Since the construction contract was awarded, how much have project costs increased?
Capital project costs have increased from the original budget of $44.55 million (set in late 2021) to $58.05 million in 2026 — an increase of $13.5 million.
Why have project costs increased?
Project costs increased because the Saltwater project was delivered during a difficult period for the construction industry, with higher material and labour costs and supply‑chain delays. Several subcontractors also became insolvent, including the supplier for the audio‑visual and theatre equipment.
As the project progressed, some necessary variations—such as structural steel and stage flooring—added to costs. Delays of more than two years also increased consultancy expenses, though some of these were offset by liquidated damages, claimed by the City.
The project also faced a high number of claims, disputes and three adjudication applications, which required legal and independent quantity‑surveying costs.
How have costs increased when the City entered into a lump sum contract with the builder?
A lump sum contract requires the contractor to complete the work for an agreed fixed price. However, the contract value can change if there are approved variations to the project scope. Approved variations – required for things such as structural steel and stage flooring - occurred throughout the Saltwater project.
How is the City funding extra project costs for Saltwater?
The additional $13.5 million, required since 2021, has been funded through:
- $3.5 million loan from WA Treasury
- $3 million from the Airport Reserve
- $5,264,952 from the Building Reserve
- $1,278,295 from the New Infrastructure Development Reserve
- $340,000 from the Legal Expenses Reserve
- $116,753 from the Community Facilities – City District Reserve Account
Why are borrowings used to fund public infrastructure like Saltwater?
Loans allow the City to deliver important community facilities when they are needed, while spreading the cost over the life of the asset. This ensures future users contribute to the cost. Borrowing also provides financial flexibility and is often cost‑effective due to the favourable interest rates available to local governments. The City’s interest rates for Saltwater loans currently range from 2.1% - 4.42% per annum.
What is the total cost of the loans taken out for Saltwater?
The City has borrowed $26.5 million to construct Saltwater and has applied for an additional $3.5 million loan. The total cost of these borrowings, $30 million in total, will be $11,718,300 in interest and fees, including the estimated costs associated with the new $3.5 million loan.
Why isn't the interest and financing costs included in the project budget for Saltwater?
Interest and financing costs are not included in the Saltwater project budget because they are treated as corporate financing costs, not capital construction costs.
In local government accounting (and most public‑sector project frameworks), a project budget covers the direct cost of delivering the asset, such as:
- Construction
- Professional services (architects, engineers, superintendence)
- Variations and contingency
- Fit‑out and commissioning
In short, the project budget reflects what it costs to build Saltwater, while interest reflects how the City chooses to fund it, which is managed and reported separately. The City has however published the cost of borrowings for full transparency.
Is the City likely to be subject to further disputes with the builder?
The City took possession of the site in December 2025. While contractual arrangements with the builder remain confidential, the City considers the matters concluded and does not anticipate any further disputes regarding the Saltwater project.
What works remain to complete the Saltwater project?
The building requires final testing and commissioning of mechanical, fire and electrical systems, along with the completion of minor defect rectification. The audio‑visual and theatre equipment also requires completion, testing and commissioning.
I heard the building has significant defects, is this true?
No. The building has only known minor defects, which will be addressed before opening. There are no known outstanding major defects. Any major defects were resolved before the City assumed control of the building.
When will Saltwater open?
Details in relation to the opening of Saltwater will be released as soon as possible. A staged opening may be required to allow sufficient time for theatre equipment installation.