The price to remediate the East Perth Power Station and redevelop the surrounding precinct has jumped by $65 million between WA budgets, with $12.2 million remaining unexplained by the state government.
It is the latest of two years’ worth of incremental cost increases scattered throughout budget papers and mid-year reviews for a refurbishment of the landmark and redevelopment of the surrounding land into a commercial and residential precinct.
However, it means taxpayers will now be forced to stump up at least $112 million for the project – which could be sold to the preferred proponents, WA billionaires Andrew Forrest and Kerry Stokes, for $1.
WA Liberals leader David Honey said the government needed to come clean with the public on how much the project would cost.
“It would seem some very wealthy individuals are going to receive a prime riverside block, unencumbered, for essentially nothing. It’s hard to understand how that will provide any value to taxpayers,” he said.
Just over half the extra $65 million funding detailed in May’s state budget will be spent for Main Roads to build a new footbridge over East Parade connecting the site to the train station.
The $35 million footbridge had not been publicly announced until last month’s budget, but the government said it was part of the East Perth connectivity project committed to in the Perth City Deal in September 2020. However, this pledge was for $20 million and the new budget puts it at $35 million.
The other $30 million of the $65 million increase is detailed in Development WA’s budget, which in September 2021 predicted their total spend to prepare the site for redevelopment would total $29.9 million.
Nine months later the cost estimate had increased to $59.7 million, $17.7 million of this jump as explained in the May budget and December 2021 mid-year review but more than $12 million has been unacknowledged by the state. WAtoday has sought clarification on where the extra money has come from.
Labour and materials shortages have resulted in huge price hikes for WA infrastructure projects over the past 12 months.
East Perth power station revitalisation total costs
- Development WA: $59.7 million (remediation and ‘de-constraining’ the land)
- Western Power: $17.3million (move and modify sub station)
- Main Roads: $35 million (footbridge)
The prime 8.5-hectare site on the banks of the Swan River with its 105-year-old landmark is one of the most complex to remediate in WA thanks to existing gas and electricity infrastructure, which is being moved to allow for redevelopment.
Western Power is expected to spend $17.3 million on decommissioning and site remediation works at its East Perth sub-station.
It is because of these works that the site was valued at $1, as revealed by former McGowan government environment minister Stephen Dawson in parliament in May 2020.
The $112 million budgeted for the precinct is nearly four times more than the $30 million budgeted by Development WA’s predecessor the Metropolitan Redevelopment Authority in the 2019-20 budget.
It is also more than double the $50 million committed by the McGowan government when Stokes’ Australian Capital Equity and Forrest’s investment vehicle Tattarang Group (known then as Minderoo Group), were selected as preferred proponents to revitalise the precinct at a cost of $218 million.
Honey believes the site could be sold for more, given the amount of risk and funding the government had taken on board.
“I’m sure if other developers had been made aware of the full extent of the types of subsidies for this site, many more developers would have put their hat in the ring and I suspect offered to pay a significant price,” he said.
A McGowan government spokeswoman defended the extra remediation costs and said the government was “getting on with the job” which previous governments had talked about but not acted on.
“The reality is that no proponent has been prepared to redevelop this historic site without the government relocating the existing electricity and gas infrastructure and cleaning up the significant contamination,” she said.
The East Perth power station redevelopment is one of Development WA's first tasks.
“If the public is ever going to be able to access the East Perth Power Station site, then the state needs to play a role in de-constraining the site and cleaning it up.
“If we didn’t commit to these works, the site would just continue to sit there as an eyesore, as it has done for a decade.”
The spokeswoman also backed the extra spending on the footbridge to allow people easy access to the site without having to navigate East Parade or walk from Perth Stadium Station.
“Clearly we expect to see a significant increase in foot traffic and people visiting the revitalised area once this long talked about project is complete,” she said.
Despite being nominated as preferred proponents more than two years ago, a deal has still not been struck between Tattarang, ACE and the government.
The spokeswoman said an exclusivity period for negotiations had been extended until September by the DevelopmentWA board.
The budget revealed DevelopmentWA was negotiating a ‘Project Development Deed’ which would “stipulate the responsibilities of both parties under the development.”
The deed would include performance warranties regarding delays in the completion of state-led site remediation works.
ACE and Tattarang declined to comment.
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