NSW Government sells-out public for useless footy stadiums

By Leith van Onselen

If you want a text book example of why governance in Australia is busted, look no further than the NSW Government’s privatisation of the state’s monopoly land titles registry.

In April last year, the Berejiklian Government announced it would lease the state’s land titles registry to Hastings Funds Management and First State Super, after accepting their bid of $2.6 billion.

Upon the announcement, Premier Berejiklian and Treasurer Dominic Perrottet claimed the 35-year lease of Land and Property Information (LPI) would lead to better customer service and a “massive” infrastructure boost.

At the time, MB described the sale of the land titles registry as “everything that is wrong with privatisation”,  and claimed it “utterly defies both economics and common sense”. Since the land titles registry is an essential government service and a profitable natural monopoly, its sale would very likely see end-users being gouged by the new monopoly owners, while the NSW State Government also losing a reliable income stream.

To make matters even worse, the sale proceeds from the land titles registry sale is to be used on two utterly useless projects: to demolish and rebuild the Olympic Stadium and the Sydney Football Stadium, both of which are fit-for-purpose and underutilised.

Today, the Daily Telegraph reports that the Sydney Football (“Alliance”) Stadium rebuild will deliver zero net economic benefits for the state, according to analysis by hired gun KPMG:

The Daily Telegraph has obtained the executive summary of the KPMG business case dated January 2018, currently being prepared for the Berejiklian government.

The KMPG documents, labelled “sensitive — NSW cabinet” boost the state government’s case to demolish and rebuild the Moore Park stadium, finding that the alternative of a simple refurbishment would have “significant capital costs for marginal improvements” and deliver “significantly negative net economic outcomes”…

 

…The documents put the cost benefit ratio at “approximately break-even”, for demolishing and rebuilding the stadium, meaning for every dollar spent there will be a dollar in economic benefit for the state.

This analysis will provide a boost to the Berejiklian government, which has been under pressure of the scale of the spend planned for stadiums. The government has previously put the cost of its Allianz stadium redevelopment at $705 million…

So the knock down and rebuild of the Sydney Football Stadium will deliver zero net benefits, even with KPMG’s highly optimistic assumptions. So why is this project going ahead? And why did the NSW Government sell-off the land titles registry to pay for it – a decision that will raise costs for NSW residents?

Clearly, the NSW Government has not heard of the broken window fallacy in economics. That is, rebuilding these stadiums is akin to digging holes just to fill them up again. While the projects might create jobs and increase GDP directly, they will cost taxpayers a huge sum, won’t boost productivity, and will do nothing to raise living standards.

The NSW Government has reached peak stupid.

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Comments

  1. But their mates in the construction industry will make out like bandits, and just as housing construction is slowing as well.
    You’ve made a faulty assumption that they are interested in doing anything to benefit the people of NSW.

      • exactly, it is called lobbying and jobs for mates, who will return the favour in future.

        Anyway, it’s not like Sydney needs any new roads, schools or hospitals with that $2 billion.

      • Yeah nah yeah mate aye it’s not corruption, it’s mateship, it’s helping good blokes who know how it works get on to a good thing

  2. I think the labour guys are looking forward to some free tickets and some new seats with their names on them.

  3. You don’t want to go against the Leagues Clubs in NSW. Despite the majority of New South Welsh not having much interest in the Rugby League, they seem to be a very powerful lobby group.
    Mini-May will probably get dumped soon by her own side.

  4. reusachtigeMEMBER

    I’d much rather my taxes were spent on entertainment venues than hospitals and schools as I don’t give a sh1t about leeching sick people or other people’s kids but I do love fun!

  5. Can we get Tip Top to sponsor the stadiums?

    Then they can hand out free bread as the punters roll in to watch the fightin and the killin.

  6. Stadiums are another element of society being disrupted by Amazon netlfix and the like pay broadcasters. Right now punters don’t even bother to fill a stadium for egg football, and increasingly round ball footy, in fact round ball forty in straya is really struggling.
    The only sport having any success is cricket, and its headed for disruption as well
    The whole joint is going to the dogs.

    • who needs sport if you live in an apartment and study/work/commute all day?
      I always laugh at those ads showing backyard cricket – none of these backyards have enough room for a good slash.

    • It didn’t take the likes of Amazon or netlfix to kill live sport for fans in NSW, it simply took locating the stadium in an out or reach location, with poor public transport, and not having any food or beverage options open after the game. People don’t even watch the end of the match as they leave 20 min early because of anxiety over getting out of their parking spot.

      • I’m a stadium user. The current facilities are great. The transport options are fine. People are generally just whingers IMO. Sorry, but even with current congestion levels, the transport and service are way better than when I was a kid. And Olympic Park / Homebush whatever it’s called is growing in options for after game drinks etc. If you’re not happy queuing, smuggle in some booze! All the kids are doing it.

        People’s expectations are too high. Spend a bit of time with people at the footy or a concert and have a chat to strangers with common interests. You might even enjoy it!

    • Maybe some anecdotal stories on this point, having attended AFL week-in-week out in the late nineties, it’s much better watching on the TV anyway these days…. order in a pizza or something, have your own beer in your fridge, don’t have to wait at long lines and pay $10 for low-alcohol beer, no toilet lines, don’t have two hour commutes each way. And yes even prefer the game with commentary – they make it more exciting these days – at least for AFL (let’s not get into an NRL/AFL debate – since the game has turned pretty boring over the last decade or so.

      Anyway, rebuilding the stadium…….. how moronic can you get.

    • Strayan govts are deaf corrupt and arrogant.

      Fixed that for one. One better not to slip next time, won’t one?

  7. Alan Jones wants it and so Gladys is hoping if he gets what he wants he’ll stop saying nasty things about her.

    It’s interesting Alan’s contempt for females in leadership roles given his lack of interest otherwise.

  8. This is just the way we roll in NSW. We are also tearing up a rail line to replace it with a different type of rail line without seats (cost $12 billion), we tore up a different rail line to replace it with a light rail line (cost $2 billion), and we are going to tear up a museum and move it somewhere else (cost $2 billion). We can go on doing this forever the economic results speak for themselves. Keynes was right all along.

    • If Luke Axl Foley (he MUST take to the stage with the Beverly Hills Cop theme song) can lose some kgs and slip into some late 80s Eddie Murphy jeans and deploy some Eddie laughter and banter about taking the privileged elites down he will be a shoe in.

    • ”We are also tearing up a rail line to replace it with a different type of rail line without seats (cost $12 billion)”

      Plus the mail is that, on the Chatswood component anyway, the tunnel will be ‘spiked’, so it can never practically be used for heavy rail again.

  9. WW is right

    Let’s be honest

    The only people going to stadiums in meaningful numbers are AFL

    Witness the Dees and Tigers for Easter Monday. 80k plus
    NRL and NSW can only dream of numbers like that
    Even the Womens game in Hobart a few weeks ago – stoically reported from afar by the ever reliable Demonblog – with numbers at 1279 – are numbers the NRLM can only dream about (guffaw)

    And a Dees/Tiges GF – they’ll be hanging from the rafters [MB you can tell our banishment of part of our decades long North hoodoo has seriously affected my clear thinking)

    In any case, my super is in FSS, so wheeeeeeeeeeeeeee!

    • Someone down your way sent me a link to some surfing stadium being built near MLB airport
      That is a guaranteed failure.

    • Sydney must compete with Melbourne to stay number 1. That is the economic justification for the Convention Centre, for the stadiums. But in Melbourne 80,000 people go to the football every game, in NSW about 10,000. Gone to ANZ stadium for a few club games. Best to pay some students to sit and fill up the other 70 000 empty seats to stop the dusty wind and tumbling chip packets.

  10. ANZ Stadium rebuild is a joke. But anyone saying that Moore Park (Allianz) is fit for purpose hasn’t actually been there, it’s a soviet bloc style hellhole.

    • ICAC was too expensive. It was about $800K they were short (that’s $0.0008 billion to you Gladys). Perhaps they could privatize it?

      • Hopefully Labor make it an election issue to investigate, whether it goes ahead or not. They might also look into how our harbour side land was gifted to a billionaire to build a casino we can’t go in.

  11. TailorTrashMEMBER

    If Straya had its own monarchy and Gladys was queen ….she would go down in history as Gladys The Silly .

  12. Sydney FC, Waratahs and the Roosters can’t crack 15k, about the only time the SFS is even close to full is if the Wanderers or Socceroos are in town 3-4 times a year. The only legitimate complaint I’ve herd is the lack of female toilets but surely they can be added without knocking the whole thing down.

    • Yep – quoted only 150 million for new toilets, disabled spaces, etc.
      Did you knock your whole house down when you need to renovate the bathroom?

      • Male toilets too – there are literally 3 pissa-phones in the whole Members Bar.
        Tahs do crack 15K for Reds & Brumbies games. Roosters v St George for ANZAC Day cracks 15K. Any Wallabies game is a sellout. Roosters finals games crack 15K. Sydney FC v Newcastle cracks 15K

  13. They only know two tunes
    Divide and rule
    Bread and circuses
    and on that note it’s
    Goodbye Gladys
    .

    • St JacquesMEMBER

      Ah,your comment must have registered on me subconsciously.
      Exactly- like the Romans but minus the glory.

  14. There’s a hole in the bucket, dear Gladys, dear Gladys,
    There’s a hole in the bucket, dear Gladys a hole.

  15. That is assuming they can deliver the project on time, on budget and meet all the quality specifications. If not, it will have a negative cost benefit ratio. Any sensitivity analysis done on the inputs and results?

  16. Broken Window fallacy is wrong –

    By breaking the window, the man’s son has reduced his father’s disposable income, meaning his father will not be able purchase new shoes or some other luxury good. Thus, the broken window might help the glazier, but at the same time, it robs other industries and reduces the amount being spent on other goods

    The glazier would never have spent that money on anything else. Hence the broken window forces the release of locked up capital. Same as trickle down – lowering taxation does not force the released of funds which will be saved, or spent on the accumulation of more wealth, or on high value impulse asset purchases which do not help the economy – art etc.

    Where as forcing money into the bottom of the economy – trickle up – Keynsian stimulus, forces the capital back into the economy where it will be spent – labour.

    That said you are still correct – in that the Keynsian stimulus spent on non-productive assets are an opportunity cost in that the LOSS can be measured (broken window) via the stimulus not going into a productive asset such as improved transport, communication, health or other productive service.

    $2 Billion injected into the economy is good – and not a broken window fallacy. $2 Billion on a sports stadium which returns nothing is a broken window fallacy when it could have returned billions in improved travel time via a hyperloop.

    .

    • Exept for the oligarch elites, they don’t spend 5% of their money. The broken window principle works for elites as they circulate extra money, but for the working poor it just means they haven’t got money for dinner instead.

  17. Like nearly everything else, the Romans already have been here and even had a sarcastic expression for it:

    Bread and Circuses. (Juvenal, Satire X, 100 AD)

    But until now it had never occurred to me it was bread for mates and circuses for the rest of us.

  18. Everytime a parent in NSW looks at a demountable classroom with no air conditioning at their kid’s school, they will reflect on how the Glady decide to spend the money on rebuilding a sport stadium instead. If the NSW ALP have any ounce of brain left, they will ignore Alan Jones, go heavy on this issue, and win in a landslide.

    For all his fault, at least Mike Baird is not stupid.

    • Nah – they won’t reflect for nuts… Until it smacks the over their heads and screams in their doped up faces, they won’t connect the two issues!

    • The refusal to broach topics because of possible backlash is precisely the sort of thing MB attacks. If 2GB were to retaliate I’m sure MB would keep on fighting regardless. This stadium stuff is disgusting. There are so many others things NSW could build for that kind of money.

      • Yeah – imagine how many FHOGs could be paid out of that money 😀

        Although in the case of the NSW government – it’s more the case of “selling your last kidney to get that boob-job you’ve always wanted”

  19. Mark HeydonMEMBER

    Might be zero net economic benefit overall, but the incidence of the cost and benefit sides of the equation are taxpayers DOWN $2bn+, private sector sports franchises, concert promoters and entertainers UP $2bn+.
    How about the NSW government gift me a lazy billion or two. I promise to spend it all in the NSW economy so there is no net economic cost.

  20. I was speaking with a mate who works at one the biggest construction companies about whether they make policial donations.
    Turns out they don’t
    BUT what they do is employ ex-political staffers who are on their way into the parliament. They put them on MASSIVE salaries before they get into power so they are ingratiated when they get there.

    I remember my time at one of the big four banks about 10-years ago when we had an ex-senior commonwealth government staffer working for us on a massive wicket while he was waiting for preselection.

    The guy did sweet FA for the bank while he was there but when he got into the parliament he rewarded his old banking employer who had feathered his nest very nicely indeed.

  21. KPMG have also made a wild assumption the stadiums will be constructed to the estimated price and have not considered cost overruns which we all know plague projects of this size and scale.