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Glamorgan Spring Bay Council - Funding for Prosser Pipeline

11 September 2019
Rosalie Woodruff MP

 

Dr WOODRUFF question to TREASURER, Mr GUTWEIN

In 2016 you signed a $4 million Tascorp loan to the Glamorgan Spring Bay Council to construct the Prosser water pipeline. Now cost blowouts mean the council cannot afford to finish the job. It cannot supply the water to Tassal, or anybody else, and will not be able to recover its costs. No serious financial modelling for this loan was ever shown to Glamorgan ratepayers or to previous councillors and the loan deal between yourself and the previous mayor and general manager was highly secretive and publicly and widely criticised for being so. Simple back-of-the-envelope maths of loan repayments show servicing this massive debt over decades places the council into a perilous debt trap. Mayor Wisby said yesterday her council's borrowing capacity is extremely low and there is no money for emergency rebuilding of bridges or any other infrastructure. This is gross malfeasance on your part. You gave a leg-up for two private commercial operators at the expense of Glamorgan ratepayers. Why did you let this happen and what are you going to do about it?

 

ANSWER

Madam Speaker, I thank the member for that question and her interest in this matter. The simple facts of the matter are that the council has substantially underestimated the cost to complete the scheme.

Ms O'Connor - Oh, it's the council's fault.

Madam SPEAKER - Ms O'Connor, warning two.

Mr GUTWEIN - Those costings for the scheme have proven to be insufficient to complete the various stages. The council approached the state Government for support in the last term and we went through the normal processes. I make the point regarding the language the member uses that she says it was highly secretive but then says it was publicly criticised. How do you have a highly secretive process but then at the end of the day the arrangements were publicly criticised?

Dr Woodruff - The lack of information.

Madam SPEAKER - Dr Woodruff, warning two.

Mr GUTWEIN - This is a matter for the council. When they applied for the borrowings they were within the normal metrics that would be applied by Tascorp in terms of lending money to any government authority. They went through the process. Tascorp looked at this and determined that they were in a position to meet their obligations in terms of the loan. Interestingly enough, the terms of the agreement with Tassal are such, as I understand it, that once water begins to flow, over a period of time Tassal will pay for the loan and interest repayments associated with the pipeline over time.

The council has put itself into a spot of bother and the circumstances the mayor finds herself in now were not of her doing. I spoke with Mayor Debbie Wisby on Monday evening about this matter and she is engaged with Tassal to look at what potential options may be.

In terms of Glamorgan Spring Bay's capacity to borrow and the metrics that were applied, they are exactly the same metrics and process we go through with every other council. That the council entered into a project where the cost estimates have not worked out as they thought they would is not a matter for the state government. It is a matter for the mayor, the council and her current general manager to work through. We will support them and I have been engaged with that council every step of the way since Mayor Debbie Wisby began working through this issue with a number of acting general managers in recent months and we will continue to play our part.

The process the council engaged in was exactly the same process; the same metrics and the same approval process was applied to this council as would be applied to any other council. The council has itself in a challenging situation because the costings associated with the project have blown out. We will work with the council and with the community to ensure a suitable solution can be found. I understand the mayor is working with Tassal regarding this matter.