‘Class A Asset Stripping of the Powerhouse Museum’
2 January, 2019
One day economic historians will document the vampire squid epoch in NSW history; the colourful term coined to describe the influence of Goldman Sachs, relentlessly jamming its blood funnel into anything that smells like money.
In NSW the vampire squids have their blood funnel into public assets. Under the O’Farrell, Baird and Berejiklian governments more than $50b in public assets has been sold to infrastructure companies, toll road operators, developers, banks and foreign pension funds, in the name of recycling the proceeds into new infrastructure.
Behind the scenes a constellation of banks, businesses, mates and lobbyists are working their networks and levers of influence to get a slice of public property. With a quiet word to the government they lob an unsolicited proposal, negotiate a secret deal marked commercial in confidence, grease the approval process for an even bigger tower, and buy a tier one income generating asset that has paid dividends to NSW governments for generations. The vampire squid even has its tentacles reaching for the assets of the Powerhouse Museum (PHM).
But the gloss is coming off the state government’s asset recycling strategy. A recent report from the Auditor General raised doubts about the return on the $16.1b lease of Ausgrid, questioning whether taxpayers received a fair price when the state government named its price early in the negotiations, and did not go to a second tender after the Chinese bid was blocked on national security grounds. Then there’s the privatisation of the ports, with secret non-compete clauses that are now the subject of legal action by the competition regulator.
Sensible economists question the merits of public asset sales when there are cheaper ways to finance new infrastructure at a time of very low interest rates. The loss of revenue to fund public services is only one of the downsides. Loaded with debt and structured into off shore companies, the new owners of our once public assets hike the prices and will never pay tax. Every time we drive across Sydney, turn on the lights or sell a property the vampire squid enabled by Baird and Berejiklian has its suckers on our wallets.
The NSW government has a particular mania for selling heritage buildings, and with it the history of NSW. The houses of Millers Point have gone from public ownership. Mike Baird sold the magnificent Lands and Education buildings in Bridge Street to a Singapore hotelier for a paltry $35m. As the eminent former NSW Treasury official Betty Con Walker observed, this was hardly the price of a couple of homes in Mosman, or one house in Point Piper. There was no assessment of other public uses for the buildings, such as an extension to the gallery or a NSW social history museum – a major gap in the profile of the state’s museums.
Perhaps the most egregious asset sale is the demolition of the Powerhouse Museum, in the guise of building a new museum in Parramatta. This is class A asset stripping. It is worthy of a special case study on the modus operandi of the vampire squid, to understand how the NSW government conspired to sell off the museum’s Ultimo land and buildings to developers. Today the Powerhouse is a great public museum, based in Ultimo since 1893, open every day and accessible to visitors from across NSW, interstate and overseas. It has world’s best practice museum facilities, with monumental exhibition spaces that are co-located with the collection store, library, archives and conservation labs. All that space and museum infrastructure is just too good for the people’s museum, which lacks friends in high places, and a board willing to stand up for the museum’s interests. What Ultimo needs is more high rise apartments. If the Berejiklian government is re-elected, the former Powerhouse Museum site will be a developers’ wet dream, with the opportunity for four towers up to 68 storeys.
The developer will have to accommodate a Broadway style lyric theatre and an exhibition space for some of the fashion and design collection, but that will no doubt be an opportunity to negotiate additional floor space. The idea for a theatre and remnant exhibition space, under the banner of a creative industries precinct, was an afterthought to assuage community outrage over the museum’s demolition.
It will cost the NSW taxpayer at least $387.5m to let the developers loose on the PHM site, not counting hundreds of millions to replace the demolished collection facilities, and the cost of the new Parramatta museum. Plans reveal the replacement collection facilities at Castle Hill are too small and grossly inferior what the PHM has at Ultimo. But this is a snip to allow the site realise its ‘highest and best use’, as the spokeswoman for the Arts Minister put it recently. Of course that money might otherwise be used to refurbish the PHM’s exhibitions, which was the first excuse for demolishing the Powerhouse. But as we’ve seen with the demolition and rebuild of Darling Harbour and the $2.4b spendathon on under-used stadiums, NSW doesn’t do maintenance. In the vampire squid economic model, the purpose of the NSW government is to provide a pipeline of work for the construction industry, preferably turning over public assets for private profits. And in the culture of NSW, ‘highest and best use’ is property development, not a public museum on public land.
Then there’s the con on the Parramatta community, who thought they were getting the recycled Powerhouse on public land strategically acquired by the council. Now we know it’s not the Powerhouse; it’s a stalking horse for developers. Heritage buildings will be demolished and a brutal 70 storey super tower will loom over the New Museum Western Sydney, which is half the size of the PHM and nothing like the Powerhouse. All this, at a cost to the taxpayer of a further $1.2b just to ‘move’ the PHM 23ks west to build a smaller, less accessible museum on a flood prone riverbank.
NSW is breaking all the wrong records with its world first museum demolition plan. This is the only museum development project anywhere in the world where the new facilities will be smaller and markedly inferior to what the museum already owns. And it is the only museum project where the new museum does not enlarge the museum’s exhibition space, audiences, or collection access and facilities. Indeed the whole project puts the museum’s collection at grave and unnecessary risk, not least the flood risk on the NMWS site. This is a great meal deal for the vampire squid, but a bad deal for NSW taxpayers and museum lovers.
The government has now stacked the deck for the PHM’s demolition with the recent appointment of Lisa Havilah as the museum’s fourth CEO in just six years. While lacking experience in museums or heritage collections, she is on record as a supporter of the sale of the PHM site. Arts Minister Don Harwin has also appointed David Borger to the museum’s Trust. He is the executive director of the Western Sydney Business Chamber and was the key spruiker in the public relations campaign to ‘move’ the Powerhouse. The mission of the Sydney Business Chamber and its affiliate is urban renewal, planning reform and recycling state assets. Enough said.
Kylie Winkworth 2 January 2019
Read also in Altmedia: winkworth city hub 3 jan 2019
For more on asset recycling in NSW see: