FEAR NOT, MY FRIENDS—OUR WHITE ELEPHANTS WON’T BE GOING HUNGRY NEXT YEAR

(NOTE: Postscript added 26 June 2016
and another on 28 June)

The trouble with socialist governments is that sooner or later they run out of other people’s money.

Former British Prime Minister Margaret Thatcher

An elephant is a mouse designed and built to Shire of York specifications.

Anon.

Maggie Thatcher was wrong.  It’s not only socialist governments that run out of other people’s money.  Sooner or later, all governments do, regardless of type, level or political composition.

Other people’s money is the only kind of money governments—politicians and bureaucrats—have to spend.  If they were spending their own money, they’d be more inclined to spend it carefully, even when lavishing it on themselves.

If you spend money, your supply of it dwindles away.  That’s a law of nature.  It’s a bit like the second law of thermodynamics applied to the world of finance. 

Luckily for overspending governments, there are simple remedies at hand.  One is simply to print more banknotes, a risky solution at best.  (When the US Federal Reserve does that, as it’s doing right now, it’s called ‘quantitative easing’.  Spare me.) 

Another is to stop or reduce spending on services that government provides. 

The first of those remedies isn’t available to local governments.  (I bet they wish it were.)  The second is available to them, but tends to provoke howls of protest from sections of the community that benefit most from those services—who are not necessarily the people who pay, or pay most, for them.

Government services at every level are usually more popular with folk who use them but don’t pay for them than with folk who pay for them but don’t use them.

As the saying goes, if you rob Peter to pay Paul you can always rely on Paul's support.

That’s a law of nature, too.  Human nature.

If Paul doesn’t get from government what he thinks he deserves, he can whip up a tidal wave of popular dismay that sweeps the offending government out of office.  Faced with that prospect, a government will usually respond by thrusting its claws more deeply into Peter’s pocket.

There are other, no less hazardous ways to replenish diminishing government funds.  The most obvious is through direct (poor old Peter) or indirect taxation.  Another is by borrowing, from your own citizens (including corporate citizens like banks) and investors overseas.

Running low on cash? Have to maintain or increase spending on a bloated public sector and people who can’t or won’t pay their own way? 

Easy!  Impose new or higher taxes (and charges for service) on those who can afford to pay them, at the same time building up a humungous deficit for your grandchildren to take care of.

This is the process that keeps the economy—local, national and global—bubbling merrily along.  The mantra is ‘Buy, spend, tax and borrow’, followed by ‘Buy, buy, buy, spend, spend, spend, tax, tax, tax and borrow more.’

No wonder astrology is big business on the Internet.   Everyone knows that sooner or later, S.S. Titanic is doomed to hit the iceberg.

I thought that would chase away your midwinter blues.  Now, to the point of this article.

Feeding the little white elephant

At the municipal level, taxes go by the name of rates.  We in York have seen for ourselves how unwise and extravagant spending decisions have resulted in swingeing rate increases over the last few years. 

Take the purchase of the Old Convent School, poetically christened ‘Chalkies’ by the vendors and by me as ‘the little white elephant’. 

That incomprehensible purchase was the work of Commissioner James Best.  A bumbling state government minister appointed him to masquerade as the shire council while doing his best to crush the spirit of dissent in York.

For the grossly inflated price of $625,000, the Shire got back a near-derelict building it had disposed of many years before to save the cost of maintaining it.  It didn’t have enough in the kitty to pay for the building, so it took out a loan (at interest) from Treasury Corporation, and put up the rates. 

There you have it—modern political economy in a nutshell.

The present council, guided no doubt by community contributions to the draft corporate business plan, must soon decide what to do with the little white elephant.  First, though, the building must be ‘brought up to code’, i.e. made safe for public use or perhaps habitation. 

That will cost money—our money.  The elephant will have to be fed, even though it’s doing nothing for us.

Then, if Council decides to sell the building, it will almost certainly do so on a sinking market, resulting in a considerable loss to the Shire—that’s to say, us— made up of the difference in the building’s value, the cost of repairs, the residue of the Treasury loan and every cent paid by way of interest.

Thank goodness somebody got something out of the deal.  Verily I say unto you, greater love hath no man than this, that he fork over lots of other people’s money to his friends.

What if Council decides not to sell Chalkies?  In that case, it will have to be turned to some profitable purpose. 

Here’s my suggestion:  convert the building into a high-class Gothic-style bordello catering for wealthy sado-masochists from Perth’s western suburbs.  Call it ‘Kiss of the Whip’ and hire somebody to run it under the nom-de-bonque Madam Lash.

That’s the only way we’ll get a reasonable return on our investment. 

And we can arrange overnight accommodation for bordello clients at the York Palace Hotel.

What about the big white elephant?  He needs feeding too

Assiduous readers of this blog will recall that at the May OCM I asked a question about the costs and benefits past and present of the YRCC, and received from Shire President Wallace what I can only describe as an anodyne, cavalier and intellectually vacuous reply. 

Somebody must have told him I’m a fool.  I was trying to keep that a secret.

Well, the past may be off-limits so far as the Shire is concerned, but the future is up for review.  (Don’t be daft, James, you can’t review something that hasn’t yet happened.)

All right, then: the Shire has published estimates of the operating costs of the centre for the coming financial year.  You can find them on the Shire website.

Let’s cut straight to the chase.  Taking Forrest Oval and the YRCC as a single enterprise, the Shire intends to spend a total of  $775,907 and expects to receive income amounting to $447,762, resulting in a net cost to ratepayers of $328,145. 

Peanuts.  What a relief.  Remember, fellow forelock-tuggers, it’s only money, and our money at that.  No reason to lose sleep.

But remember too that these are just operating costs, taking no account (so far as I can tell, I’m no accountant) of other costs like repayment of principal and interest on associated loans.

I haven’t included the cost of salaries ($34,684) and superannuation ($40,877), because I’m still trying to work out how that amount of salary can attract a superannuation liability, calculated at 12%, that is $6193 greater than itself.

If those estimates were to be included, that would raise the net cost of the enterprise next year to $403,706.

That’s the merest bagatelle compared, say, with the annual cost of Perth’s latest white elephants, the pricey Burswood Stadium ($1000 for a good seat, i.e. one from which you can see the game) and toxic, child-poisoning Elizabeth Quay.

Some good news…

On a positive note, you’ll be glad to learn that the bar in the convention centre is expected to make a profit (income $208,000; expenditure $191,914; profit $16,086).  So is the café/restaurant (income $140,000; expenditure, $137,732; profit $2,268).  

That’s a combined profit of $18,354.  Not a lot, but better than the proverbial boot in the nether regions.

(Still, as I said in a previous article, I have doubts about the morality of a local government running those kinds of facilities in competition, as in York, with privately owned munching and swigging stations.  I’m told that at least one senior DLGC bureaucrat has expressed similar misgivings.)

The gym is also expected to make a profit of $12,863 (income $22,880; expenditure $10,017).  Thank you, physical jerks.

…and some bad

Everything else at Forrest Oval will continue to run at a loss.  The Shire expects to spend a total of $219,694 on the convention centre, compared with an estimated income of $70,720 (including income from the gym).  That’s a net cost to ratepayers of $148,994.

I was under the impression that the expense of providing services for the benefit of sporting clubs would be to some extent defrayed by agreed contributions from the clubs.   

Apparently that was once the case, but is no longer so.  Council waived that requirement a couple of years ago.

I recall that in 2012 or thereabouts, the Shire took out a loan for the Bowls Club that the club agreed to repay at the rate of around $30,000 per year.  It appears the remaining balance of that debt was also waived. 

Next year, the Shire expects to spend $11,350 on turf maintenance for the bowling greens and to receive green fees of $8,320 (a net cost to ratepayers of $3,030).   Of course, the club wasn’t responsible for the sinkhole, so we’ve really no right to grumble.

A similar consideration arises in relation to the corrugated tennis courts, which will run at a loss of $4,268 after green fees of $8,320 are set off against $11,350 to be spent on turf maintenance.  (Try playing corrugated tennis!)

I suppose that the cost of re-turfing the bowling greens and tennis courts, and fixing the bowling green sinkhole, is included somewhere else in the estimates, as asset maintenance.

One of the clubs is doing really well at ratepayers’ expense.  Can you guess which one I mean?

Yes, you’re right.  It’s the Hockey Club, of which Shire President Wallace is a life member and former president. 

Next year, the Shire expects to spend $26,260 on oval maintenance and $9,739 on a second hockey field.  No income is expected, so that’s a net cost to ratepayers of $35,999. 

There must be something about the game that attracts good luck—maybe the balls, or the stick.

What was I saying about other people’s money?  Enough, already.  My brain hurts.

NB: Councillor Randell has been unable to contribute to this edition of the blog, but may make a cameo appearance in the next one.

POSTSCRIPT:  Balls or stick? York Hockey Club holds hand out for help in cash and kind

Our currently most successful sporting mendicant, the York Hockey Club, has its hand out for more of our money.

You can read all about the club’s application on pages 55 to 58 of the agenda for tomorrow’s ordinary council meeting. 

Notice, before your eyes glaze over as you read item SY069-06/16-1154505 Application for Support, that it records no disclosure of interest, despite Shire President Wallace’s long association with the club including a stint as its president and current status of life member.

That’s a bit of a conundrum, because when the application first came before Council in May, SP Wallace played no part in the decision to defer consideration of it until the June meeting.  However, he took part, along with CEO Martin, in a meeting on 9 May with representatives from the club to discuss the proposal that is the subject of the application.

The club has provided the Shire with a copy of its ‘financials’, to be circulated ‘as a confidential attachment under separate cover for Councillors’ information’.

Here we go again.  It’s our money the club is after.  Why should its financial situation remain a secret from the rest of us?  If it’s doing well, does it really need help from the Shire?  If it isn’t doing well, can we trust it to spend our money and use our resources wisely? 

And can we trust our councillors to make a rational decision in the interests of ratepayers rather than of people waving a begging bowl under their noses—especially when the president’s friends are holding the bowl?

The club is asking for support in cash and kind for its proposal to host the 2016 Great Southern Hockey Tournament in York, to be held on the weekend of 8 and 9 July.

It wants $1000 in cash to pay for ‘security services’ and ‘an in kind allocation’ of $7,751 to to cover the cost of various benefits and services for which the club might otherwise be charged by the Shire.

We should be wary of the sleight of hand involved in phrases like ‘in kind allocation’.  What the club is really asking is that Council waive fees and charges for a series of items, namely: additional playing field maintenance; provision of rubbish bins; venue hire; cleaning; hire of Forrest Oval; hire of the stadium for camping; and ‘camping on YRCC grounds’. 

On page 58 of the agenda, you can find estimates of the individual costs of those items.  The highest estimate is for camping on YRCC grounds ($2,550), while the lowest is $140 for hire of the YRCC as venue for a dinner on Saturday night.

Throw in the cost of security—for which the club would normally be responsible—and you have, in effect, a donation from the Shire to the York Hockey Club of $8,751.  I won’t describe it as a loss to the Shire, because what it is really is a ‘failure to gain’ rather than a loss—except for the $1000 cash for security, which however you look at it would be lifted ultimately from ratepayers’ pockets.

Can this donation be justified as conferring a benefit on the community as a whole? 

The Shire thinks so, on the grounds that the proposed event will attract ‘in excess of’ [in plain English: ‘more than’] ‘300 visitors… making use of local accommodation providers or local camping facilities’. 

But according to the Shire’s estimates, at least 100 of those visitors will be camping for nothing on YRCC grounds, and I’m betting the number of campers taking advantage of free accommodation there and elsewhere will be considerably greater than what’s envisaged by the Shire.

It seems likely, too, that not many of those visitors will come into town to eat breakfast, lunch or dinner when food will almost certainly be available on site—perhaps from their own supplies, or on sale from the club.

From a ratepayer’s point of view, the cost seems definite, the benefits nebulous.

And don’t expect those visitors to spend a fortune in the tavern.  The hockey club has 13 liquor licences per annum, granted en bloc every year.  My guess is that any profit resulting from the sale of alcoholic beverages will flow directly into the club’s coffers, not the Shire’s.

Okay, $8,751 isn’t a huge amount of money.  But there’s an issue of principle here.  No community group, however well connected, should consider itself entitled to a handout from municipal funds—our funds—without offering something tangible in return.

It troubles me that the hockey club, already doing quite well out of the Shire compared with other groups, doesn’t seem to have included in its application an offer to divert some part of any profits from the event—for example, from the sale of booze, soft drinks and grub—to its benefactors, the ratepayers of York.

I ask again: is it the balls or the stick that brings the club luck.  Or is it just brass neck?

[Disclosure: one of my nephews plays hockey at county level in England.  Further disclosure: he’s in my bad books at the moment because unlike his parents and siblings the treacherous fellow voted for Britain to remain in the EU.]

POSTPOSTSCRIPT:  At last night’s OCM, Council approved the ‘in kind’ request, but not the cash payment to the club of $1000 for security purposes.  So the club will have to pay for security from its own resources.

It would be churlish of me to object to Council’s decision (wouldn’t it?).

However, I was too hasty in claiming that such a decision would cost the Shire nothing, resulting merely in a ‘failure to gain’.  Shire staff will have to prepare the grounds for the event at an estimated cost to ratepayers of $1,200. See p. 58 of the agenda for last night’s meeting.  The Shire will also have to provide additional rubbish bins—estimated cost $261.

In response to recent comments on the blog critical of SP Wallace, I repeat here an earlier observation that he is a good chairman of meetings.  I’m not being patronising.  It’s the truth.

 

 The Splurj Mahal, York