Unlocking the Sports Hub's Full Potential for Singapore

3.06 pm

The Minister for Culture, Community and Youth (Mr Edwin Tong Chun Fai): Mr Deputy Speaker, Sir, I thank all members of the public and Members of this House who have shown a keen interest in the Government's move to take over the Sports Hub and have filed various Parliamentary Questions. My Ministerial Statement today will address the 25 oral and written questions that were filed for the Parliament Sittings in July.

Sir, the Sports Hub we see today is a fully integrated sports, entertainment and lifestyle hub across a 35-hectare site in Kallang. It is anchored by the National Stadium and the Singapore Indoor Stadium, with a range of indoor and outdoor sports and retail facilities in the surroundings. It has been in operation since 2014 and was designed, built, financed and operated by Sports Hub Pte Ltd (SHPL) under a Public-Private-Partnership, or PPP, agreement that was signed between SHPL and SportSG in 2010.

Over the last 12 to 18 months, we spent some time closely evaluating the performance of the Sports Hub project, including its performance in the pre-COVID-19 period, with a view to assessing if we should continue with the partnership. We took a holistic long-term look at the changing environment in the sporting, lifestyle and also entertainment ecosystem in Singapore and what we wanted to achieve in our sporting and social policy outcomes.

In our assessment, the interests of Singapore and Singaporeans would be better served by the Government taking over the ownership and management of the Sports Hub instead of carrying on with the PPP arrangement. A main consideration was our desire to bring stronger community participation and activities to the Sports Hub.

Once we reached that view, a detailed financial, legal and operational due diligence was carried out with the support of external consultants and advisors to satisfy ourselves that taking over the Sports Hub would indeed be a viable option. Thereafter, we engaged with SHPL to inform them of our decision and worked through the details of the handover. SportSG formally served notice to terminate the Sports Hub PPP with SHPL on 10 June 2022 and reached a mutual agreement with SHPL over the termination and the process of the handover.

On 9 December 2022, a few months from now, SportSG will assume full ownership and management of the Sports Hub and begin a new chapter for the Sports Hub.

Sir, in my Statement today, I will address the range of issues raised in the various Parliamentary Questions that Members have filed. I will organise my response along the following lines: first, set out the historical and contextual reasons leading to the development of the Sports Hub via a PPP – I will explain why we chose the PPP model for this case; second, explain the changed environment and the reasons which led to the termination of the partnership as well as the details around the termination, including the financial information; finally, I will touch on what we envisage for the community and Singapore following the change of ownership and management of the Sports Hub.

Sir, by way of background, let me begin by briefly sketching out some key points in the history of the Sports Hub.

Prior to the development of the Sports Hub, the former National Stadium stood in the same location. This was officially opened in 1973 and hosted its first major event in September that year – the seventh Southeast Asian Peninsular Games – the SEAP Games.

It was a place where major national, sports and entertainment events were held, such as the Malaysia Cup – which Members, I am sure, will recall – where the stadium echoed with the "Kallang Roar" and concerts by global stars like Michael Jackson, Stevie Wonder, Bon Jovi and Mariah Carey. I am not sure if this is all in our generation but I am sure you recall.

It also hosted 18 National Day Parades before the last in 2007.

In 2001, the Sporting Singapore Report set out how the former National Stadium, whilst one of the best in Southeast Asia when it was first built, had become quite inadequate to support our ambitions to stage major sporting events of international or world repute. The report recommended that the National Stadium be redeveloped into a multiuse Sports Hub with top-tier infrastructural facilities for both sporting as well as lifestyle and entertainment activities.

This would give us a world-class venue that could compete with the world's best in attracting major sporting and entertainment events into Singapore. This would in turn also help in the larger development of our sports and lifestyle entertainment industry.

Following the report, the Government commissioned an in-depth feasibility study. It then announced plans in 2003 for the redevelopment of the former National Stadium into the Sports Hub that we see today to achieve the outcomes stated in the Sporting Singapore Report.

The Sports Hub was to be a new best-in-class international stadium envisioned to bring our sports, social and lifestyle offerings to the next level and position Singapore as a leading venue for local, regional and international events.

With this in mind, the Government had to decide on the best way to design, finance, build and operate the Sports Hub.

Broadly, there were two options available to us at that point in time.

First, the traditional procurement method. Under this model, the Government fully finances the upfront capital investment for the project and thereafter either pays a service provider to run the project or does it on its own. The Government would also bear the costs and risks of undertaking the project from the start, including the design and construction and in also getting suitable parties to come in to operate the project.

Alternatively, a public-private partnership model. Under this arrangement, the Government could tap into current international private sector expertise, particularly where the project was innovative and cutting edge, as the Sports Hub was intended to be.

A suitable partner would fully undertake the design, the construction as well as the financing of the operations and management of the project and thus, in this way, also directly bear the risks. The Government would not have to incur any upfront capital costs or financial outlay until the project was completed or operational.

Thereafter, the Government would then commit a steady stream of payments to the private sector partner for the entire duration of the project term.

Given the unprecedented scale and complexity of such a major sports infrastructural project in Singapore and the limitations at that time of not having sufficient depth and breadth of such expertise in Singapore, including in the private sector, we chose to adopt the PPP model.

These reasons have previously been fully explained in this House but let me briefly emphasise a few points in relation to the choice of the PPP model for this project to address the various questions raised by hon Members.

First, as I said earlier, the PPP approach allowed us to benefit from the expertise of major international private sector partners with worldwide experience. This, to us, was an important consideration.

The Sports Hub development as an integrated sports, entertainment and lifestyle hub was to be the first of its kind in the region. In terms of infrastructure, it was to be a new innovative, forward-looking world-class sports facility that was intended to be configured for different events, be it sports, entertainment or lifestyle. As a global events venue, it had to be able to attract live entertainment events from all over the world as well as provide a first-class spectatorship experience.

Sir, we have to remember that when we first started exploring this, it was in 2003, or close to 20 years ago. At that time, neither the Government nor our local sporting or lifestyle entertainment industries had sufficiently matured and developed depth of experience, networks and contacts in bringing in marquee sports and entertainment events from all over the world.

Thus, besides needing to tap on market leading experts with not only the right technical expertise to build the infrastructure, we also needed the experience and connections of someone with international sporting and entertainment networks.

Based on our assessment, SHPL was chosen as the PPP partner because each of the consortium members of SHPL brought with them substantial expertise that was relevant to certain key aspects of the project. For instance, InfraRed Capital Partners for project financing; Dragages Singapore to design and build the project; Cushman & Wakefield for the subsequent facilities management; and Spectra for the venue operations.

At the same time, we also wanted to ensure that our partners would have skin in the game. The PPP model was useful for this because it allowed risks to be shared with the private sector in two material ways. And I would illustrate this by outlining the terms of our own PPP with SHPL.

First, as I mentioned earlier, there is no upfront cost to the Government. The entire project design, planning and construction were borne by the PPP partners, from the time the project started in 2010.

The Government did not pay any of the upfront construction costs at all. The entire sum, an amount in excess of S$1.3 billion, was borne by the consortium upfront and they took out a loan to finance this cost.

The Government only started paying the annual availability fee, at $193.7 million per year, subject to inflation and other benchmarking adjustments, when the project was ready and operational in 2014. Under the terms of the agreement, this was to be paid to SHPL every year until 2035, which is the end of the project agreement period.

These annual payments go towards SHPL's debt service repayments for the loan they took out to finance the Sports Hub construction, as well as day-to-day maintenance and operations of the asset. These are payments which we would have had to make, had the Government chosen to undertake the project on our own.

These payments were also subjected to and moderated by SHPL's achievement of a broad and comprehensive range of Key Performance Indicators (KPIs) which were set out expressly in the project agreement.

These KPIs included the availability of Sports Hub facilities and performance of services, such as events and activity programming, infrastructure maintenance, cleanliness, estate management, security and so on.

Overall, having no upfront costs for the Government turned out to be useful. For instance, when the Global Financial Crisis in 2008 hit unexpectedly, as the Government's fiscal resources were not tied up, we were able to use those resources to meet other pressing economic and other needs.

Second, this structure also allowed the Government to mitigate the, sometimes, unexpected risks of such a major project undertaking. In fact, these risks did come to bear. For instance, the project encountered construction delays, for which SHPL underwrote the costs. SHPL also bore the costs of addressing the defects such as the roof leaks, the inadequacy of the pitch and poor sound quality for concerts. In all of these cases, whether in delay to the project, or to the cost of rectifying the project, the associated costs were borne by SHPL because, under the PPP, it assumed the risks for both timing and quality.

Third, the PPP structure ensured that there would be inherent financial discipline in the project. As I explained earlier, this was a ground-breaking, novel project and we had not undertaken such a project, at least on this scale before. It was therefore important for the Government to ensure that the costs would not run away.

This was achieved by ensuring that the consortium would have to bear any costs above their expectations and also return the assets back to the Government at zero cost at the end of the project period in 2035.

As such, this was an effective incentive built into the PPP model to ensure that they align and maintain commercial discipline and minimise the risks of any budget overrun.

Finally, when considering the use of the PPP model in this case, it is also useful for Members to have this in mind. This was essentially a project that had two parts: the design and building of a world-class sporting, entertainment infrastructure, or the hardware – which took place at the outset – and the subsequent running and operations of the project to meet sporting, lifestyle and community aspirations, spread over about two decades.

On the infrastructure, it is vital that we get it right, from the get-go, from the start. It would be difficult, if not impossible, to change the hardware mid-stream, or once it is built. And we needed the relevant expertise to achieve this, to get it right, build a world-class cutting-edge facility.

As to the operations and running, I have explained how the consortium's know-how and networks and connections were key to the initial periods, when international marquee events were attracted to the Sports Hub in Singapore.

But we also envisaged that there could come a time when Singapore would be ready to operate this project, after it has been built – both in terms of expertise in the Government and also growth and maturity of the industry and the broader ecosystem.

And that is why the structure of the PPP provides for a unilateral right on the part of the Government, but not SHPL, to terminate the project, to take over ownership and management at any time it wanted, before the expiry of the project, with no penalty for such an early termination.

This reserves to the Government the right to assess, at any time, if its interests might be better served by stepping in to run the Sports Hub directly – run, own and manage, directly. If so, there is an agreed mechanism upfront, right at the start of the arrangement, for such a mechanism and there is a clear formula that defines what happens consequent to that decision.

Overall, this structure enabled the Government to manage its interests, through the different phases of this project, to mitigate its financial risks, to drive greater economic efficiency and also align the parties, particularly in relation to the upfront design and construction of the new infrastructure.

Sir, various Members have asked about the termination. Mr Sitoh Yih Pin, Miss Cheng Li Hui, Mr Xie Yao Quan, Mr Leong Mun Wai, Mr Lim Biow Chuan, Ms Sylvia Lim, Ms He Ting Ru, Mr Edward Chia and Mr Sharael Taha asked about the roles of SHPL and the Government in the PPP; what the arrangement entailed; the ways in which SHPL had fallen short; and the reasons why the Government decided to terminate the PPP.

Sir, there is a confluence of several reasons, and not just any single one, which has led to our decision to terminate the partnership. Let me explain them.

The first reason is this. The current arrangement has helped us achieve the world-class sporting infrastructure. I have explained that. Nonetheless, it still falls short of promoting sufficient community vibrancy in and around the Sports Hub.

At present, it has been about eight years since the Sports Hub first opened in 2014, though the operations of the last two and a half years have affected by the pandemic. So, it has really been about five, five and a half years, with another 13 years to run.

In terms of getting a world-class sporting infrastructure, I have explained that and I think we have achieved that.

When we set out to redevelop the former National Stadium, the intent was to have a Sports Hub capable of staging major events and entertainment events of world standards. And through the PPP, which has worked well, we now have a world-class Sports Hub. It has won international accolades for its architectural design, hosted multiple major international events such as the International Champions Cup, HSBC Rugby 7s and also, more in line with today's concert-goers – BTS, U2 and Coldplay.

Members in this House know that there were some early infrastructural problems that occurred after operations began, such as the roof, the pitch, the lights and so on. When these occurred, we imposed the suitable and relevant financial penalties to hold them accountable.,By and large, SHPL made efforts to work with SportSG to correct them.

However, when it came to promoting and enhancing the vibrancy of community sports and lifestyle activities at the Sports Hub, the project did not do so well. The quality and volume of its calendar of events and programming fell short of what we had envisaged, even taking into account the private sector interest in this project.

We wanted to see SHPL invest in the creation of their own new event intellectual properties and building on existing event properties, but these did not come to fruition.

Apart from the Super Rugby event from 2016-2019, SHPL has not secured any recurring or marquee sport events at the Sports Hub on a multi-year basis.

Sir, the Sports Hub is a world-class sporting facility and, of course, international marquee events are important.

But it is also an iconic national sporting asset and there must be a strong sense of affinity and connection between Singaporeans and the Sports Hub. There ought to have been more community participation and activation around the Sports Hub. For instance, we would have liked to see the sporting community from the grassroots, from schools and junior national athletes, having more access to the Sports Hub. Hosting National School Games – key events like the finals – could be at the Sports Hub, or grassroot programmes and activities, family days or carnivals around sporting or social objectives.

These are programmes for which there will not likely be any or much commercial return. But there is an intrinsic social value in realising a young athletes' aspiration to play in the national stadium, cheered on by his or her schoolmates, or having seniors take part in a social event at our iconic stadium grounds.

This is where the profit-driven model of the SHPL consortium, which had worked well in the infrastructure phase of the project, was not sufficiently aligned in the current phase of the project, where greater emphasis was needed on community programming and driving social outcomes, even if such programmes did not always resonate with commercial returns.

Our assessment is that this would be difficult to change by just adjusting some KPIs or trying to improve the outcomes with SHPL via negotiation. We had in fact tried this for some time, but the difficulty lies in the inherent structure of the project terms. For example, SportSG had wanted to bring in ActiveSG academy programmes such as the Basketball Academy at the OCBC Arena but encountered resistance as such programmes were not revenue generating.

The costs of hosting school sport events, such as combined sports days and National School Games, were also high and in some cases, prohibitive.

Due to SHPL's exclusive subcontracting arrangement with its catering subcontractor, community events organisers that wanted to cater for their own food and drinks also had to pay high levies for doing so. These costs were then either borne by the event organisers or passed on to participants.

Accordingly, terminating the present arrangement and taking over the infrastructure on a clean break basis, would allow us better flexibility and discretion, in being able to drive our own policy outcomes.

A number of Members – Mr Darryl David, Mr Sitoh Yih Pin, Mr Seah Kian Peng, Mr Christopher de Souza, Mr Shawn Huang, Miss Cheng Li Hui, Miss Cheryl Chan, Ms Poh Li San, Mr Gerald Giam and Dr Wan Rizal – asked about the Government's vision and plans for the Sports Hub moving forward, after we take over and how it would benefit Singaporeans.

Besides what I have already outlined, let me share a few ideas which SportSG and other agencies are already working on.

As an over-arching consideration, the Sports Hub will be made more accessible to Singaporeans. We want to make it a community icon that Singaporeans can identify with and feel a part of in their social and sporting activities.

We are thus planning regular Sports Hub and National Stadium Open Houses with activities for the young and the old, and of course, everyone else in between.

For instance, as part of our Unleash the Roar! national project, children who have joined our new ActiveSG Football Academies can also participate in the year-end football tournament at the National Stadium.

We are also working with MOE to host even more National School Games, such as the Track and Field, Netball and Rugby competitions, as well as the Singapore Youth Festival performances, or even some Sports Days for schools, at the Sports Hub.

Our children can then aspire to play and compete at the National Stadium, or simply come, soak in the atmosphere and cheer on their schoolmates.

The plans for the National Day Parade for the next few years are not out yet, but regardless, the Sports Hub will be a place where all of us – both young and old – will be able to build treasured memories and meaningful shared experiences.

Seniors from all walks of life can also participate in mass events such as GetActive! Singapore at community spaces in and around the Sports Hub, including the 100PLUS Promenade, OCBC Square and the nice space along the waterfront.

We also hope to see the return of the casual stroller or jogger to the stadium, by enhancing access to the stadium.

Where community programmes such as ActiveSG events and activities are concerned, we will also aim to keep them affordable and accessible to all and we will ensure that as many community spaces as possible are open and free for all to use.

Sir, the objectives I have set out above – enhancing sporting and social outcomes and driving greater community affinity with the Sports Hub – will be complemented as well by the impending development of the Kallang precinct in our Kallang Alive plans, which aims at developing the area in and around the Sports Hub. Therefore, the second key reason for the taking over the Sports Hub is to achieve greater integration with the broader Kallang Alive plans.

Sir, let me say a bit about the Kallang Alive precinct. Kallang Alive will be an 89-hectare site along Kallang River and the Kallang Basin. For comparison, the Sports Hub is 35 hectares. So, this area of 89 hectares, including the 35 hectares, will be two odd times larger than the current Sports Hub. This area is envisaged to transform into a vibrant sport, entertainment and lifestyle precinct by 2030.

Sir, because a picture really speaks volumes, may I have your permission, Mr Deputy Speaker, to display some slides on the LED screen.

Mr Deputy Speaker: Please do. [Slides are shown to hon Members.]

Mr Edwin Tong Chun Fai: Thank you, Sir.

The Kallang Alive Precinct development is on a much larger scale and magnitude, as I have said, about 2.5 times that of the 35-hectare Sports Hub. This picture provides an overview of the future Kallang Alive Precinct. This is what it looks like today.

As part of the Kallang Alive Precinct plan, there will be an expansion of sporting facilities around the Sports Hub, which will be developed, owned and operated by SportSG directly. I will show Members some photos of the ongoing developments.

This includes the Kallang Football Hub, which will be our national training centre, to be ready as soon as the end of this year. Here, we see the ongoing construction and a close-up shot of one of the turfs that is already completed and an artist’s illustration of what it will look like when fully completed.

We have also started work on the Kallang Tennis Centre, which would be ready by next year. Here, we see the ongoing construction and an artist’s illustration of what it will look like when completed.

All of these that I have just shown are assets which sit outside the current Sports Hub group of assets. They are part of the Kallang Alive Precinct but not within Sports Hub.

There are also other facilities, such as the Youth Hub, in the longer-term pipeline with youth-centric activities and "young" and "youth" here include those who are young at heart as well.

Beyond these sporting assets, SportSG also plans to launch a tender for the redevelopment of the Kallang Theatre Precinct into a mixed-use development, comprising a multi-purpose indoor arena, office spaces to bring sport-related businesses and entities together, commercial facilities, such as a hotel and other hospitality offerings.

Once ready, these entertainment and lifestyle offerings will integrate with and support the activities of the Sports Hub. These are exciting plans which we have in store for the future.

But these are not our only plans. We have a vision to transform the entire Kallang Alive Precinct, including the Sports Hub, into one single integrated ecosystem which is not only capable of hosting world-class events, but also to be the home ground for our national athletes as they train and compete. We want this to be the beating heart of our community, grassroots and school sports and the testbed and breeding ground for sports innovation and growth.

Taking over ownership and management of the Sports Hub will enable SportSG to unlock the Sports Hub’s full potential for Singapore. We will integrate the Sports Hub more closely with its upcoming facilities within the precinct to deliver more seamless offerings and capture stronger precinct synergies. Members might ask, what does this integration entail and what does this mean?

I will give a couple of illustrations.

First, integration from a physical perspective, which will allow us to do more with one event. Members would have seen a glimpse of this at the recently-concluded WTT Grand Smash earlier this year, where we had table tennis tables set up around the main event, which the public could use to play with family and friends while they waited for the elite matches, and these were matches that were taking place with some of the world's best and we had tables around to engage the community. People come freely and play while waiting, engaging the entire community in the precinct.

With the fuller integration with Kallang Alive and the upcoming facilities, we can step up on this and activate more of the Kallang precinct. For instance, we can seamlessly combine the facilities at the OCBC Arena, the Singapore Indoor Stadium and the new Kallang Tennis Centre and can confidently bring in marquee sports events, such as an ATP1000 tennis event.

High-quality international marquee events will be complemented side by side with local programming. We can use the entire spread, all 89 hectares of the Kallang Alive Precinct seamlessly to do so.

By concurrently integrating community programming on the sidelines and in the months running up to the event, many more Singaporeans can benefit. These could include community tennis for the masses to try out the sport, tennis clinics for social competitive players and aspiring athletes, youth competitions and so on.

So, we will have a whole ecosystem of sports – our professional athletes competing in the arena, our budding young athletes training on the sidelines and in the facilities, and the general public enjoying a social game, all integrated with the other lifestyle offerings which will be coming up. It will also provide for better and dedicated experiences for participants and audiences.

Second, integration from a user point of view. With different ownership structures and different commercial profit and loss, it can be incredibly challenging to achieve seamless integration in the delivery of services across the entire suite of facilities. In fact, adversarial competition between the facilities is the more likely outcome.

So, by taking over the Sports Hub, we will be able to give users a more integrated service experience across the entire precinct, for instance, precinct-wide promotional and marketing activities and hospitality offerings that span across multiple facilities and programming.

Beyond just integrated service experiences, users are likely to enjoy cheaper costs as SportSG will now be able to reap precinct-wide economies of scale through shared functions and services.

Overall, taking back the Sports Hub and integrating it with Kallang Alive will enable us to unlock greater value and achieve our broader social and sporting vision for the wider precinct as a whole.

Finally, the third reason for taking over the Sports Hub at this time is because the wider sporting and entertainment ecosystem has since matured. I spoke a little bit about this earlier. One of the key reasons for working with SHPL and choosing them as a partner was to rely on their expertise and networks with many other networks and international players around the world.

Over the years, our own sector in Singapore has grown and matured and we are now much better placed to continue making Sports Hub a premier hub for sports and entertainment.

Our own internal capabilities have grown. Over the past few years, SportSG had played a key role alongside SHPL to bring in major sporting events, such as the WTA Finals, International Champions Cup and Rugby Sevens and so on. We have developed the know-how, links, networks and the experience to continue doing this.

Besides that, our local and locally-based companies have also matured. Companies, such as UnUsual Limited and LiveNation, are now much more established and can bring in larger gigs into Singapore. Group One Holdings and Ironman Asia have also continued to grow, introducing several flagship events that Singaporeans can identify closely with and actively participate in.

Our growing capabilities and international recognition as a premier hub for sports and entertainment can be seen in major names that have set up operations in Singapore as well, such as AEG and IMG, as well as NBA which has announced the set-up of their Singapore office.

Third, demand for these events has also grown. With our recovery from the COVID-19 pandemic, there is now greater demand and we see that gradually ramping up, both locally and regionally, for larger-scale sport, lifestyle and entertainment events.

Overall, the limitations of the current arrangements, the changing environment and our growing capabilities and ambitions are all factors that we considered when deciding on terminating the relationship. I would add that this was not a decision taken lightly. We felt that, however, having done our due diligence, as I have explained at the start and a confluence of these factors in the ecosystem all coming together, this was now a right time for the Government to exercise its right to step in, take over ownership and continue the management of the Sports Hub.

Members Mr Edward Chia and Mr Sharael Taha asked about the impact which the termination in this case might have on the guidelines and considerations for future PPPs.

Sir, each venture, whether PPP or otherwise, has to be considered on its own merits and to consider the purposes for which you enter into an arrangement in the first place. In this case, we foresaw in this arrangement that it was long term, that circumstances could change along the way and we provided upfront for an agreed no-fault termination without penalty in the PPP.

As I have outlined above, we had good reasons to terminate the PPP, with regard to the reasons I have outlined. But having reached this decision does not necessarily mean in all cases, that the Government should no longer be open to other PPP projects.

Regardless of how projects are financed, we have a sound evaluation process to review the business case, scope, lifecycle cost, implementation approach and also the relative risks between Government and private sector for each of these projects.

For PPPs, in particular, a framework is in place to assess the suitability of undertaking the PPP, including tangible outcomes, potential for downstream lifecycle cost savings, the nature of project risks, which will differ from industry to industry and project to project, the available private sector expertise in that area relative to what the Government can offer and the need for flexibility or the likelihood of downstream changes. All of these are factors to be taken into account and I would say that no two projects would be similar.

This framework is continuously refined and builds on the lessons learnt both here, locally, our own experience, as well as internationally elsewhere. We will, therefore, continue to be open to leveraging PPPs as a model, where suitable.

Having explained the reasons for termination, let me turn now to explain the costs of termination and how it might compare with carrying on with the PPP project till its conclusion in 2035.

Members Mr Seah Kian Peng, Mr Sitoh Yih Pin, Mr Edward Chia, Mr Lim Biow Chuan, Ms Sylvia Lim, Mr Sharael Taha and Mr Raj Joshua Thomas have all asked about the costs of termination.

Sir, the key questions are: how much is the Government paying in total for this termination? How does it compare with what we would pay if we had continued with the partnership till 2035? And if it is different, how do we account for it?

Let me address these points. To do so, let me just quickly recap a few financial points on the PPP which I had raised earlier.

First, SHPL funded the full initial capital expenditure for the construction of the Sports Hub. They did so by taking out a loan. This meant that the Government did not have to contribute any upfront capital for the construction in 2010. So, we did not pay upfront and it is also now that the cost of the loan for the financing of the infrastructure, the capital cost, is still being borne by SHPL.

Second, the Government would pay SHPL a fee of $193.7 million each year from the time the project started operations in 2014 all the way until the end of the project in 2035.

Third, with this fee from the Government, SHPL would then be responsible for the full operating expenditure, including daily operations, maintenance, security and lifecycle costs for the entire project term.

Fourth, the assets would be returned to the Government at no cost in 2035. So, that is the framework of the PPP.

Therefore, if we had continued with the PPP arrangement, the Government would continue to pay SHPL approximately $193 million each year, every year, from now until 2035, and that works out, from 2022 onwards, to be approximately $2.32 billion. That is a committed sum under the PPP. This sum does not take into account net present value and other financial or accounting adjustments.

With the termination, the Government would have to pay two main buckets of costs and let me explain them to Members.

The first is the amount to be paid to SHPL for the termination. This amount is made up of several components, derived from the financial terms stipulated in the Project Agreement. I had explained earlier that this Project Agreement contemplated this early termination on a no-fault basis without penalties and the agreement itself provides for the formula by which such a termination sum can be calculated.

Conceptually, the single largest component which accounts for about $1.2 billion, or slightly more than 80% of the total sum to be paid, is the capital expenditure that the Government would have had to bear. In other words, the $1.2 billion or so of the sum that would be paid will go towards the capital expenditure. As I explained earlier, this is the capital expenditure that the Government would have had to bear if it adopted the traditional procurement approach of proceeding with the Sports Hub on its own.

The remaining components, or about $300 million, are due to the fair market value of the Sports Hub, which is commercially negotiated and also other costs, expenses and deductions, based on the Project Agreement.

At present, the sum to be paid to SHPL for termination is projected, therefore, to be around $1.5 billion. But the final amount will be based on the accounts as at the date of handover, which is December. So, there could be some fluctuations and variations, but we do not expect there to be material variance from this figure.

The second bucket of costs is the costs of the future running and operating of the Sports Hub, post-handover. So, for parity of consideration, let me sketch out what this cost is projected to be. Ms Sylvia Lim and Mr Sharael Taha asked about this.

We will take, as a benchmark, the current operating assumptions and costs incurred by SHPL which include, as I mentioned earlier, maintenance, operations, security, future lifecycle costs, replacement, programming costs, day-to-day costs and so on, all the way until 2035, which is the comparable period.

Based on this, and we use data from actual incurred, that means, this is from SHPL's actual incurred, we expect to incur approximately $68 million per year doing this for operations.

If we were to draw a parallel comparison against the balance tenure of the Project Agreement, in other words, if you compare like-for-like until the end of the period in 2035, at $68 million per year for operational costs, that brings us to approximately $800 million over the balance period until 2035.

If this $800 million is added to the termination sum, this makes the full projected costs of termination at around $2.3 billion. So, it is roughly the same, although I have not gone into the decimal places. The termination sum, added to the projected cost of maintenance and operations, is roughly comparable to what it would cost had we chosen to continue with the PPP and incurred the availability payments over the rest of the project period until 2035.

So, with the component figures taken at face value – and as I have said, without taking into account accounting and other net present value adjustments – this aggregate sum would be comparable to the financial obligation committed under the PPP if we had chosen to continue with it.

Sir, we have carefully examined the finances to ensure proper due diligence and that we can reach a financially rational outcome when we are doing this. Taking the two buckets of costs to be paid for the termination – the sum to be paid to SHPL, which largely reflects the upfront capital expenditure and future operating costs – this would be a fair deal for the Government on which to take back the assets.

None of these components are penalties to the Government, as I have said, because the project agreement provides for a no-fault termination. These are simply the costs that we would have had to incur, or would have incurred, going forward, in terms of the capital expenditure and the operating expenses.

Sir, the financial calculations and their due diligence, as I have said, it is to ensure that we reach an outcome that is financially rational. I want to make it clear that the decision to terminate the Sports Hub project was not driven by financial considerations or to save money.

Indeed, we do not plan to operate the Sports Hub at status quo or on the same assumptions as SHPL.

As you heard me say earlier, we want to make the Sports Hub more accessible, invite more participation, bring more people into the Sports Hub, make it more accessible. To do this, we would have to have more community programmes, invest to bring more world-class events into the Sports Hub and open up the Sports Hub and the National Stadium to general community use.

All of this would probably mean higher expenditures and increases in daily operating and maintenance costs. As such, we should probably expect our operating expenditure on an ongoing basis, once we take over, to likely be higher than what it was previously.

At the same time, however, this might be balanced off against the future revenue generated by the events and activities at the Sports Hub. Previously, under the PPP, any revenue that was generated by these commercial activities would go into the project. When we run it, albeit we want to do it in a different way on different assumptions, the revenue that we generate will go back directly to mitigating and defraying any of the increased costs in maintenance.

Sir, let me be clear that, even as we do this and we have these considerations, even as we want to enhance community participation at the Sports Hub and enhance our programmes, we must also do it judiciously. We must still operate within financial prudence and ensure that we are not profligate in spending, that we are careful in how we spend.

But, taking back the Sports Hub from the private sector will also mean being able to redefine our outcomes away from being mainly or predominantly commercial in nature, we will be able to better realise our sporting and social objectives, open up the Sports Hub to more Singaporeans and bring greater value and outcomes for us, the future of sports in Singapore, our athletes and the everyday Singaporean.

Sir, Members Mr Mohd Fahmi Bin Aliman, Mr Shawn Huang and Ms Sylvia Lim asked about SportSG's confidence and ability to take over and how SportSG will continue working with the private sector.

The PPP project has enabled us to have a strong foundation of a world-class infrastructure. We intend to build on that and continue to bring in top-tier international sporting and entertainment events whilst, at the same time, incorporating our ambition of attaining wider and better social and sporting outcomes for Singapore.

To achieve this, SportSG will incorporate a holding company to own and operate the various pieces of assets within Kallang Alive. A subsidiary of this holding company will be set up specifically to own and manage the Sports Hub.

This structure will enable SportSG to focus on the Sports Hub, but also, at the same time, have regard to the wider Kallang Alive Precinct and what could be done in those cases, when the other projects that I have mentioned in the Kallang Alive precinct come onstream.

Where necessary, it can be operated as a single, integrated entity, able to reap synergies and economies of scale across the entire suite of sporting and lifestyle assets of Kallang Alive. A team of officers from SportSG has already been earmarked to move into the Sports Hub holding company and manage Sports Hub on a full-time basis.

These are officers who have had years of experience with the Sports Hub, many of them having worked alongside SHPL since the inception of the project in 2014, gaining experience and know-how along the way.

These officers within SportSG have already been functionally organised in a structure that coheres with the structure of SHPL, suited to running the Sports Hub. They have been in this position for the last few years, readying for a takeover if and when needed.

Beyond the internal capabilities of SportSG, we value the expertise and experience of existing SHPL employees and would like to retain them.

All SHPL employees have been offered an opportunity to cross over into the new corporate entity and continue on this mission to make Sports Hub the centre of sports in Singapore.

Beyond the internal structure and resources, we intend to continue working and partnering the best providers in the private sector in the areas of programming, broadcast, hospitality, facilities upkeep and management, to name a few.

We will, therefore, continue to retain the contracting model. In other words, the model where we can subcontract and work with external parties in the private sector. This allows us to work with market-leading, optimal partners to provide the best services and facilities fit for the particular purpose in question, for a particular occasion or event.

In the mid to longer term, we also intend to tap into the private sector, to explore the prospects of redeveloping some parts of the Kallang Alive precinct. For instance, projects, such as the redevelopment of the Kallang Theatre into an integrated multi-purpose sport, entertainment and lifestyle hub. Or even turn the Kallang Wave Mall into a one-stop sporting, health and wellness destination. Those are just some ideas.

Overall, with SportSG taking over, the Government would be better placed to drive a synergised and coherent vision for the whole precinct and achieve internal synergies while providing more integrated offerings and programmes to the public.

Finally, Mr Deputy Speaker, as I wrap up my speech, let me bring us back to the very initial vision of a Sporting Singapore more than 50 years ago, all the way back to the early days of our Independence.

Then, at that time, we had the "Pesta Sukan Minggu Merdeka" or Sports Festival Week of Independence, which was an annual feature in our National Day celebrations from 1966 to the early 1970s.

This was an event which was not just about excellence in high performance sports, but really, sports for all, as part of our culture and in our everyday life.

As then-Minister for Social Affairs, Encik Othman Wok, put it in his speech at the ground breaking of the former National Stadium in 1966, he says and I quote, "Sport… must be an essential feature of our way of life. The new generation will not fear stagnant thinking because they will have dynamic reflexes built into them".

We must go back to that spirit and conviction to make sports an essential feature of our everyday life, because of the impact it can make in our own lives and in the lives of others around us.

Some of my own fondest memories growing up were the excitement of being able to play at the Zone or National Finals at the old National Stadium, or simply being in the stands, skipping class, supporting and cheering my friends as they competed against rival schools.

It made me feel like I was part of something bigger, larger, something more. And it connected me with my school, friends and, certainly, with the sport in a way which no other way can – intangible.

Sport has this immense power to bind us as one, to be hungry for more and to strive to be the very best. This is what our TeamSG athletes embody when they compete under the Singapore flag and it is the spirit that we want to see in every Singaporean.

Together, sport can make us more resilient individuals and strengthen our sense of unity as One Singapore.

At the heart of it, this next chapter of Sports Hub is about sports being a part of the life or everyday life of Singaporeans.

As we close the previous chapter, let me also acknowledge SHPL for its contributions. The partnership between SHPL and SportSG has given us a strong foundation from which we can now proceed to drive our social and sporting ambitions confidently. And we look forward to working with SHPL for the next few months to ensure a smooth handover and to welcoming SHPL employees to continue with the new corporate entity which we will set up.

Even so, as we leave this partnership, as SportSG assumes full ownership and management from December this year, the efforts towards Sports for Singapore still remain a partnership. Between the Government and the private sector partners, we will have to continue to work to provide top-class services.

We want to partner with the many community stakeholders, as I have mentioned – students, young athletes, junior athletes, seniors, NSAs and, of course, the many Singaporeans who will participate and make the place even more vibrant and alive.

I am, certainly, excited about the potential we will be unlocking, as we build on what we have achieved to turn Kallang Alive into a larger, more diverse and more vibrant sporting and lifestyle hub for everyone.

The Sports Hub will be a place where our students grow to be resilient, as they deal with wins or losses in their school colours; where we bond with our family and friends, as we enjoy running around the jogging track, participating in the community sports events and enjoying international concerts. And we cheer our athletes on, as they take on their competitors from around the world.

So, let us write this next chapter together to make Sports Hub and our National Stadium, our Home Ground and a place which we can all be proud of. [Applause.]

Mr Deputy Speaker: We have some time for clarifications. Mr Darryl David.

3.55 pm

Mr Darryl David (Ang Mo Kio): Thank you, Mr Deputy Speaker. I thank the Minister for that speech. I have a clarification that is linked to an oral Parliamentary Question (PQ) which I filed previously. The Minister talked about going beyond sports and about involving the community a lot more in the Sports Hub. That is very heartening.

I would like to ask the Minister if there is any consideration being given to perhaps having one of the, if not the biggest, community event of the year, which is the National Day Parade (NDP), held at the National Stadium at the Sports Hub.

I had the privilege of marching in the PCF contingent for the only NDP held at the Sports Hub since – I think it was in 2016 – and I can say it was a wonderful experience.

So, Minister, in the past, as you know, the NDP would be held one year at the old National Stadium; one year at the Padang. Are there plans to perhaps commit to a more regular schedule of having the parade held at the Stadium, at the Sports Hub and perhaps even involving the Kallang Alive area, in a month of celebrations, say, across the entire month of August, that leads into a meaningful celebration at the NDP?

Mr Edwin Tong Chun Fai: I thank Mr Darryl David. I am glad that he enjoyed marching in the PCF contingent. I take it that he was leading the contingent. [Laughter.]

Mr Darryl David: Yes, I was, Sir.

Mr Edwin Tong Chun Fai: We will, certainly, be open to it. I think what this taking back of the ownership and management of Sports Hub was designed to do is to give us more flexibility and the ability to not let cost, which was otherwise a serious prohibitive factor, constrain the organisation of events, such as the NDP, at Sports Hub.

At the same time, we also want to be circumspect about having it there every year, or even every other year, because there is a five- to seven-month lead time before and after, where much of the facilities will have to be decked up for rehearsals and cannot be used. So, you have to think about it in terms of the programming that we want to do for the Sports Hub, the availability and the options around how to organise the NDP at the Sports Hub. But, certainly, Mr Darryl David can be assured that this will be a consideration and, at the very least, the Sports Hub will be open for MINDEF to consider hosting the NDP there.

Mr Deputy Speaker: Mr Xie Yao Quan.

Mr Xie Yao Quan (Jurong): Mr Deputy Speaker, I thank the Minister for his comprehensive update on the decision to take back ownership and management of the Sports Hub and also the plans to unlock the Sports Hub's full potential for Singapore and Singaporeans.

I am very glad to hear about the move and I have a clarification for the Minister about the leadership of the Sports Hub going forward, starting with the CEO. I think we will need a CEO going forward who is able to understand the vision, execute on the vision and really bring it alive.

And importantly, a CEO who is able to build the leadership team to help him or her to achieve all of this. Can the Minister give some update about what is the selection process that we can expect, maybe in the months ahead and what are some of the principles or qualities that we would be looking for in a CEO to lead the Sports Hub in its next chapter.

Mr Edwin Tong Chun Fai: Sir, I thank Mr Xie Yao Quan for his support of this takeover and the project that I have laid out before Members over the last 45 minutes or so.

We are considering various options for the CEO of the Sports Hub. I do not want to go into specifics at this point in time, but I agree with Mr Xie Yao Quan that we do have to look out for qualities, such as an ability to integrate with the rest of Kallang Alive. That is, after all, one of the fundamental raison d'être behind why we are doing this. That person must have strong organisational skills because they are several components that come together that are not just sports, but also lifestyle, entertainment. You have got to deal with the local ecosystem, have an eye for who our best international and private sector partners might be, liaise with them externally, bring in international events into Singapore.

And there must, most importantly, also have a clear eye on being able to use the Sports Hub's assets to be able to drive our sporting, social and lifestyle outcomes. And those are the key qualities that we will look out for, for the leadership of Sports Hub.

Mr Deputy Speaker: Mr Sitoh Yih Pin.

Mr Sitoh Yih Pin (Potong Pasir): Thank you, Sir. I am heartened to hear from the Minister that once the Government takes over the Sports Hub's management, we are going to do a lot more things for a lot more Singaporeans. But, Sir, that will also mean that we need a lot more resources. Bearing in mind that the MCCY budget is always amongst the smallest in every Budget, I would like to ask the Minister whether he can go to the Finance Minister and ask for more funding because, Sir, especially when we celebrate National Day next week, the lion must roar.

Mr Edwin Tong Chun Fai: Sir, the Deputy Prime Minister and Minister for Finance is grinning at me, from behind the mask.

Sir, I think that is a good question. Before we embark on this, we satisfied ourselves that at least for the baseline of what we say we want to achieve, we have enough resources to drive towards. But, obviously, the details as to what an enhanced budget might look like is something we will have to discuss closely. And we have to bear in mind our current fiscal constraints and position as well.

Mr Deputy Speaker: Mr Gerald Giam.

Mr Gerald Giam Yean Song (Aljunied): Sir, could the Government not have tapped on international private sector experience using the procurement model?

Secondly, how would SportSG bring in more marquee events when SHPL, with all this international experience, could not?

Lastly, will the Sports Hub and Kallang Alive precinct be used to host all national sports competitions and national school games and can SportSG make greater efforts to market such events to a wider audience? This will inspire our young athletes to push themselves harder, increase the public attendance at such competitions and also free up other community sports facilities to the general public. These facilities, as some might be aware, tend to be blocked booked by the National Sports Associations for competitions and training, to the consternation of some members of the public.

Mr Edwin Tong Chun Fai: I thank Mr Gerald Giam. On the first point, yes, it would have been possible to work with third parties and private sector partners in the traditional procurement model. Indeed, that is the case in many procurement models. But the reasons I outlined earlier carefully about the unique nature of this project, the fact that it was innovative, cutting-edge and we were moving into an area which, frankly, in Singapore, we, at that time, did not have much experience in. And also, it was a question of risk allocation, having a PPP project in the way I have described, puts this partner in the context of having some skin in the game. And to ensure that every delay, every failure of availability, in other words, when the stadium or the facility is not available because of a defect or a problem with the facility, that is a responsibility they bear.

If you went to a third party and you bought those services, then the Government will bear the risk of that. Quite apart from that, the Government would also have had to bear the risk and the financial obligation of incurring the capital expenditure (capex) from the start. So, having regard to what I have said earlier, I think I have explained why, whilst we could have in the way Mr Gerald Giam has put it, we chose not to do so in a procurement model but to do it by way of a PPP.

On Mr Gerald Giam's last question whether we want to host all national school games and all other community games there because, as Mr Giam puts it, facilities are block booked and unavailable, we have to be clear. The Sports Hub, obviously, is a top-class infrastructure and you cannot conflate that with training and more local, domestic events for which we have many of the ActiveSG facilities available in the stadium and other facilities around the island. And we got to make sure that the relevant level of facility is used to host and cater for the relevant level of sporting activity.

Yes, I did say we do want some national school games to be there – the finals or key moments – but we cannot turn the Sports Hub into a place where every school event is being held there. I think that will be difficult.

Can Mr Gerald Giam please repeat the second question on SportSG?

Mr Gerald Giam Yean Song: Yes, my second question was how will SportSG be able to bring in more marquee events when SHPL, with all its international expertise, was not able to?

Mr Edwin Tong Chun Fai: Well, first of all, that has been done. We have had some experience. As I have mentioned earlier, we have built up our expertise over the years. We also worked with developed partners in the private sector today. So, I have mentioned UnUsual Limited, LiveNation being here, AEG and so on, located in Singapore, having a vested interest in making sure that they bring these products into Singapore. So, it is not just about SportSG, but, as I have said, the maturity and development of the entire ecosystem in Singapore.

Mr Gerald Giam's other point I think presupposes that when PPP partner, SHPL, did not bring marquee events into Singapore it is because they were unable to do so. Part of the reason is because the cost structure of the project disincentivised them from doing so on a freely available basis because the cost structure meant that they would have to bear the risk of there, for example, not having a good turnout or good take-up of the ticket sales for such events, then the losses would be borne by them.

So, there were a number of structural problems with the current arrangement, which made it harder, not impossible, but harder for SHPL to have done so.

Mr Deputy Speaker: Mr Lim Biow Chuan.

Mr Lim Biow Chuan (Mountbatten): Sir, I want to thank the Minister for sharing with us the Kallang Alive plans. I am very excited to hear about it, especially since the bulk of it falls within my constituency. But, Sir, Members of Parliament in this House need to hold the Government accountable for Ministries' expenditure. The Minister has explained that the cost of taking over the Sports Hub is about $2.3 billion, which is about the same price as what the Government would have to pay to 2035.

May I ask the Minister, what about revenue from sports or entertainment events that SHPL would have carried out during this term between 2014 and 2035? Does the Government take a share in any of this revenue taken from sports or entertainment events? For example, I think Liverpool played recently at Sports Hub. Did the Government take a share in any of these major events? Because if it does, then we also need to balance how much we will lose in terms of lost revenue in taking over the Sports Hub.

Mr Edwin Tong Chun Fai: I thank Mr Lim. The project agreement provides for a waterfall formula by which such costs would be apportioned, how payments would be apportioned and the priorities by which they meet the costs. There is a formula which cascades down the takings from these events and they are then put it into a fund and, in some cases, shared with the Government. So, there is a formula for that.

The cost of running is high. In most cases, there is not much that comes down to a level which allows the Government to share and that, itself, is also one of the considerations behind this decision, because if we were to take on board the entire project and run and manage it ourselves, as I mentioned earlier, then we would avail ourselves entirely of the upsides of any of these projects. Of course, these are things which we should not automatically assume that just because a team like Liverpool comes here, that there will automatically be a tremendous upside, because you have to weigh up these commercial considerations. But the point is, once we take back ownership of this, the structure allows us to then directly manage it. We will assess the risk and if it is something we can get into, then the commercial revenue and the upsides can be taken by the Government in this case.

So, currently, there is a formula that prescribes the usage and the allocation of these takings. After we terminate it and we do it on our own, then all of these would be within SportSG and within the Government to control.

Mr Deputy Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai (Non-Constituency Member): Thank you, Deputy Speaker. Please allow me to have one or two minutes of preamble, before I ask my questions, okay?

Mr Deputy Speaker: Perhaps, I can restrict you to half a minute, please.

Mr Leong Mun Wai: Okay. There has been a lot of aspirational delivery throughout this session. I must also share my experience, that, first, I support the Government taking back the Sports Hub. We are all very attached to the old National Stadium. Ministers past and present have participated in the opening of the old National Stadium together with me in 1973. So, we are very attached to the old National Stadium. We do not know why the Sports Hub was given to a private consortium.

Secondly, throughout the discussion we had today, no one asked the question – is the $1.5 billion compensation or termination cost given to the private consortium fair or not? Of course, then, we have to go into a lot of details of financial calculations and all that, but we still need to debate about that. But so far, no question has been raised. So, let me ask two questions. The fact remains why the decision was made at the beginning —

Mr Deputy Speaker: Mr Leong, please ask your questions.

Mr Leong Mun Wai: Yes, my question is —

Mr Deputy Speaker: Be fair to the Members who are after you also wanting to ask clarifications. So, please keep it short. I will give you the leeway, but please keep it short.

Mr Leong Mun Wai: Yes, my first question is, why was the decision made in the first place when it is quite possible that we can run on the procurement model?

The second question is, looking at the financial numbers – and bear with me a little while on that ‒ basically, SHPL seems to have failed in its job, failed in the expectations that we have on them. Of course, when we ask international companies to come in, I am in business for many years, I know! When I use the international partners, we expect them to bring in the marquee events. If they did not bring in the marquee events, they have failed in their job. So, why, for example, in the compensation formula, do we pay for the $1.2 billion, which, I presume, is the outstanding bank loan?

Mr Deputy Speaker: Mr Leong, I have been listening to you quite carefully. You have asked your first question quite succinctly.

Mr Leong Mun Wai: Yes.

Mr Deputy Speaker: I invite you to ask your second and final question now succinctly.

Mr Leong Mun Wai: My second question is, is it fair for us to pay $1.5 billion to SHPL? And I have to elaborate, right?

Mr Deputy Speaker: Thank you, Mr Leong. We will allow —

Mr Leong Mun Wai: So, I will let the Minister elaborate first then. Thank you.

Mr Edwin Tong Chun Fai: Thank you, Mr Leong. I think I have spent the better part of the last 45 minutes precisely doing that, elaborating at some length, because I think Mr Leong did ask that question about why we chosed the PPP model. I thought I had explained in some detail why we considered the procurement model but it was not appropriate, why we wanted to put the risk-sharing allocation mechanism to work, so that our partners would have skin in the game, that they would bear the risk as well, that there will be financial and market discipline in the way we structured the arrangement. I think all of this Mr Leong would understand very well.

So, in the first place, why we went into it, why we chose this model, I think I have explained that in some detail.

Then, the question about whether it is fair. This is a termination sum that is based on a formula in the PPP. So, it is the defined formula. The majority of this cost is the capex, as I have explained and this is the capex that we would have had to bear had we undertaken the procurement model anyway.

To give Mr Leong an example, if we had taken the procurement model, we would have had to raise the entire cost of the construction upfront and paid it by around 2010, which was when the project started, even before it became ready. So, a full commitment of the sum in 2010.

And over the years, we would have had to make at least two large payments every year. One, to service the loan that we would have taken, or at least to account for the interest of that loan; and second, a commitment to an income stream that would allow the project to run, operate, maintain, keep a sinking fund for lifecycle costs and so on.

And when we pay every year, the $193.7 million towards SHPL, that is what those sums are for. It goes towards, as I have explained earlier, for SHPL to meet their loan obligations and to meet their expenses for operations, maintenance, lifecycle costs and so on.

Instead of paying the sum upfront, what we did was we asked SHPL to come in. You have heard me explain it earlier, so, I would not go further into it. And they bear the risks and the costs. And once it is ready, and only when it is ready, we then make the payments each year to SHPL.

On that basis, when we take over, these are costs that we would have had to bear anyway, at least for this portion. The rest of it, as I have said, is an open market valuation, because they are the current owners of the asset, and then there are some items like deductions, more minor items, how we deal with the debt reserve account and so on. But those are all minor.

So, in that regard, I have set out the premise of the payment, the formula by which this is done and why I believe this is a fair assumption.

Mr Deputy Speaker: I will come back to you, Mr Leong Mun Wai. Ms He Ting Ru.

Mr Leong Mun Wai: No, Mr Deputy Speaker, Sir, it is a continuation. Minister has not answered my question.

Mr Deputy Speaker: No, I will come back to you. I think there is a point of order, Mr Leong. We have to give people a chance in the House to ask their clarifications. The next person the Chair is calling is Ms He Ting Ru.

Ms He Ting Ru (Sengkang): Thank you, Mr Deputy Speaker. I just wanted to follow up on the question that I asked the Minister previously. I am not sure whether it was answered. It was whether a review would be held to look into the circumstances that basically led to this early termination of the PPP project. This is really very much in the spirit of taking up learning points to be applied to similar projects in the future, whether it is for a vibrant sports and events scene in Singapore or, in particular, in terms of our negotiation and structuring or usage even of the PPP projects in the future, whether or not there is anything to be learnt from this. The Minister has described that some parts of the project have been assessed to be successful, but, other parts have fallen short.

So, I am just wondering in terms of the learning points, making sure that any mistakes are not being repeated in the future, whether this is something that is going to be taken and whether this review and the results would be shared with the public.

Mr Edwin Tong Chun Fai: Sir, I thank Ms He Ting Ru for the question. In terms of doing a review, what had been done leading up to this decision was a very thorough review already. And that review went into aspects, such as where they performed well, where they did not perform so well, looking at the internal capabilities within SportSG, whether we could muscle up enough resources to do what they are doing, the extent to which we feel we can commit to doing this on an international marquee basis, the kind of partners that we might have in Singapore. Everything I mentioned in my speech earlier are all factors that we took into account to reach this decision.

So, that review actually had been done and that is why we are confident and capable of coming to Parliament and explaining this to Members and embarking on this termination.

To Ms He Ting Ru's point about whether all of these learning points would become something that we take on board, obviously, yes. With each PPP project that we do and indeed, for the Government, with each project that we do, large or small, there are always continual learning points. We look back, we reflect and we think about what we could have done better and take all those learning points into play as we embark on new projects.

I also want to emphasise that, in this project, it is somewhat unique and different as well, for the reasons I have set out earlier. And also because, as I have said, this is a multi-year project over two decades, for which at different junctures of this project, there are different objectives. That is why the agreement is structured this way – to put financial discipline, to put technical expertise at the forefront, at the start of the project, but, along the way, to give us the ability to step in to manage when we feel that we were able to do so. And that is exactly how this project was done.

But, obviously, these are learning points that we will take on board and in subsequent projects, whether it is PPP or otherwise, they will feature in the thinking as we embark on this with third parties.

Mr Deputy Speaker: Mr Sharael Taha.

Mr Sharael Taha (Pasir Ris-Punggol): I thank the Minister for the comprehensive statement. I believe many sportsmen and women and athletes in our national schools feel the excitement on the vision on the integrated sports precinct. The Minister mentioned that sports, such as football, tennis and track and field, would have world-class facilities at the new sports precinct. Is that list exhaustive?

How do we create equal opportunities for other sports, such as floorball, netball and even boxing, to benefit from this vision and investment in our sporting future? I say this because some in the fraternities, for instance, the netball fraternity, are worried that they have got to move out of their Kallang Netball Centre, a much beloved location with facilities for netball.

Mr Edwin Tong Chun Fai: I thank Mr Sharael Taha. It is not an exhaustive list and there are various other plans in the pipeline. But I mentioned these because you do need something specialised for these sports. You need a specialised facility to play tennis. Whereas if you have a hall that has a big space, it can be reconfigured for various purposes. As you know, the Indoor Stadium can be reconfigured for basketball. Floorball has taken place there in the OCBC Arena. We can also reconfigure it into one that deals with netball competitions as well. So, there are a number of options when you have these spaces. Whereas for cycling, football, tennis and some others, you will need a specialised facility to play that sport.

Having said that, the Member's point about netball, I understand that they are moving out because that area is part of the area that, from memory, will be developed into the Youth Hub in time to come. Netball, we have been in touch with them and will ensure that they will have a place that they are comfortable with and that they will be able to continue training and take care of the national players and their training needs as well.

Mr Deputy Speaker: I see two hands. We will have Mr Leong Mun Wai and we will end with Mr Pritam Singh.

Mr Leong Mun Wai: Thank you, Deputy Speaker. But actually I have to be given the right to ask because the Minister did not answer the question.

Mr Deputy Speaker: I am giving you the ability to ask, but not to elaborate in a speech.

Mr Leong Mun Wai: Thank you. Okay, I will ask a question. Can I ask the Minister why the Government is so generous to pay $193.7 million a year to the private consortium when he just mentioned also that the operating cost, after we take over, will be about $68 million?

Mr Edwin Tong Chun Fai: Two points. One, it is not about being generous, this is what the contract says. And the contractual agreement provides for the way in which the sums are calculated. Secondly, Mr Leong Mun Wai may not have heard me. But the $193.7 million is not just for operation and maintenance. It is for debt service as well. From my memory, the single largest portion of the $193.7 million goes towards debt service.

Mr Leong Mun Wai: Okay. Deputy Speaker, can I ask —

Mr Deputy Speaker: One more question and then we will go to the Leader of the Opposition.

Mr Leong Mun Wai: Can I ask the Minister what is the debt servicing amount inside the $193.7 million?

Mr Edwin Tong Chun Fai: The debt servicing amount, to my memory, is about 65% of the $193.7 million.

Mr Deputy Speaker: Mr Pritam Singh.

Mr Leong Mun Wai: Deputy Speaker, we have not got to the bottom of the thing.

Mr Deputy Speaker: Well, if you need to, you can file a specific Parliamentary Question. But to be fair to the Members, this is a topical issue —

Mr Leong Mun Wai: But what is the point of having the debate without getting to the bottom of the thing, having all kinds of questions? We must get to the bottom of the issue.

Mr Deputy Speaker: Mr Leong.

Mr Leong Mun Wai: I am asking and I do not think —

Mr Deputy Speaker: It is a point of order, Mr Leong. I have been very fair to you and the Chair has called Mr Pritam Singh. But before that, I think Leader of the House would like to have a word. So, I invite you to take your seat, Mr Leong.

Mr Leong Mun Wai: Okay. Thank you.

The Leader of the House (Ms Indranee Rajah): Mr Deputy Speaker, a point of order, what the Standing Orders require is for a Minister to answer a question that is put. In this case, Mr Leong Mun Wai had put a couple of questions. Mr Edwin Tong had answered the questions. I think the fact that Mr Leong does not understand the answer does not mean that the question has not been answered.

Mr Deputy Speaker: Mr Pritam Singh.

Mr Leong Mun Wai: Deputy Speaker, point of order, please. Can I answer the Leader? Because the Leader is accusing me of not understanding certain things.

Mr Deputy Speaker: Mr Leong, I invite you to ask Parliamentary Questions, which any Member is capable of doing, if you think that your questions have not been suitably answered by Minister Edwin Tong.

Mr Leong Mun Wai: But now, not only my question has not been suitably answered but the Leader is accusing me of something. She said I —

Mr Deputy Speaker: I am not sure that the Leader of the House is accusing you —

Mr Leong Mun Wai: She is accusing me that I do not understand the financials behind all the questions I am asking.

Mr Deputy Speaker: Mr Leong, I am going to say this as a final position to you. The Chair has been very fair. I think you have spoken on this issue three or four times in this debate alone and I asked you to give way to the Member whom I have just called, Mr Pritam Singh. Mr Singh.

Mr Pritam Singh (Aljunied): Thank you, Mr Deputy Speaker. Just one question for the Minister. In 2014, I asked a Parliamentary Question with regard to non-performance by SHPL. This was on the back of the Brazil-Japan football game when there were concerns about pitch quality and so forth. The then-Minister for MCCY confirmed that there was a provision for deductions in the event of non-performance or non-availability for use.

Can I just confirm that from 2014 to date, how much has the Government, by way of liquidated damages or whatever the clause in the PPP contract states, charged SHPL for non-performance?

Mr Edwin Tong Chun Fai: Mr Deputy Speaker, subject to checking this – and I am just answering Mr Singh based on memory – I believe the figure is around the order of $44 million for defects rectification, non-availability payments and so on. But as I have said, I will check the precise figure since he is asking for something from 2014 until, I take it, this point in time.

4.26 pm

Mr Deputy Speaker: Order. End of Ministerial Statement. Introduction of Government Bills. Minister for Home Affairs.