State Government ‘deliberately’ delaying new RAH handover to save money on repayment plan, industry group says
A SENIOR industry group has accused the State Government of deliberately delaying handover of the new Royal Adelaide Hospital as a bid to renegotiate its expensive repayment plan.
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A SENIOR industry group has accused the State Government of deliberately delaying handover of the new Royal Adelaide Hospital as a bid to renegotiate its expensive repayment plan.
Health Minister Jack Snelling on Friday rejected a so-called “cure plan” from the building consortium SA Health Partnerships, which set out a blueprint for preparing the hospital to open.
He said the plan had been rejected on safety grounds and fears for future patients, but was unable to detail the specifics of the failings due to an ongoing “commercial negotiation”.
However, an independent status report on the progress of the cure plan, obtained by The Advertiser, shows the builders were “on track” to make handover by June 14 next year.
It is currently unclear when the hospital will open, but it will be at least a year late.
Mr Snelling has strongly insisted he wants to move into the hospital as soon as possible, but is being held back by the consortium as it “plays games” over fixing alleged faults in the final design.
Sources close to the project say the cure plan ripped up by the Government has nothing to do with safety concerns, and the consortium has complete confidence the hospital is safe.
They believe the Government is attempting to “shakedown” SAHP for a once-off cash payment or bargain down the terms of a 35-year contract that will cost taxpayers $400 million per year.
Delays in handover of the hospital save taxpayers $1 million per day, as the Government is not required to begin making quarterly payments demanded by the contract.
However, it also places increased financial pressure on the consortium, which has taken loans to finance the project.
Sources familiar with the project say that there is increasing speculation that the Government, by rejecting the cure plan, is taking the steps needed so it has powers to terminate the contract and using delays to financially pressure the consortium into a settlement of up to $600 million.
The sources say the dramatic step of terminating the contract would trigger court action that could cost taxpayers billions of dollars should the consortium prove the move was illegal.
Infrastructure Partnerships Australia chief executive Brendan Lyon, whose organisation promotes public-private partnerships like the new RAH construction, said “this looks like it’s being driven by reasons other than patient safety”, and the Government was really after contract changes.
“It appears SA has bought a project that is very complex and expensive at a time when their Budget looked very different,” Mr Lyon said.
“There’s certainly concern from investors and others that this process is driven by a desire to delay payments or renegotiate fundamentals.
In a statement yesterday, SAHP chief executive Duncan Jewell said the consortium “take safety, including safety during the operational period of the new RAH very seriously”
“It remains our number one priority,” he said. “As the operator of the hospital over the next three decades, SAHP has every confidence in the safety of the hospital.”
He said the consortium would “continue to work towards completing the new Royal Adelaide Hospital facility safely and as soon as possible, and are currently slightly ahead of program”.
This would allow the hospital to be fully handed over to the Government in June, he said.