News & Media

Auditor General Confirms Bracks Government Turn Around Of Federation Square

Major Projects Minister Peter Batchelor today welcomed the Auditor General’s report which confirmed that the publicly funded component of the estimated completion costs to construct Federation Square is expected to be $394 million. “It also confirms that the Kennett Government’s extraordinary 1998 decision not to novate the Architect’s Agreement to the Managing Contractor (Multiplex) was the major cause of subsequent cost blow-outs and completion delays,” Mr Batchelor said. “The transfer of responsibility under the novation agreement would have seen the cost and other risk associated with design changes and delays transferred from government to the private contractor, but this did not happen. “For the third report in a row, the Auditor General has drawn attention to the 1998 bungle that resulted in the Federation Square project having no target end cost or target program. “In addition, this report reveals the work the Bracks Government had to do to renegotiate the Managing Contractor’s Agreement to reflect the Kennett decision. “Had we not been able to tidy up the mess left by the Kennett Government, the Managing Contractor would have ceased work on the site and Victorians would have paid the price.” The Bracks Government has maintained that the publicly funded component of the Federation Square construction cost would be around $400 million excluding fit out costs, with any additional costs to come from sponsorship or loans provisions. The figure of $451.5 million quoted in the Auditor General’s Report comprises: Fit out costs $39.1 million (cost to Arts Victoria, not the Federation Square Management Company and not construction costs)Loans $13.7 millionSponsorship $4.6 millionCapital expenditure $394.0 million (of which $280 m is State funding) Minister Batchelor was also confident that additional loan provisions of $11.3 available to the Federation Square Management Company were sufficient to cover the worst case scenario detailed in the report should it eventuate. “Under the Bracks Government, the Federation Square project has certainty and has been turned around with a target end cost to the public of $394 million and a target program to open in Spring this year,” Minister Batchelor said.