Legal action over new Royal Adelaide Hospital blamed for large drop in likely investment in SA

EXCLUSIVE: Lengthy legal action over the new Royal Adelaide Hospital has led to big investors staying away from SA, an industry group says.

• New RAH builder launches fresh legal action
• Builders of new RAH face legal bill after losing court fight
• Government ‘deliberately delaying’ new RAH handover
• Health Minister rejects cure plan
• Government launches court action over hospital delays

LENGTHY legal action over the new Royal Adelaide Hospital has led to big investors staying away from SA, an industry group says.

Just one of 26 large investors surveyed in Infrastructure Partnerships Australia’s annual infrastructure investment report said they were likely to invest in South Australia, a 75 per cent drop on last year.

IPA chief executive Brendan Lyon said the “unprecedented” legal row between the government and the consortium building the new RAH was the key reason.

In the report, Mr Lyon said the drop showed “investors will punish jurisdictions who act in poor faith” and said the Government’s response added a layer of political and sovereign risk to investing in SA.

Former Health Minister Jack Snelling repeatedly rejected a “cure plan” from the building consortium, prompting criticism from Mr Lyon that it was deliberately delaying the project.

“There are going to be disruptions on projects, particularly something as complex as the new RAH, but the problem was the focus didn’t appear to be on resolving the problem, it appeared to be being delayed for the presentation of the budget,” Mr Lyon said.

The emergency department at the new Royal Adelaide Hospital. Picture: Calum Robertson

“The way the interactions went were without precedent in Australia. It’s raised real problems in investors’ minds.”

Treasurer Tom Koutsantonis said the contract with the consortium was “world-class” and ensured taxpayers didn’t pay a cent until the new RAH was completed.

“I’m not surprised that frustrated the consortium, however, the State Government does not apologise for protecting taxpayers and ensuring that the developers followed through on all their commitments under the contract,” he said.

He criticised the survey’s small sample size and said recent ANZ and NAB survey’s had shown incredibly high business confidence in SA.

Investors surveyed by the IPA include wealth and pension funds, developers, banks and insurance companies — with the 26 companies owning or managing a combined $220 billion of infrastructure assets.

Mr Lyon said the collapse of the billion-dollar deal to redevelop the old Royal Adelaide Hospital site and the Government’s proposed bank tax added more risk to investing in SA.

“Capital is a coward — investment doesn’t want to fight government policy and it doesn’t want to take brave positions where it doesn’t know the rules of the game,” he said.

Opposition Leader Steven Marshall seized on the 4 per cent result to implore voters to kick out the Government at the next election.