A mysteriously costly field kitchen is a tiny part of the billions that the federal government spends on immigration detention, write Ben Butler, Rory Callinan and Georgia Wilkins.
No one seems to know why it’s so expensive to run a kitchen on Manus Island, a jungle-covered island off the north coast of Papua New Guinea where Australia operates a controversial, violence-plagued immigration detention centre.
But expensive it certainly is. Since October 2012, when the Department of Immigration reopened the centre, the government has paid Toll Holdings $3.5 million for kitchen facilities.
Exactly what the department got for the money also isn’t clear – Toll declined to comment and on Friday the department had yet to respond to questions.
But a photo posted to the department’s website shows that two months after Manus Island reopened, the kitchen was housed in a tent. A contractor who works for the detention centre said he heard that a small but good kitchen was in place last year, before the government announced it would upgrade the centre. When the centre was upgraded the old kitchen was removed, he said.
Whatever it paid for, the $3.5 million is only a tiny fraction of the billions the federal government spends on the immigration detention system, which now supports an ecosystem of contractors, sub-contractors, workers and suppliers.
Among them four big service companies – G4S, Serco, Transfield and Toll – have between them reaped contracts worth more than $5.6 billion from the Department of Immigration.
”The policy of indefinite detention is a very expensive policy,” said Greg Barton, the Herb Feith Research Professor for the Study of
Indonesia at Monash University.
”It’s expensive to put people in jail and to keep them there. From the point of view of those being detained, the conditions seem very harsh and the services very modest, but it still costs a lot of money.”
While Transfield and Toll are listed on the Australian exchange, G4S and Serco are British-based multinationals. This week, Transfield staged a coup at G4S’ expense by seizing from it the contract to run Manus Island. It was a much-needed victory for Transfield, which has been struggling to transform itself after taking heavy financial hits from its mining business.
For $1.22 billion, Transfield adds responsibility for Manus Island to its existing job running the government’s other offshore camp, in the tiny South Pacific island nation of Nauru.
The deal has the potential to transform Transfield. Investors certainly liked it, pushing company shares up 24.5 per cent when it was announced on Monday.
But it also carries hefty risks. A fortnight ago, an Iranian asylum seeker held at Manus Island was beaten to death and dozens more detainees were injured in violence PNG police allege was perpetrated by locally employed G4S guards.
Others have implicated PNG police in the rampage, which is under investigation by the Immigration Department.
The new contract is also four times the size of Transfield’s previous deal to run the Nauru centre, prompting questions from analysts this week as to whether the company has the financial capacity to do the job.
Transfield chief executive Graeme Hunt is adamant: ”We went into this having assessed the risk across all areas,” he said.
”We have to deliver our service in line with what we have been asked to do and we believe we’re good at it and that will assist the situation. The other thing we need to do is manage the stakeholders, and we have a very good track record of effectively engaging with the local community.
”We have been asked questions about will we just basically front up and change the logo and nothing else will change. Absolutely not.”
A Business Day analysis of contract notes posted to the federal government’s AusTender website shows a clear hierarchy among the four players.
While Toll has the multimillion-dollar kitchen and a key role flying planes between detention centres and the mainland, the $68.7 million that the Australian-listed company has billed since 2008 puts it in the last spot.
Last July the company paid to fly Scott Morrison, who was at the time the opposition’s immigration spokesman, and two News Corporation journalists to Nauru to announce new policies.
Morrison is now Immigration Minister but the jaunt appears to have done Toll no favours: the company said it had not since won any additional immigration contracts.
Serco, which runs the department’s network of detention centres within Australia, is the clear market leader, winning more than $3.2 billion in contracts since December 2009.
But this week’s contract upheaval moves Transfield to second place, from a total of about $350 million in immigration work since 2010 to about $1.5 billion.
G4S, which has reaped $828 million since 2003, was pushed down to third spot.
It’s not just Transfield whose fortunes have been turned around by the torrent of government money pouring into Manus Island.
Despite allegations islanders took part in attacking the rioters, the local community has generally supported the detention centre, which has brought jobs and improved facilities.
The most obvious sign of change is the large football field-sized patch of swamp that has been cleared and levelled for the proposed permanent detention centre, being built in the island’s capital, Lorengau.
Contractors regularly overbook tourist accommodation in Lorengau and several hire car businesses have sprung up, some charging close to $450 a day for new Toyota LandCruisers or similar vehicles.
Older islanders, some of whom have land rights on properties where detention centre facilities have been built, have been awarded lucrative contracts to help with construction and maintenance.
And instead of young islanders having to leave the island to find employment, they are now working at the detention centre, many having found jobs with the Salvation Army and others with G4S or caterer Eurest.
Hunt said Transfield will continue to employ locals.
While he said Transfield won the new work because of its good work running Nauru, G4S regional managing director for the southern Pacific, Darren Boyd, said ”the decision to change providers on Manus Island was not based on performance”.
The loss of the contract is the latest in a series of blows for G4S, which has been under fire for bungling security at the 2012 London Olympics and, with fellow London-listed multinational Serco, failing to fulfil a contract to find housing for asylum seekers and allegedly overcharging for electronic tags.
In a report released in November, the British National Audit Office revealed G4S paid zero corporation tax in Britain in 2012. The same year the Australian Taxation Office paid G4S’ local arm a cash refund of about $2.2 million.
Boyd said G4S paid tax where it earned its income, ”in full accordance with the taxation laws of the countries concerned”.
He said a ”significant proportion” of the company’s network of subsidiaries in tax havens including the British Virgin Islands, the Cayman Islands, the Netherlands Antilles and Luxembourg were ”normal operating or holding companies”.
Transfield’s offshore detention contract appears much fatter than the deal struck by G4S.
Under the old Transfield and G4S contracts, the government was paying about $39 million a month to run the two centres.
The new contract increases that figure to about $61 million a month, or about $900 a day per prisoner – more than it costs to rent a harbour view suite at the luxury Shangri-La Hotel in Sydney.