The day after Malcolm Turnbull skewered Bill Shorten in federal Parliament for sucking up to billionaires in Melbourne, Victorian Premier Daniel Andrews has rolled out a sweetheart deal for casino billionaire James Packer to build the tallest building in the southern hemisphere.
After more than two years of private arm-twisting and lobbying, the state government has ignored regular council processes and approved a 323-metre skyscraper at the Queensbridge Hotel site on the banks of the Yarra River across the road from the existing casino complex. The development, a 50-50 joint venture with Melbourne’s wealthy Shiavello family, will re-affirm Crown’s Melbourne precinct as one of the biggest integrated buildings in the world and certainly the biggest in Australia.
The Victorian government is the responsible planning authority for this giant 200,000sqm-plus proposal because Victorian law side-lines the capital city council when developers aspire to build more than 25,000sqm.
However, normally in these circumstances, City of Melbourne would be provided with a copy of the application, the planning officers would produce a public report, written and oral public submissions would be received and then councillors would have a public vote.
As an example, check out this City of Melbourne report from November 2015 on the $1 billion CBUS proposal to build “The Arch” at 447 Collins Street. Imagine what the pro-Crown Herald Sun would have said if Daniel Andrews and his fellow Socialist Left faction Planning Minister Dick Wynne had done a sweetheart fast-track process for their mates at the CFMEU.
CBUS was subjected to a very different process, and there is no clear reason why James Packer and Crown Resorts are getting such special treatment.
Apart from the huge size and bulk of the 323-metre tower, which has negligible set-backs from the adjacent Freshwater Place residential tower, the most controversial element is the pedestrian flyover across Queensbridge Street, which will link the tower to the existing Crown precinct.
Flyovers are not supported in the Melbourne planning scheme, although state governments have made exceptions before, notably at the new Comprehensive Cancer Centre in Parkville and in Little Bourke Street linking Myer and David Jones.
The planning principle is that Melbourne’s wide streets should be loved and nurtured, not covered up or built over.
However, there’s a climate change angle here because Queensbridge Street has the worst record for flooding of any street in the City of Melbourne. There have been estimates that it will cost more than $100 million to fix up the drainage network at Southbank, which is an old swamp and also Victoria’s most densely populated suburb.
Packer’s people, including the likes of Labor fixers Karl Bitar and Mark Arbib, clearly had some success with the line that “if you can’t provide a nice street that doesn’t flood, then let Crown build an elevated flyover for our guests to visit the casino in comfort without getting wet”.
Crown shares opened marginally higher this morning, so investors are not worried about the capital cost of yet another big spend upgrading its facilities.
This flies in the face of the closing line in last week’s Mariah Carey-supported Vanity Fair hatchet job on James Packer, which made the following claim about his $2 billion Barangaroo project in Sydney:
“Packer’s biggest concern now, his friend says, is what to do about the Barangaroo casino project, which would feature a nearly 900-foot skyscraper and be a striking architectural addition to Sydney Harbor. But if Crown’s high-roller numbers continue to fall in the wake of the China crackdown, he’ll be faced with the grim prospect of walking away from the project, even though Crown could likely get the financing it needs to complete it.
“If he walks away from Barangaroo, his friend says, ‘it will be a gigantic loss of face for him,’ because Sydney is ‘his home and he was building this Taj Mahal.’ This person pauses and seems genuinely concerned about the forlorn billionaire. Packer is sort of damned if he does, damned if he doesn’t. If he walks away, he’s a laughingstock, his friend concedes. But to complete the project, Packer will have to load up his company with debt again, likely pushing down Crown’s stock price from its already depressed levels. In the past, the friend says, ‘there’s always been another piece of family silver to sell.’ But not this time. ‘There’s nothing left,’ he concludes. ‘It’s all on black.'”
Frankly, this is tosh. The Macau exit so far is bringing in more than $2 billion and Crown has still got another 11% stake in Crown Melco, which could be liquidated.
Because the latest Melbourne expansion is a 50-50 joint venture with the Schiavello family and includes 700 apartments, construction won’t start until most have been pre-sold and therefore financing will probably be non-recourse to Crown Resorts and certainly well away from James’ family company.
*Stephen Mayne is a former deputy chair of the planning committee at City of Melbourne.