SA taxpayers face $100m blackhole for embattled Bragg Centre bailout

International questions are growing about why the world-leading cancer facility in one of Adelaide’s most expensive building is nearing financial collapse.

Premier Peter Malinauskas and Treasurer Stephen Mullighan have said serious questions have to be asked about the proton deal. Picture: NCA NewsWire / Kelly Barnes

Taxpayers face at least a $100m bill to bailout one of Adelaide’s most expensive buildings amid international questions at why a world-leading cancer facility is near financial collapse.

The $500m Australian Bragg Centre, formerly SAHMRI 2, was due to house the country’s first proton beam therapy unit, in a fortified concrete “bunker” from December 2023.

But The Advertiser has revealed the southern hemisphere’s first proton treatment unit, which was to annually treat more than 700 patients especially children, is on the brink of financial collapse amid fears the North Tce centre is at “significant risk” of failure.

While Ministers are tight-lipped about the true taxpayer cost, sources close to the pioneering project revealed the South Australian exposure is currently estimated at more than $100m.

The proposed Australian Bragg Centre proton therapy unit spearheaded by the South Australian Health and Medical Research Institute. Picture: SAHMRI.

Ruling out new taxes, Treasurer Stephen Mullighan did not deny amounts but has warned taxpayers are “on the hook” for “many millions of dollars” for the South Australian Health and Medical Research Institute structure.

The calculations don’t include almost $45m in Commonwealth grants paid to ProTom International (PTI), nor a “significant” extra public bailout the Boston-based firm has sought.

As MPs prepare to question SA Health this week and a new political row erupted over who was to blame for the financial blowout, there is international intrigue with constraints on scientists involved with the project.

Senior Treasury officials say Russian technical physicists can’t work on a similar unit at Massachusetts General Hospital, Boston, due to Ukraine war trade sanctions.

Australian Bragg Centre on North Terrce in Adelaide. Picture: Matt Loxton

PTI, which has blamed Covid-19 and the war for its woes, only operates the cutting-edge technology in that location worldwide.

But Treasury dismissed questions that project assets or equipment were stuck in Russia.

The bailout, which sources say may climb past $100m, includes SA Health renting five floors of the 14-storey building for at least 15 years and other construction costs.

Taxpayers will also pay 21 months rent for the Australian Bragg Centre for Proton Therapy and Research Centre bunker with specific dimensions for the American equipment.

PTI, which denies wrongdoing, has been hit with a “please explain” about its financial affairs.

An SA delegation, comprising SAHMRI, SA Health and Treasury officials, held urgent US crisis talks in late January, during which “significant concerns” emerged with the contract.

SAHMRI, acting on state Treasury advice, is now refusing PTI any more of its original $68m grant.

Premier Peter Malinauskas said the US firm, which filed for voluntary “Chapter 11” bankruptcy in 2015, faces “extraordinary questions”.

The building, located in the CBD’s northwest $3.6 billion BioMed city precinct, has already been hit with cost blowouts and delays through a public/private partnership involving SAHMRI, Commercial & General construction firm, taxpayers and Dexus property fund.

In a statement, Mr Mullighan said commercial and legal advice prevented public discussions.

“Providing a specific figure at this time could jeopardise taxpayers’ exposure … to this project,” he said.

“Importantly, taxpayers are on the hook for many, many millions of dollars due to an agreement signed by the former Liberal Government.

“The support they agreed to provide to Commercial & General was significant, including leasing five floors of commercial office accommodation for more than a decade and agreeing to fund the majority of any cost overruns in the building’s construction.

The centre’s bunker has more than 25,000 cubic metres of concrete poured over four storeys below ground level, with 20m foundations protects staff and patients from secondary radiation. Picture Emma Brasier.

The Bragg centre’s bunker has been built for the specific measurements of the Protom International’s dimensions. Picture: Supplied

“ProTom does have Russian based physicists who specialise in these machines.

“We were made aware of some issues in the United States involving Russian technical

experts in the running of the Massachusetts General Hospital machine, which was

proving difficult due to US sanctions.”

Opposition spokesman Matt Cowdrey said the Premier last year “boasted the project was on time and almost complete”.

“Stephen Mullighan needs to explain how he will cover the $100 million cost – if the figure is accurate – and will Labor raise taxes to cover this massive cost blowout that’s occurred on their watch,” he said.

But Mr Mullighan said it was a “desperate” Liberal attempt “to shift the blame away from themselves for the massive financial exposure they created for taxpayers”.

“For them to now claim it’s anyone else’s fault but theirs is ludicrous,” he said.

Health Minister Chris Picton signed a new funding agreement that mirrored one his predecessor Stephen Wade signed in 2018.

PTI declined to comment.

* DO YOU KNOW MORE? Get in touch: [e-mail]