Auditor General questions ship lift transparency

A key scrutiny watchdog has raised questions about Darwin’s half-billion-dollar ship lift project. Read its concern.

Less than a fortnight after the NT government announced United States company Pearlson would deliver key infrastructure on the Darwin ship lift development, a leading probity watchdog has delivered a stinging report on the project’s governance.

In her May report, Auditor General Julie Crisp said that “key decisions” made surrounding the $515m Darwin ship lift project were not subject to governance oversight.

This included a land deal that, in exchange for four land parcels from Paspaley, saw the government transfer 15.1ha of land and sea to the company and lease a further land parcel at nominal value in order to construct a private marine facility to be owned by the company.

The report, tabled in Parliament last week, identified that evidence to support key decisions made by the Department of Chief Minister and Cabinet and the Department of Infrastructure, Planning and Logistics was not provided for audit scrutiny to the Auditor General.

How Darwin’s ship lift project might look.

Ms Crisp was “unable to conclude” that “the agencies have adequate systems and processes in place to support effective project planning, transparent procurement and sound financial management”.

Her report detailed a laundry list of changes and alterations to the project that appeared to have been made without a transparent process.

The report said there was no documented evidence-based analysis, modelling, risk assessments or cost and benefit analysis provided to support key decisions.

These included terminating an initial project development agreement, changing the financing and construction model from being externally funded and constructed to being government financed and constructed.

Other areas of doubt raised by Ms Crisp included the land transfer arrangement, an operating agreement signed with a private sector company, creation and execution of the minimum output specifications and the awarding of the project head agreement.

Major changes to the project that were not backed up by sound governance principals included reversing a decision for the project to be privately funded, nor was “appropriate due diligence procedures or a cost-benefit analysis” performed over the site selection.

Ms Crisp’s report focused on the fourth part of the overarching ship lift project plan, released in June 2020, which looked at procurement of design and construction packages around the project.

Initially scheduled for completion in April 2021, the Auditor General’s report now identifies project completion during the 2025-26 financial year, with components expected to be completed by 2025.

The report questions transparency around a July 2020 land transfer agreement that saw a land exchange between Paspaley and the NT government.

“A cost/benefit analysis of this exchange had not been undertaken and values of the individual land packages had not been determined at the time of this audit. As at 31 August 2023 (the conclusion of the period within the audit scope), accounting advice had not been sought on the appropriate financial recognition and measurement of the arrangements.

Responding to the report, the Department of Chief Minister and Cabinet said it was committed to best practice.

“The Department of the Chief Minister and Cabinet acknowledges the findings of the audit and remains dedicated to ongoing self-assessment and commitment to robust performance management practices,” it said.

Darwin’s ship lift will be 26m wide, 103 metres long with a vessel lifting capacity of 5500 tonnes. It will include wet berths to allow in-water maintenance, a hard-stand area for ship repair and maintenance works and a self-propelled modular transporter unit to transport vessels around the ship lift facility when they’re not in the water.

Originally published as Auditor General questions ship lift transparency