On balance: Lessons from the Hobart stadium fumble

In April, Prime Minister Anthony Albanese announced that the Federal Government would fund $240 million for the development of a stadium district on the Hobart foreshore. However, the kickoff went over like Meat Loaf’s performance at the 2011 Grand Final.

It’s not difficult to imagine a meeting prior to the announcement, particularly for anyone who’s watched an episode of ABC’s comedy series Utopia where political staffers look for easy wins to keep people happy by giving them what they think they want.

In this case, what do Aussies love more than sport? Let’s give them a stadium! Too easy, right?

The funding for the stadium was locked in – the Federal Government’s $240 million, $375 million from the Tasmanian Government, a possible additional $85 million funded by borrowings against land sale or lease … and $15 million from the AFL.

Arguably, the AFL should be first in line to fund the construction of an AFL stadium, rather than kicking in less than 2% of the proposed $800 million total. However, it can also be argued that the project will bring thousands of jobs, urban renewal, a massive tourism boost, a visible pathway for young athletes, and lots of footy for the fans.

Unfortunately, this isn’t a sitcom. Australia is facing a housing affordability crisis, and a cost of living crisis, both of which are compounded by rising inflation. As such, many Tasmanians aren’t over the moon about the announcement, and they’ve voiced their disapproval about the project publicly.

Protesters heckled and waved placards during the Prime Minister’s announcement, particularly around the topic of affordable housing.

That same day, the local politicians got stuck into it as well. Andrew Wilkie, Member of the Australian Parliament for Clark, was particularly scathing, calling the announcement “simply unfathomable”.

“More than a billion dollars – and that’s what the stadium will end up costing, for an AFL stadium in sight of another one, with just 3000 more seats and likely no roof – is beyond bizarre,” he said in a statement. “This is a failure of governance on an eye-watering scale.”

A failure of governance – this is one part of such a simple announcement going so wrong.

Keep it simple, Senator

Calculating the value of a new sports stadium should be a fairly straightforward process, but it’s not as simple as doing a pub test.

“It’s a very simple issue,” says Professor George Tanewski, Director of the IPA-Deakin SME Research Centre. “Look at the value of the actual stadium. How much revenue will that stadium generate over perhaps a 10-year period. Then figure out the net value and the multiplier effect it will create for the Hobart area. It’s very simple. Yet all of the talk we’ve heard since the announcement is emotion and politics.”

Tim Harcourt, Industry Professor and Chief Economist for the Institute for Public Policy and Governance at the University of Technology Sydney, agrees that the matter has been made more complex than it needs to be. However, he also believes that a lack of clarity about how government funding works is behind much of the negative public sentiment.

“People who don’t understand the difference between debt and deficit, and public debt and private debt, and who think the government funding is like a household budget, can get very spooked,” Harcourt, also author of Footynomics and The Airport Economist, says.

“I suspect the opponents of the stadium are probably using the fact that people get spooked. But did the Romans complain about the building of the Colosseum? And in the 1960s there were housing issues in Sydney, so was it wrong to have built the Sydney Opera House? These arguments didn’t happen around the Commonwealth Games in Melbourne or the Olympics in Sydney.”

How can the government get it right?

Harcourt believes that one issue that may have contributed to the negative public sentiment with the Hobart announcement was a lack of specialist finance knowledge in the media reporting.

“Nobody said, ‘Hang on a minute, it’s actually infrastructure. The government makes these types of investments and pays them off over time. It’s not the same bucket of money that you spend on housing and health’,” Harcourt argues. “There was also a lack of explanation by the government around how all of that works.”

Government needs to carry out economic due diligence on any proposed infrastructure project, Tanewski says. At the same time, it will weigh up any announcement from the angle of whether it will generate votes.

In this case, he says, the government failed to recognise that it was terrible timing to make this announcement – they didn’t read the room correctly.

“The announcement was conflated with a whole bunch of other very timely issues, such as housing affordability. That’s why it seems so complex. But it’s not complex,” Tanewski says.

“It will generate jobs. There will be work for tradespeople and for others in the building industry. There will be work for the manufacturing and other allied industries. Through the multiplier effect, it will spread the economic wealth and value around Tasmania. And in the long run, it will bring in tourists who will spend money.”

The IPA-Deakin SME Research Centre has produced three white papers discussing small business productivity: 

• Post COVID Options to Enhance Australia’s Innovation Capabilities
• Revitalising the Australian Economy
• Policy Options for Australia

Find out more about the IPA-Deakin SME Research Partnership, current research, and previous white papers and submissions. 

What lessons can be learnt for next time?

One obvious lesson: understand local political and social environments, and read the room.

“Government would have known that inflation is a major issue at the moment. So, with a little bit of common sense, they should have weighed up various factors and asked if this is the right time to announce it,” Tanewski says.

And what about accountability and productivity?

Nobody outside the relevant departments can know how thorough the due diligence was, whether it was deeply researched or whether it was a Utopia-style announcement with little consideration – and that’s part of the problem.

“While making the infrastructure investment, Treasury would have gone over the figures. But what would have helped is making the decision-making process more transparent and accountable,” Tanewski says.

“If government was to be more transparent and accountable, it would make data available to independent think tanks and research centres, so they can triangulate and validate what they are doing. Greater secrecy creates cynicism and lack of trust. But government needs to build trust. The only way to build trust is to assess what they’re doing independently and transparently.”

A white paper from the IPA-Deakin SME Research Centre titled The Case for a National Australian Small Business Agency, published in September 2022, suggested that such an agency should have as one of its priorities the “release of data to assist policy evaluation and formulation”.

“[The] Australian Government has been criticised for its performance in the provision of open data, and decisions regarding the release of data important to public scrutiny of government functions frequently rests with decision makers within those very same government departments or functions,” the white paper states. “Hence, Australia’s provision of open access to public sector data is below comparable countries with similar governance structures.”

Developed and presented in the right way and at the right time, and backed up by the right independent analysis, infrastructure project announcements can be met with the positive reactions they often deserve as other matters close to the local communities’ hearts are also addressed, Tanewski says. That’s the best outcome for everybody.

As Harcourt wrote in The Conversation, “Without an AFL team and a new stadium, Tasmania is likely to still have a homeless problem. In fact, the problem may even be worse without economic activity the new team and stadium will bring.”

Still, infrastructure projects, departmental spend and budget commitments without accountability are a drag on productivity.

Time may tell whether the stadium will have any measurable impact on the state’s struggles, many of which could be drastically improved with funding, from whatever bucket. But time will only tell if accountability is assigned and any impact is measured.