Infrastructure

hobart’s stadium

Spending money we don't have, to buy a stadium we don't need

The development of a new stadium in Hobart is irresponsible and wasteful. It shows a total lack of appreciation for the hard work that Tasmanians had to do in order to make the money the Tasmanian State Government now wishes to spend so liberally. Instead, a smarter approach would be the refurbishment of existing facilities. It’s cheaper, and you can get an equivalent outcome quicker. The savings should be partly invested into the immediate needs of Tasmanians, specifically in housing and health, but not all. The remainder should be used to pay down debt.

Why we don’t need a new stadium

The economics don’t stack up

Despite government claims of significant economic benefits, independent analyses reveal serious flaws in the methodologies and assumptions used to justify the stadium. Critics highlight:

• Unrealistic event attendance projections: The projected attendance figures are implausible, including events like international cricket matches that cannot be held in a fixed-roof stadium under current ICC regulations.
• Overestimation of tourism benefits: The reports overstate potential tourism influx, failing to provide detailed modelling to support claims of increased state revenue.
• Failure to account for opportunity costs: Analyses neglect the opportunity costs of land use at Macquarie Point, disregarding the value of land already committed to other developments such as the Antarctic and Science Precinct and the Truth and Reconciliation Art Park.
• Lack of transparency in funding assumptions: A concerning lack of transparency regarding funding assumptions and the potential impact on GST revenue raises doubts about long-term budgetary implications.

Unfunded commitments and ballooning debt

The project faces significant unfunded commitments, particularly for “revenue-generating features” like catering facilities, leading to further cost increases. This comes at a time when state debt is projected to double over the next four years, raising questions about the government’s financial prudence. Standard and Poor’s assessment of the state’s budget as “credit negative” underscores the financial risks associated with the project.

Prioritising housing and health

Tasmania faces a critical housing crisis, with rents surging by 45% in recent years. Substantial public funds allocated to the stadium could be redirected to address this pressing issue by supporting social housing initiatives. Similarly, funds could be invested in bolstering the healthcare system, a crucial need during a time of fiscal constraint.

We have stadiums already!

Current stadiums in Hobart and Launceston are sufficient for hosting AFL matches. Refurbishing these facilities, rather than constructing a new stadium, would result in significant cost savings. These funds could then be allocated to address more urgent social needs, such as affordable housing and healthcare.

Why refurbishment?

Investing in upgrading Bellerive Oval would be a more fiscally responsible approach. This would enhance the fan experience while preserving a historic venue.

Alternatively, you could invest in upgrading York Park in Launceston, which is more central (and thus more easily accessible by a wider audience than simply the southern side of the state).

The substantial savings realised through refurbishment could be reinvested in crucial areas like housing and health. This would directly benefit Tasmanians struggling with rising living costs and inadequate access to essential services.

The arguments in favour of a new stadium

Proponents of the new stadium often cite economic benefits and its role in securing a Tasmanian AFL team. However, serious doubts are raised about these claims.

“The stadium will generate significant economic benefits for Tasmania”

While the government touts a $2.2 billion economic benefit over 25 years, independent analyses reveal substantial flaws:

• Unrealistic attendance projections: Reliance on implausible event attendance figures undermines the projected economic gains.
• Neglect of opportunity costs: The failure to account for the value of land use at Macquarie Point diminishes the credibility of the economic rationale.
• Overestimation of tourism benefits: Overstated tourism projections without detailed modelling cast doubt on the purported benefits.
• Lack of transparency: Insufficient detail regarding state revenue increases further weakens the economic argument.

“We need a new stadium to secure an AFL licence and ensure the financial sustainability of a future Tasmanian Club”

This argument is unfounded. The AFL Licence Taskforce Report, while acknowledging potential benefits of a new stadium, explicitly states that it is not a prerequisite for a Tasmanian AFL licence. The government’s insistence on a new stadium appears driven by political motivations rather than AFL requirements. Furthermore, flawed economic projections and the potential need for ongoing subsidies undermine claims of financial sustainability.

“The stadium will lead to broader urban renewal and development at Macquarie Point”

This argument overlooks existing plans for Macquarie Point and the potential displacement of valuable projects.

Constructing the stadium would reduce available land for developments like the Antarctic and Science Precinct and the Truth and Reconciliation Art Park, potentially hindering their economic and social benefits.

Lack of consultation with key stakeholders suggests the stadium project prioritises a single development over a holistic vision for Macquarie Point.

What else we could invest in

Housing

Tasmania faces a severe housing crisis:

• Surge in homelessness: A 45% increase in homelessness over five years^[1] underscores the severity of the issue.
• Skyrocketing rents: Average renters now pay $7,000 more annually than five years ago,^[2] with rent increases outpacing income support payments.
• Strained social housing: The waiting list for social housing has doubled, and average wait times have increased from 16 weeks to over 90 weeks.^[3]
• Impact of short-stay accommodation: Platforms like Airbnb have diverted properties from the long-term rental market, exacerbating the shortage.^[4]
• Effect on essential workers: Difficulty in securing housing affects the ability to attract and retain essential workers, including doctors.

Redirecting funds from the stadium to housing initiatives could significantly alleviate these issues.

Healthcare’s not so healthy

Allocating $375 million of taxpayer money towards a stadium while the health system faces strain is dim. Tasmania has a creaking healthcare sector, which requires forward-planning. Improving health outcomes could lead to a far greater economic dividend than a brand new stadium could merit. Investing in healthcare can lead to:

• Increased workforce productivity: A healthier population contributes more effectively to the economy.
• Reduced long-term costs: Preventative care and robust health services lower healthcare costs over time.
• Improved quality of life: Better health services enhance overall well-being for Tasmanians.

The true cost of the stadium lies in the forgone alternatives. By funding the stadium, the government is choosing not to invest in areas that could yield more significant benefits. In addition, pushing money into sectors of the economy that are overheated already means we’re paying more for something we shouldn’t be paying more for, and getting less per dollar invested than we otherwise might get.

The flow-on effects of this ripple well beyond Hobart.

Diverting skilled labour and resources towards stadium construction may exacerbate existing shortages in the construction sector, hindering progress on housing projects.

This makes it harder to build a house, more expensive to buy a house, longer to get repairs done and we get less bang for buck.

How did we get here?

The AFL has positioned the construction of a new stadium as a non-negotiable condition for granting Tasmania its own AFL team. This ultimatum effectively places Tasmania in a difficult position, forcing the state to choose between significant financial expenditure and missing out on joining the national league. The insistence on a new stadium, despite existing facilities, suggests the AFL is leveraging its influence to secure assets that primarily benefit the league’s commercial interests.

The AFL’s minimal financial contribution—$15 million towards a $715 million project—contrasts sharply with the substantial investment required from the Tasmanian government. This disproportionate funding arrangement raises concerns about the allocation of public funds. The significant expenditure on a stadium primarily serving the AFL’s interests diverts resources from critical areas like housing and health, which have a more direct impact on the well-being of Tasmanians.

Let’s not forget that the inevitable cost overruns are not coming out of the AFL’s pockets. The agreement is that anything on top will be covered by the state.^[5]

The Tasmanian government believes it will be able to attract private sector investment, but I’m not sure how that would work: what share of equity would you want in exchange for the money? Or would it be debt? And if so, who’s taking on the debt: the state government? Any share of the ‘benefit’ from the project that goes to the private sector is money that is being distributed to capital providers and lenders instead of going back in to homes, hospitals, schools and roads.

In other words — the more costs blow out, the smaller the benefits of the stadium. It’s already blown out by $115 million: how much more are we prepared to tolerate?

What’s this say to the next outfit negotiating with Tasmania?

The AFL’s financial contribution of $15 million is token. The vast share of the capital is coming from the public sector (meaning, ultimately, the public).

Conceding to such terms would set a dangerous precedent. It would signal that Tasmania’s government is vulnerable to pressure tactics, inviting other organisations to demand similar concessions by wielding public sentiment as leverage.

Worse, it invites them to threaten and withhold, based on the successful blueprint the AFL is seeking to draft: If you want hundreds of millions from the taxpayer, for free, threaten the public you’ll deprive them of something they value.

The situation is not irreversible

Tasmanian Labor supports the stadium proposal now, making it hard to see daylight between the two major parties when it comes to their support. Labor’s support is premised on the idea that it is necessary to secure a Tasmanian team.

Comparing the positions of the AFL and the Tasmanian government sheds light on the underlying motivations and implications of the stadium project. This comparison is important because it reveals discrepancies between the purported benefits of the stadium and the realities of its impact on Tasmania.

But the question of a stadium is not the same as the question of this stadium. There are differences of opinions, interests and solutions between the AFL and the Government and these can be explored.

The AFL’s primary goal is expanding its league and increasing its market presence. The insistence on a new stadium reflects the league’s desire for state-of-the-art facilities that enhance its brand and revenue streams. In contrast, the Tasmanian government has a different mandate. Governments uniquely are elected to represent the totality of their citizens. The AFL, as a business, cares only about its total addressable market. There is a chasm of difference between the two. Ultimately, the state government has to recognise that its interests are not aligned with the interests of the AFL.

Who decided this?

The decision to proceed with a fixed-roof stadium, initiated by the government, demonstrates a willingness to accommodate the AFL’s standards, even when it may not serve the broader community’s needs. The lack of consultation with key stakeholders, including local organisations and residents, indicates a top-down approach that overlooks the importance of inclusive, community-driven decision-making.

This comparison reveals potential issues with how public policy decisions are made. If the government prioritises the demands of a powerful external organisation over the needs of its constituents, it undermines democratic principles. Transparency, accountability, and responsiveness to the public are essential components of good governance. Highlighting these discrepancies emphasises the need for the government to refocus on serving the interests of Tasmanians.

Understanding this comparison is vital because it exposes the potential misalignment between government actions and public needs. By bringing these issues to the forefront, we can encourage a more democratic process that places the well-being of citizens above external pressures.

Developing a new stadium is an expensive and risky undertaking that diverts crucial public funds from more pressing needs. The economic benefits are uncertain, and the financial burden could exacerbate Tasmania’s already strained budget.

Refurbishing existing facilities provides a cost-effective solution that allows for investment in essential services like housing and healthcare. This approach not only addresses immediate community needs but also promotes responsible governance and the equitable use of resources. Prioritising refurbishment over new construction ultimately enhances the well-being of all Tasmanians and ensures that public funds are used where they are needed most.

It means we get a stadium. And some spending money too.

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