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Legislative Assembly for the ACT: 1999 Week 13 Hansard (9 December) . . Page.. 4144 ..

MR HUMPHRIES (continuing):

Mr Quinlan asked about the costs of CanDeliver's operations, and why it incurred losses of $600,000 to $800,000 a year in its first few years of operation. I am advised of a number of factors embedded in that cost. The establishment costs, of course, were in the first couple of years. There were the costs of the board, staff costs and tendering costs. It is worth pointing out that CanDeliver's approach was to absorb the tendering costs itself and not pass them on to the subcontractors. The idea was that returns that would come in over time would defray the costs of the tenders. Well, that was not always the case. There were a number of factors to be built into a decent tender and I am advised that those costs were up front in this process rather than distributed back to the subcontractors.

There was also the process of pre-qualifying something like 200 local firms for inclusion in the CanDeliver program, so that itself involved some significant costs. The approach of CanDeliver to bearing the costs of establishing the bidding consortia and wearing the initial tender costs certainly contributed to those high up-front costs. Some of the losses will be recouped from the disposal of the contracts, so the figures you have seen there cannot entirely be attributed as the losses of CanDeliver.

If the Assembly agrees to the motion, an independent valuation will be obtained to ensure that the Territory's interests are protected. If the existing subcontractors are not willing to pay a fair value, other firms will be given the opportunity to acquire the contractual rights from CanDeliver. That does not mean that the subcontractors will be the only people who will be in the market for these contracts. If that were the case it may depress the price. We do not wish to do that. We wish to minimise the losses that the Assembly has been speaking about this afternoon.

Mr Berry asked where did the money go. The answer is that it went into jobs in the ACT and economic activity in the ACT, not in places like Vanuatu. Indeed, if Mr Berry speaks about the losses in CanDeliver paying for about 500 occasions of service in our hospitals, I have to say we could have paid for about 1,000 had we not squandered the $5m or $6m we lost on the VITAB contract.

I think it is unfair to describe CanDeliver as a monumental failure. It certainly is not the view of the chairman of CanDeliver, whose contribution to the report members have seen indicates, I think, a measure of agreement with the approach that has been taken in that report. The bottom line in terms of dollars and cents at this stage is not positive, but there are other benefits that CanDeliver obtained which cannot be measured in terms purely of the profit and loss statement of CanDeliver, and that, I think, has to be borne in mind in deciding whether to view this as having been a bad move.

I thank members for their support and look forward to reporting back to them next year on progress on the divesting of assets.

Question resolved in the affirmative.

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