❓ A parliamentary question regarding a cost blowout in the Perth to Mandurah railway project. The Minister defends the project's budget, citing inflation, scope changes, and economic factors.
AnsweredQoN 86Legislative Assembly
QuestionView source ↗
I refer the minister to her statement today about the Perth to Mandurah railway project. (1) How can this project, which was originally announced by the minister on 16 July 2001 as being comprehensively costed at $1.2 billion, and which today is costed at $1.563 billion, a blow-out of $363 million, be on budget, as the minister has claimed? (2) When was the minister first made aware of this cost blow-out? Ms A.J.G. MacTIERNAN
AnswerView source ↗
(1)-(2) I thank the member for the question. As members well know, when we made that announcement in 2001, we said clearly that we were operating on current figures, as was the previous - Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
(1) How can this project, which was originally announced by the minister on 16 July 2001 as being comprehensively costed at $1.2 billion, and which today is costed at $1.563 billion, a blow-out of $363 million, be on budget, as the minister has claimed? (2) When was the minister first made aware of this cost blow-out? Ms A.J.G. MacTIERNAN replied: (1)-(2) I thank the member for the question. As members well know, when we made that announcement in 2001, we said clearly that we were operating on current figures, as was the previous - Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
(2) When was the minister first made aware of this cost blow-out? Ms A.J.G. MacTIERNAN replied: (1)-(2) I thank the member for the question. As members well know, when we made that announcement in 2001, we said clearly that we were operating on current figures, as was the previous - Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Ms A.J.G. MacTIERNAN replied: (1)-(2) I thank the member for the question. As members well know, when we made that announcement in 2001, we said clearly that we were operating on current figures, as was the previous - Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
(1)-(2) I thank the member for the question. As members well know, when we made that announcement in 2001, we said clearly that we were operating on current figures, as was the previous - Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
(1) How can this project, which was originally announced by the minister on 16 July 2001 as being comprehensively costed at $1.2 billion, and which today is costed at $1.563 billion, a blow-out of $363 million, be on budget, as the minister has claimed? (2) When was the minister first made aware of this cost blow-out? Ms A.J.G. MacTIERNAN replied: (1)-(2) I thank the member for the question. As members well know, when we made that announcement in 2001, we said clearly that we were operating on current figures, as was the previous - Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
(2) When was the minister first made aware of this cost blow-out? Ms A.J.G. MacTIERNAN replied: (1)-(2) I thank the member for the question. As members well know, when we made that announcement in 2001, we said clearly that we were operating on current figures, as was the previous - Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Ms A.J.G. MacTIERNAN replied: (1)-(2) I thank the member for the question. As members well know, when we made that announcement in 2001, we said clearly that we were operating on current figures, as was the previous - Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
(1)-(2) I thank the member for the question. As members well know, when we made that announcement in 2001, we said clearly that we were operating on current figures, as was the previous - Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Mr M.W. Trenorden : On time and on budget! The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
The SPEAKER : Order, Leader of the National Party! Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Ms A.J.G. MacTIERNAN : In the following year, we decided that we needed to escalate that project. Indeed, even the member for Cottesloe acknowledged in the Parliament that it was necessary to escalate that project. The escalation amount that was needed to bring those figures up to 2006 figures was about $163 million. During 2001-02, we made a determination on precisely what route the rail line should take. In response to concerns by the community and the City of Perth, we decided to change the scope of the project significantly by including a tunnel from the foreshore, and a variety of other changes, in order to make it a better project. We then went out to tender and discovered that that would cost another $100 million overall. We have always acknowledged that this is a difficult project. Today there is unprecedented heat in the construction market. No-one in the market could have predicted the amount of concrete and steel that has gone up in the past year. Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Several members interjected. Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Ms A.J.G. MacTIERNAN : I am sorry, but we happen to live in buoyant economic times. The economy has been going gang busters. Every major private and public construction project has been under similar pressure. I would rather I did not have to say that I do not think we can meet this project within the time frame. However, as part of the budget review process that we have been undertaking during the past month, we have had a look at the contingency sum. I make it clear that at this point in time we are still within budget. Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Several members interjected. The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
The SPEAKER : Order, members! I know members want to have a say, but the member for Darling Range is the person who asked the question. I ask members to restrict their comments and allow the minister to complete her answer. Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
Ms A.J.G. MacTIERNAN : Thank you, Mr Speaker. When we awarded the contract in March for the three stations that formed the package B contract, our contingencies were taken to about $26 million. In my discussions with the Treasurer we talked about whether it was prudent to make provision in the out years for additional contingencies. We are still within budget. However, we believe there is a high level of probability that by 2007 we would have absorbed all of these contingencies, in which case it would be prudent to make an additional allocation. We know that the budget is under pressure. We have a period each year in which we analyse the budget and look at the contingencies. In the case of the last contract that we entered into before the election, we were aware that we could cover that contract and still retain a contingency. During the budget process for this year, we considered whether we should address this issue now or wait until next year. We decided that in the interests of prudent financial management we would make this adjustment to the contingency sum at this time.
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