Taxpayers get a net return of less than $30,000 a year from the lease of MyState Bank Arena to Larry Kestelman’s LK Group, a parliamentary committee has found.
The lease sets a base rent of $200,000 a year, but the state pays up to $175,000 a year back to the operator to support community access to the venue.
No percentage rent has been paid since the lease began, the Public Accounts Committee’s report found and the committee has recommended the lease be reviewed as soon as practicable.
Labor MP Jen Butler said a family living in Glenorchy would pay more in rent than Larry Kestelman paid for the arena.
“It doesn’t pass the pub test,” she said.
Sport Minister Nick Duigan defended the arrangement, saying the JackJumpers had been “transformative” for the state.
“Governments make a range of decisions for a range of reasons. It’s not always just based on the bottom dollar,” he said.
The committee also called on the government to pause negotiations to sell Crown land at Wilkinsons Point, where the arena sits, to LK Group, after more than six years of talks failed to produce a binding deal.
Committee chair Ruth Forrest said the inquiry had exposed “serious and long-standing failures” in the management of a significant public asset.
“There was no business case, no agreed master plan and no market testing and the Valuer-General’s advice on disclosing valuation information was disregarded,” she said.
The committee found the Valuer-General’s report was given to LK Group in October 2024 against his explicit advice, in a decision made by ministerial staff with no authority to direct public servants.
It found the proposed sale had not been tested through an open market process, which the Property Council of Australia told the inquiry would ordinarily apply to public land of this significance.
State Growth had estimated the cost of making the 15-hectare site development-ready at close to $100 million, while LK Group puts it at around half that, with no agreement on who pays.
“In February 2025, Tasmanians were told the government had agreed to sell this land. In reality there was only a non-binding term sheet,” Forrest said.
The committee asked the government to report to parliament on the negotiations by November 30 and to table any binding sale agreement in both houses at least 30 days before it is signed.
“Negotiations with LK Group have recommenced without any of these deficiencies being addressed,” Forrest said.
Duigan said the government remained committed to the project, which he described as a “massive opportunity” for housing in greater Hobart.
“We wanna see it move forward, happy to work through any issues PAC might have raised,” he said.
Labor said State Growth had advised the government to stop exclusive negotiations with LK Group and put the land to public tender, advice it said had been ignored.
Butler said the government had ignored expert advice “time and time again”.
“This is Tasmanian land, it’s owned by Tasmanians and we should have the best price paid for that land and it should be made available on an open market,” she said.
