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Auditors deliver blow to Brisbane Live arena project

The proposed inner-city venue, Brisbane Live, was conceived by music entrepreneur Harvey Lister’s company AEG Ogden (now ASM Global) in 2016, but was costed on a study of Melbourne’s live music scene.

It is now being evaluated by the Queensland government’s Building Queensland, which assesses infrastructure projects with a budget of more than $100 million.

The Queensland Audit Office report Evaluating Major Infrastructure Projects found the $2.11 billion Brisbane Live project’s cost was far greater than its benefits to the city.

The project involves development of a new arena located over railways, roads and properties in the Brisbane CBD (at Roma Street Station). Building Queensland developed the business case in partnership with Cross River Rail Delivery Authority,” it says.

“The reference project had a benefit-cost ratio of 0.36, which indicates that the economic benefits do not offset the large upfront capital costs of the project.”

A project should have a benefit cost ratio of at least 1 to show it will deliver a positive return on the investment.

The Queensland Audit Office report finds the project’s initial viability was based on a study of Melbourne’s music scene.

“Much of the economic benefit for this project derives from consumer surplus (ie uplift in willingness to pay),” it says.

This assumption is based on comparison with a study in Melbourne, which considered the uplift in willingness to pay at live music venues across Melbourne (as opposed to events specifically held at an arena).

“The business case acknowledges that this study does not provide for the difference between shows in the inner city (for example, international shows) and a band performing in an outer suburb.

“While the project team was able to resolve a number of issues working with the peer reviewer, it is unclear whether all the issues were adequately addressed. BQ did not maintain a peer review log for this business case.”

The Queensland Audit Office report said developing peer review logs was important to ensure all key issues were tracked and resolved in a timely manner.

In recent years, the nearby Suncorp Stadium has been used as a live-music venue for very large shows, the 30-year-old but revamped Riverstage in the City Botanic Gardens fits 9500, while the new Fortitude Music Hall fits 3000.

Building Queensland is now testing the private sector for its “appetite for the project”. The Cross River Rail Delivery Authority will report to Queensland cabinet on whether to proceed with the concept.

Building Queensland chief executive Damian Gould said the cost-benefit analysis reported by the audit office only included benefits which were “directly attributable and quantifiable” to the Brisbane Live project.

“In addition, we did an assessment of the wider economic benefits attributable to the project,” Mr Gould said.

“And in a lot of instances, these benefits cannot be quantified for the purposes of a cost-benefit analysis assessment.”

These included employment opportunities and increased gross state product and regional product, as well as positive cultural impacts and improvements to the quality of living environment associated with access to recreational and green spaces.

The Cross River Rail Delivery Authority, in the appendix of the same Queensland Audit Office Report which finds the original business case is not viable, argues the multibillion-dollar project could be a”transformational investment at Roma Street”.

A letter from CRRDA chief executive Graeme Newton to the Queensland Audit Office on April 20 agrees improvements could have been made to the business case.

Mr Newton’s letter also acknowledges questions over the “cost and contingencies” of the project.

It was now exploring benefits to the city from when the venue is not being used.

“In its assessment of the Brisbane Live business case the BQ Board advised government that the business case highlighted several areas requiring further analysis prior to the project being market ready,” the letter says.

Comment has also been sought from ASM Global.

Infrastructure Association of Queensland chief executive Priscilla Radice said businesses case are important to ensure value for money for taxpayers.

“Building Queensland has the mandate to do the detailed building cases for projects which then go up to government for consideration,” Ms Radice said.

“But there isn’t any visibility for the time period from once they’ve left BQ and gone back into the machinery of government for consideration,” she said.

Ms Radice said the lack of a funded pipeline of work made it hard for the infrastructure industry to gauge skills, size and retention of specialists in the longer term.

“It will be important not to rely too heavily on mega projects and to have projects of varying size and scale to help rebuild the economy.”

Tony Moore, Brisbane Times

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