by Graham Vercoe, Resort News Reporter
28th September, 2017
Red flag for investors, job creation following The Spit axing
Queensland’s international reputation as an ideal location for tourism investment has been shattered in an amazing backflip that stunned developers and investors alike on August 1, when Queensland premier Annastacia Palaszczuk killed off the ASF Consortium’s $3 billion integrated resort/casino on crown land on the Gold Coast’s The Spit.
“We’ve listened — a hallmark of my government has been listening to the community and people have felt very strongly and very passionately about this area,” claimed Palaszczuk during her announcement. The news was only conveyed to ASF just minutes prior to it going public.
Her comment is the total antithesis of what the state government’s own community consultation reported, with 54 percent of Gold Coasters in favour of the ASF proposal compared with 42 percent against.
Having strung ASF along for more than three years, the government now says it will keep the three-storey status quo on The Spit and set up a review in order to develop a master plan, first mooted more than a decade ago. Considering a new review or inquiry has been ordered by the state Labor government every three working days since it took office in early 2015, this could take a while.
The decision has delighted religious groups and environmentalists but the local business community was surprised by the decision. Big winner of the axing, The Star Group; which is investing heavily in its own existing casino/resort developments, were naturally over the moon.
But Palaszczuk’s jobs and foreign investment promise sounds decidedly hollow and perfidious after the decision to can the resort project. The premier, with a state election looming, has been spruiking her government’s job creation credentials. Two months ago, in Cairns, she told foreign diplomats that “there is no better place to invest than Queensland and no better time than now”.
In fact, the decision to axe The Spit development has delivered a warning on the massive risk of investing in Queensland under the Palaszczuk government.
The axing was the latest in a growing list of major tourism projects – at present more than $20 billion worth - that have fallen victim to the Palaszczuk government’s anti-development doctrine, including the $8 billion Aquis extravaganza at Yorkeys Knob near Cairns and the Greg Norman-linked $2 billion casino/resort on Great Keppel Island, despite its jobs and foreign investment mantra.
Palaszczuk said she was not concerned that business investors may perceive Queensland as a sovereign risk as a result of the decision to terminate The Spit development.
ASF director Louis Chien has accused the government of backflipping for political gain and warned of the impact on investor confidence in Queensland.
“We've been a model proponent with this government with the project, which can be delivered at no cost and no risk to the ratepayers of Queensland and it was basically terminated for no good reason,” he said. “We didn't choose the site, and then we won the international tender, so as the preferred proponent we had worked collaboratively with government over the last three years, checking every box along the way.”
Chien said ASF had spent “tens of millions of dollars” on the process, and “without any consultation or engagement with us, the project was abruptly terminated by a political decision that basically rejects the will of the community, as shown by the different consultation reports.
“We feel like we've been misled in this game of political hide-and-deceive. I think this government backflipped in glorious fashion on the many to appease the few.”
The premier, in defense of the decision, said The Spit needed to be protected for the next generations, calling the part of the Gold Cast “unique to Queenslanders and unique to the world” and the “equivalent to what Central Park is to New York”. It’s really hard to see the average Queenslander making such a connection.
In reality, the ASF development would have taken just three percent (5.5ha) of The Spit on a site between Palazzo Versace and Sea World, leaving the rest of the scrappy peninsula in the uninspiring state it is now.
The fight against The Spit development was led by long time anti-development campaigner and former Beattie government minister Judy Spence and Save Our Spit Alliance president Steven Gration.
Gration, who described The Spit as a ‘tom boy park’, insists it is the right result: “That's what the people, businesses, community stakeholders and business groups have advocated for the last 30 years.”
As Soheil Abedian, Sunland’s boss, remarked: “The small minority had a loud voice — and the government has accepted their voice and made a decision based on that.”
However, this applaudable but paralogical reason is not the real driving force behind the Palaszczuk decision.
Prior to the last state election, Labor had not held government without holding a seat on the Gold Coast and its failure to have a toehold there has long peeved the party. With the electorate expanding from 89 to 93 seats, Palaszczuk is concerned she will not be able to retain her modest majority won in the 2015 election without gaining at least a few seats on the Gold Coast.
Palaszczuk denied she was putting political pragmatism ahead of jobs to win seats nor has she specified which constituencies she plans on targeting on the Gold Coast but she was hoping to get as many Labor members as possible elected. “I need a working majority and if we're going to get a working majority, I need to pick up seats on the Gold Coast as well, that's the reality,” she said.
However, Labor insiders are convinced the government’s anti-development stance will help the party win seats, such as Gaven and newly-created Bonney, but some believe Burleigh and Currumbin could be an outside chance if the campaign goes well.
But at what cost?
First, there will have to be some compensatory payout to ASF at the taxpayers’ expense. State development minister Anthony Lynham admits to date this debacle had cost taxpayers about $4 million. But he insists, “the process deed with ASF made it clear the government could terminate the contract at any stage”.
When asked what compensation would be available for ASF, Palaszczuk said it would need to be discussed with Crown Law.
But the real aftermath will be how investors now regard Queensland as a place for tourism investment.
ASF’s Chien said the decision “cast a very long shadow” and would be watched by other investors. “We're reviewing all of our plans at the present moment, nothing is off the table, including legal action.
“Capital is fluid and so this certainly brings into question why any sensible investor would look at coming into Queensland under such an uncertain climate when [this could happen to] a longstanding existing investor such as us... we've been here for over a decade.
“And to be treated this way says a lot about the current uncertain climate in Queensland.”
Opposition leader Tim Nicholls said the decision to abort the project would send “shock waves through the business community”.
“[It sends] a message that you can consult for years in good faith with this government and then at the 11th hour, with an election around the corner, Annastacia Palaszczuk and Labor can pull up stumps,” he said.
Gold Coast-based federal tourism, trade and investment minister Steven Ciobo, while endorsing the decision to restrict The Spit to a three-storey height limit, slammed the “haphazard, lengthy process” and was preparing to go into damage control to repair the city’s reputation with international investors.
“I speak to investors around the world. They make it clear constantly shifting goalposts turn them away and they invest when they know they have more certainty,” he said. “This on-again, off-again approach, constant prevaricating by the Palaszczuk government is costing investment and costing job opportunities. It requires a lot of work to undo the bitter taste left in proponents’ mouths.”
Property Council of Queensland executive director Chris Mountford said the decision sent a “confusing message” to international investment. “This is not the government’s only backflip on investment attraction,” he said. “While the government is talking a big game about attracting investment into the state to generate jobs, these decisions are in stark contrast to the rhetoric.”
Queensland Tourism Industry Council chief executive Daniel Gschwind said: “There is a risk of damage to our reputation for investment. The state government makes it clear they want to attract investment, so hopefully now they make it clear exactly what they expect so you don’t see a situation where developers spend millions of dollars on developments that never stood a chance.”
There is also the question of the viability of a three-storey resort investment. Sunland owner Soheil Abedian, who has shelved plans for a twin tower project at Mariner’s Cove, said the three-storey limit at The Spit made no sense and would not be viable for any company.
Gold Coast property development veteran Max Christmas agreed there would be limited interest in a three-storey project. “They do not understand commerce or how to make numbers work to do things,” he said.
Mr Christmas said The Spit was a ‘bad look’ generally with 80 percent of it waiting to ‘go up in a bushfire’. “If they want to save face, do what has been done on the other side of the Broadwater at Parklands. That was all rubbish land once too,” Mr Christmas said. “They have been fluffing around – both sides, both governments – for 25 years. And it will still be sitting there for another five to 10 years.”
But the Gold Coast needs to brace for a shrinking job market flooded with people in need of work after the Commonwealth Games ends next year. About 1500 staff plus thousands of contractors finish with games organising body Goldoc after the April 2018 extravaganza. More than 1000 light rail stage-two construction jobs are to end in January and 480 games road upgrades workers will also finish around the same time.
ASF’s axed resort project would have employed 13,000, during construction and ongoing jobs afterwards while Sunland’s withdrawn $600 million Mariner’s Cove development would have employed 1652 construction workers and 1019 ongoing after completion.
Bond University vice chancellor Tim Brailsford said axing of ASF’s development removed a big post-games employment buffer. “The loss of that on The Spit is a major blow to the coast and we will feel that very much leading into the games.
“After the games we are going to have a number of people who were employed specifically for the games looking for work. Then you are going to have a large number of workers and businesses associated with projects alongside the games that will finish up so there’s a double whammy,” Mr Brailsford said.
Opposition treasury spokesman Scott Emerson admits: “The coast has become one of the job loss capitals and Annastacia Palaszczuk clearly has no vision for turning things around.”
The Chamber of Commerce president Martin Brady asked, “It begs the question now, where will those jobs and those opportunities come from? We need opportunities for people on the Gold Coast be trained up in a career, like hospitality.”
Gold Coast City Council economic development boss Hermann Vorster said: “I am in shock by this announcement because I know just how important this is to creating jobs on the Gold Coast, especially for young people.”
Gold Coast mayor Tom Tate will push ahead with a proposal for a cruise ship terminal on the Southport Spit despite the state government rejecting a $3 billion casino plan on nearby land. Tate is leading the push to have a terminal built on the ocean side of the Spit, at an estimated cost varying between $170 and $450 million depending on who you believe.
Palaszczuk said council was free to put forward their cruise ship terminal proposal, which will be considered as part of the master plan consultation.
Just how long the cruise ship terminal will be in the making is anyone’s guess.
In April 2012, Tom Tate announced plans for a cruise ship terminal at The Spit and in the following September, after a verbal agreement with Carnival Australia, declared the first cruise ship would dock on September 30, 2015.
In November 2012, deputy premier Jeff Seeney and Tate announced the Broadwater Marine Project, an integrated cruise ship terminal, casino, residential development and resort to be built on public land adjacent to the Broadwater. ASF first joined the integrated resort process in 2013.
The following March saw four consortia proceed to second stage of planning. In May 2014, ASF China Property Consortium was selected as the preferred developer of the Broadwater Marine Project, with designs showing a cruise ship terminal just inside the Seaway and an expanded Wavebreak Island with a 50-storey tower, low-rise residential buildings and several bridges to Southport. In January 2015, Annastacia Palaszczuk rules out development on Wavebreak Island if elected.
A few days later, premier Campbell Newman lost the state election to Palaszczuk. The following April, Palaszczuk officially killed the $7 billion Wavebreak Island project but in August gave ASF the green light to develop a 5.5ha crown-owned site on The Spit. On September 4 2016, the state government signed “process deed” with ASF to that effect. ASF went public with its design in December 2016. In early 2017, US casino operator Caesars Entertainment signed a deal with ASF to operate the new casino.
On August 1 2017, Palaszczuk terminated the development on The Spit. On August 8, Tait proposes new site for casino.
Tate’s plan to solve GC problems
All maybe not lost as the Gold Coast City Council is already moving ahead with a new casino/resort plan being considered.
Mayor Tom Tate has confirmed council sent a letter to premier Annastacia Palaszczuk on August 8 proposing an integrated casino resort on a site in Southport.
The new proposal would feature a casino being built on land currently occupied by Queen’s Park Tennis Club, the Southport Bowls Club and Carey Park. It's believed the sporting clubs would be relocated or incorporated into other nearby clubs if the proposal goes ahead.
The site borders land where ASF Consortium (through Gold Coast Development [No 8] P/L) has already received council approval for a multi-million development, The Au - a two-tower development featuring a 15-storey mid-rise and a 66-storey super tower. ASF director David Fang is Gold Coast Development’s sole director and it has owned the land since 2011.
According to plans, it would feature 694 apartments including 1087 bedrooms in a mixture of permanent residential and serviced apartments.
Tate said his vision for a casino, hotels, restaurants, bars, theatre and retail on the 6.7ha site in central Southport could rival casino giant Crown’s Melbourne entertainment precinct and was critical for growth after April’s Commonwealth Games.
The site, in council’s Priority Development Area with no restriction on tower height or density, ticked all the boxes with no environmental concerns, he said. “The state can approve it tomorrow and there will be even more proponents interested in this site.”
Having just returned from China to spruik the city, Tait said he had been inundated with calls from spooked international investors over the ASF axing.