Page 4043 - Week 11 - Wednesday, 16 Sept 2009
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
and a range of assumptions about the extent of works required. It was recognised that these costs were preliminary assessments, and that further and more detailed work was necessary to confirm the actual costs. This work included, but was not limited to, detailed engineering, quantity surveying and geotechnical advice. The final design needed to be settled based on this work. Prevailing market conditions would also need to be taken into account.
The voting shareholders were aware that Actew was undertaking, as part of the Bulk Water Alliance, a detailed costing and engineering exercise for the delivery of the enlarged Cotter Dam. It is a long and complex exercise, necessary to enable the corporation to get a firm and detailed understanding of all the components of what is a very significant project.
Mr Corbell: On a point of order, Madam Assistant Speaker: could you ask members, if they want to conduct negotiations, to go out to the lobby.
MADAM ASSISTANT SPEAKER (Ms Le Couteur): Mr Corbell makes a very good point.
MS GALLAGHER: This was to be finalised around the middle of this year, and it was disclosed in the budget papers, on page 438 of the 2009-10 budget paper 4, that Actew had consistently advised that the cost of delivering the enlarged Cotter Dam was expected to be much higher in the final analysis than the preliminary estimate of $145 million, due to a range of factors, including increases in the price of labour and materials. Indeed, to provide additional reassurance on the project, Actew sought independent expert verification of the costs and designs to reconfirm that the costings were robust and that the design was appropriately specified. This was a necessary and important step in order to validate the final costs.
The corporation provided the voting shareholders with appropriate information when the final facts and positions had adequately crystallised to allow us to consider the final situation. In considering our position on the matter, we took into account the following factors alongside the detailed costings: the ongoing effects of climate change and the extended drought conditions which still need to be countered; the need from a climate perspective, which remains as strong today if not stronger than in 2007; the outlook for this year, which is shaping up to be the driest on record, with the prospect of stage 4 water restrictions being imposed sometime in 2010, unless conditions improve; current disappointing weather forecasts, with recent predictions of an emerging El Nino weather pattern unlikely to provide any relief; and stage 4 water restrictions, which have been estimated to cost the community $324 million annually. This is almost as much as the total project to enlarge the Cotter Dam.
Although we were expecting a much lower final total project cost, the government realises that it is not unusual for final costs on complex major projects of this type to vary considerably compared to initial estimates. For example, I have been advised that a recent news item commenting on BHP’s proposed expansion of the Olympic Dam copper-uranium-gold mine in South Australia said that it was expected to cost between $17.4 billion and $23.2 billion, yet the initial cost estimate released several years ago was in the order of $7 billion.
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .