❓ Mr. Wyatt questions the Treasurer about the sale of the Perth Market Authority (PMA) for less than its reported net asset value. The Treasurer explains the valuation discrepancy is due to the condition that the PMA must continue operating as a market for 20 years.
AnsweredQoN 160Legislative Assembly
QuestionView source ↗
STATEMENT
OF FINANCIAL POSITION — PERTH MARKET AUTHORITY — ASSET SALES
160. Mr B.S. WYATT to the
Treasurer:
I refer to the Treasurer's answer to a question in
the upper house yesterday regarding the sale of the Perth Market Authority and
its impact on the government's statement of financial position. The
Treasurer stated in his answer —
The initial impact on the
government's statement of financial position will be the receipt of
$125.5 million gross proceeds offset by the cost of project costs, wind-up
costs and reversal of the PMA forward estimates.
I note that the 2015 annual report of the PMA has the net
assets of the PMA at $157 million.
(1) Is it not
true that the impact on a government's statement of financial position
on the sale of the PMA is negative?
(2) Why did the government sell the PMA for a price less than
the value of its net assets?
OF FINANCIAL POSITION — PERTH MARKET AUTHORITY — ASSET SALES
160. Mr B.S. WYATT to the
Treasurer:
I refer to the Treasurer's answer to a question in
the upper house yesterday regarding the sale of the Perth Market Authority and
its impact on the government's statement of financial position. The
Treasurer stated in his answer —
The initial impact on the
government's statement of financial position will be the receipt of
$125.5 million gross proceeds offset by the cost of project costs, wind-up
costs and reversal of the PMA forward estimates.
I note that the 2015 annual report of the PMA has the net
assets of the PMA at $157 million.
(1) Is it not
true that the impact on a government's statement of financial position
on the sale of the PMA is negative?
(2) Why did the government sell the PMA for a price less than
the value of its net assets?
AnswerView source ↗
(1)–(2)
I thought I answered this in response to the question in the upper house, but I
will gladly answer this. We sold the asset for $135.5 million; $125.5 million
will be received soon. I think the deal goes through on 31 March. An amount of
$10 million will be paid over a period. The latest annual report of the PMA
states its net assets are worth around $150-something million. I have forgotten
the exact amount.
Mr B.S. Wyatt : It
is $157 million.
Dr M.D. NAHAN : It
is $157 million. The question is how that $157 million was determined.
Mr
B.S. Wyatt : No, the question is why you sold it for less than that.
Dr
M.D. NAHAN : I know. Just let me get to the facts. The member asked a question.
Let me get to the facts. On the sale process we had a condition that PMA
continue to operate as a market for at least 20 years. The $157 million that
was determined is not from it operating as a market but as if all the land from
the Perth Market Authority was sold for the highest value alternative use that
was not a market, but sold to the market for industrial land. That is how the
assets were valued in the books of the PMA. We sold it, as we made it quite
clear in here, that the whole sale was focused on making sure that the PMA
remains a market for at least 20 years, and that devalued the property relative
to splitting it and selling the asset. If the PMA remained in state hands, we
would not have shut it down. We would not have sold the land and dispersed it
and sold it for industrial purposes. The PMA was valued as though we shut down
the PMA and sold off the land. That is not an accurate valuation of what we
intend to do with the PMA in government hands or in private hands.
I thought I answered this in response to the question in the upper house, but I
will gladly answer this. We sold the asset for $135.5 million; $125.5 million
will be received soon. I think the deal goes through on 31 March. An amount of
$10 million will be paid over a period. The latest annual report of the PMA
states its net assets are worth around $150-something million. I have forgotten
the exact amount.
Mr B.S. Wyatt : It
is $157 million.
Dr M.D. NAHAN : It
is $157 million. The question is how that $157 million was determined.
Mr
B.S. Wyatt : No, the question is why you sold it for less than that.
Dr
M.D. NAHAN : I know. Just let me get to the facts. The member asked a question.
Let me get to the facts. On the sale process we had a condition that PMA
continue to operate as a market for at least 20 years. The $157 million that
was determined is not from it operating as a market but as if all the land from
the Perth Market Authority was sold for the highest value alternative use that
was not a market, but sold to the market for industrial land. That is how the
assets were valued in the books of the PMA. We sold it, as we made it quite
clear in here, that the whole sale was focused on making sure that the PMA
remains a market for at least 20 years, and that devalued the property relative
to splitting it and selling the asset. If the PMA remained in state hands, we
would not have shut it down. We would not have sold the land and dispersed it
and sold it for industrial purposes. The PMA was valued as though we shut down
the PMA and sold off the land. That is not an accurate valuation of what we
intend to do with the PMA in government hands or in private hands.
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