By Jane Nethercote, Crikey Reporter
What’s going on with the Meander Dam
project in Tasmania? Premier Paul Lennon last week launched an investigation into cabinet documents that were leaked to the Greens. The leaked papers reveal just how much
trouble the government has had financing the project. And it ain’t over yet.
December 2004, the government chose a consortium headed by
Rothschild-John Holland (RJH) to build the dam. But
if you read the government’s latest press release, the project is now
to be managed by a consortium called Tasmanian Water Solutions Pty Ltd (TWS),
which is headed by KPMG, Agricultural Resources Management and
Serve-Ag. “It’s been a long and difficult row (sic) to hoe, but a
successful end is finally in sight,” Primary Industries and Water
Minister Steve Kons claims.
The leaked docs paint a dramatically less sunny picture.
Despite the fact that the government and TWS
had not yet reached “financial close” – defined as the developer
securing unconditional access to sufficient funds to complete the
project – by 11
July 2005, they decided to proceed anyway because of the “need to
maintain investor and stakeholder confidence.”
Saving face has come
at a significant cost to the government – “the Crown negotiating team has had to take a risk-based
approach in negotiating a number of possible concessions to TWS just to
reach a potential agreement by which the project could proceed.” Under the agreement TWS will have “overall control of project
implementation,” and a lower grade of insurance than initially recommended.
The project is funded jointly by the public and private sectors. In
2001, the project looked like it would cost $23 million, with the Crown
providing $7 million to the project. But there have been blowouts – some blame
environmental groups for taking the government to court over the project
– increasing estimated costs to $28 million. Despite a new injection of
government funds – $4.6 million from the Commonwealth and
Hydro Tasmania – the need for even more private funding “has
significantly reduced the financial viability of the project to a marginal level,” according to Cabinet documents.
To help meet costs, TWS is selling shares in dam
ownership to irrigators in the form of strata title. And at this stage, there are reportedly expressions of interest from more than 120 local farmers for 1700 of
the 2400 units on offer. Strata titles are a “wealth creation mechanism,” says solicitor Julie
Van Dort, a body corporate law expert with Coadys. “In Australia and the US, it
is now common for strata titling to be used for billboards on walls,
air space over roads, garages, storage units, car parks, market stalls, automatic teller machines and wineries.”
But schemes like this are also complex – and require a complex legal approach.
“To enable creative uses of strata tile to occur,” says Van Dort, “a
range of governing documents need to be carefully drafted to set out
the rights and obligations of all the parties.” At this stage it sounds
like a recipe for quite a bit more pain – and negative PR – for the