and events;
• Forecourts – Parliament House and Supreme Court forecourts with water-features; and
• Liberty Square – design commencing shortly with construction anticipated in late 2022.
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