Tuesday, 25 March 2014

The Dawesville "cut"

The Australian is in full attack mode on Union corruption. On the weekend of March 22 it ran two closely related articles:
Early 1992: The WA government entered contractual agreements directly with Thiess to build the channel at a fixed price of $56.7m.
June 24, 1992: The AWU WRA Inc was officially incorporated. It continued to issue monthly invoices for work purportedly performed at the Dawesville site. No such work was ever performed. Thiess continued to pay the invoices.
April 1994: Liberal premier Richard Court opened the Dawesville Channel from a boat on the waterway. The worksite was inundated according to plan on April 4, 1994, and Thiess closed the project in its books, eight months ahead of schedule.
August 1994: Thiess continued to pay the AWU WRA invoices for “workplace reform” at the now-closed Dawesville worksite. Payments in respect of Dawesville totalled just more than $300,000 to the association.
Why was there no public tender as originally promised for such a significant project? Why did the WA government enter into a contract directly with Thiess? And what did Thiess get in return for the $300,000 it paid to Wilson?
On November 28, 1991 transport minister Pam Beggs told the WA parliament that cabinet had decided to abandon plans to seek competitive tenders for the construction work, instead opting to accept a “turnkey” contract proposal from the landowner.
Beggs: “The estimated cost of the government’s building the channel had been $76.8m, and the major reason for the lower cost (almost $60m) under the total construction package stems from having a single contractor responsible for all site works. This introduces an economy of scale and enables the significant construction risk to be spread over a wider scope or work. The agreement between the government and Wannunup has widespread support, including, I understand, even the member for Mandurah.”
But with no competitive tender, the government was guessing. The major reason for Thiess getting the job, according to Wilson’s AWU sidekick Ralph Blewitt, was that Wilson demanded it.
I'm no fan of corruption. However, what amazes me is actually that the government's guess of the costs was so cheap—the cut and bridge together are a huge and complex engineering project that I visit several times a year—as I expected that it would have cost well over $100m, even back in 1992:
Even when the winds roar in from the ocean, it’s easy to forget that the 2.5km, 200m wide waterway was dry land just 20 years ago—part of a continuous strip of coastal land that ran south from Mandurah for about 50 unbroken kilometres.
In return for the $300,000 it paid to Wilson, Thiess closed the project in its books on budget (I assume; not mentioned in either article), and eight months ahead of schedule! If we could get industrial peace and on-time, on-budget completion for other infrastructure projects, for such a nominal sum—which, perhaps, could be considered as a "success fee"—then it seems like very good value.

Such a fee pales into insignificance compared to Arthur Sinodinos’ $200k salary for 100 hours work or the $1 million success fee that that Senator Sinodinos negotiated with Liberal Party lobbyist Michael Photios to get a public-private partnership with the NSW Government, as shown by the board minutes of Australian Water Holdings.

1 comment:

  1. Ah yes, but Sinodinos is Liberal corruption, and that doesn't really count.