SUBMISSION - YRCC REVIEW DISCUSSION PAPER

 

The Chief Executive Officer

Shire of York

PO Box 22

York WA 6302

30 March 2017

By email to records@york.wa.gov.au

Submission—YRCC Review Discussion Paper

Let me begin by thanking the Shire for providing this opportunity for public comment on options for the future management of the YRCC.  In particular, I congratulate the author of the Shire’s review discussion paper on having comprehensively canvassed relevant issues and for having summarised important financial information that appears up to now to have been diligently withheld from the public gaze.

As you may know, I have written extensively on my blog The REAL Voice of York about a variety of issues pertaining to the origins, history and present situation of the YRCC.  While at times I may have been mistaken as to detail, the discussion paper has provided me with no reason to resile from the main thrust of my opinion. 

In short, I believe that the project was poorly conceived and designed, incompetently constructed, ineptly managed and from the beginning misrepresented as an enterprise that would result in beneficial outcomes for the York community as a whole but at no serious cost to ratepayers. 

Instead, the project has generally benefited only a minority of members of the community, especially those belonging to various sporting clubs, and the degree of that benefit is itself questionable.  It is at least arguable that from a social, self-reliance and fundraising standpoint, the clubs (with the possible exception of the Hockey Club, which seems to have done quite well out of the venture) may have been better off in their previous accommodation.

Cost

What is not arguable is that the YRCC has imposed a massive financial impost on ratepayers leading to huge rate hikes over several years that many ratepayers resent and are finding it hard to contend with.   It comes as no surprise to learn that as of February 2017 some 66% of current rates ($1,217,633) remain outstanding, along with 34% ($622,267) from previous years (see SY029-03-17, March OCM agenda, p.66).  

I read somewhere recently that the Wheatbelt is the most socially and economically impoverished region in WA.  These are certainly tough times for the people of York, who are required to pay rates of metropolitan dimensions in return for a much inferior level of public amenity than most metropolitan local governments are able to provide. 

Analysis of the Shire’s discussion paper reveals the great proportion of municipal funds that have been consumed by construction, repair and maintenance of the YRCC.  Meanwhile, roads and other projects have been sadly neglected, to the detriment both of residents and visitors to York.

Those developments have occurred despite the involvement of several expensive consultants (six according to the discussion paper, or seven counting the quantity surveyors Ralph Beattie Bosworth, referred to in the 2008 report of the ‘leisure consultancy’ A Balanced View as authors of a ‘concept plan’ for the project).  

Notwithstanding that involvement, the Shire seems never to have formally adopted a definitive business plan to guide and direct the management of the YRCC, or to have exercised restraint and commonsense in its approach to spending on the project.  

Optimism

Regretfully, I cannot share the optimistic view maintained in the discussion paper (p. 15) that the YRCC ‘has the potential to become a facility that the whole community can enjoy and be proud of and one that contributes to the economy’. 

While I agree—up to a point—that providing sporting and recreation facilities ‘is an investment in the health and well-being of a community’, I remain unconvinced that this particular ‘investment’ has contributed much to the physical, social or psychological welfare of more than a small fraction of York’s inhabitants, if indeed of those. 

On the contrary, I believe it has created anger and division in the community, imposed an unfair financial burden on the majority of ratepayers, and threatened, by including a tavern and restaurant among its facilities, the livelihood of local business people and their employees. 

I would venture a guess that the YRCC has played no small part in the decline of York over the past few years from a vibrant tourist attraction focussed mainly on the CBD to its present relatively drab and cheerless condition.

Above all, the discussion paper makes clear that the YRCC operates at a thumping loss, every cent of which is made up from the rates.   Health and wellbeing is one thing; systematic impoverishment of our community is quite another.

‘Convention Centre’

Significantly, the original master plan for the redevelopment of the Forrest Oval Precinct did not envisage the construction of a convention centre such as now purportedly exists.   The idea of having a convention centre was an afterthought, first put forward in a revised master plan cobbled together to meet the funding rules of the Country Local Government Fund.  The centre was supposed to seat 250 participants.  I think it would have difficulty accommodating fewer than half that number.

The discussion paper indicates that this facility could be ‘aggressively’ promoted both in the region and Perth as a locus for conferences, seminars and the like (conventions tend to be much bigger affairs). 

Perhaps it’s worth a try, but Perth is well provided with conference facilities, and our building as it stands is not an ideal conference environment.  The acoustics are poor, the air-conditioning problematic, the structure barn-like and uninviting, and the immediate proximity of a bar, while superficially attractive, could well pose an unwelcome distraction to participants and organisers alike.   

Perhaps the first two of those objections could be overcome—no doubt at the usual outlandish cost to ratepayers.

The Tavern and Restaurant/Café

A local government should not be operating a facility that takes custom from local business owners, who especially in these straitened times battle to make ends meet and provide employment. 

In the absence, as is usually the case these days, of a teeming flow of visitors to York, proprietors of cafés, pubs and restaurants have to rely to a great extent on local trade.  A facility like the tavern and restaurant is capable of making a big dent in the viability of their businesses.

This objection is compounded by the astonishing disclosure that ratepayers—including those business owners—are willy-nilly contributing to an operational subsidy that enables the facility in question to serve food and drink at discounted prices.  This has been justified on the basis that ‘full cost pricing’ will drive patrons away, forcing the Shire to increase the amount of the operational subsidy.  I invite the Shire to meditate on the topsy-turvy morality of that arrangement.

By what seems to me a process of creative accounting, the tavern and restaurant have been made in financial reports to show a small but persistent profit.  Unless I am greatly mistaken, this happy result is achieved to some extent by ignoring the full cost of employing staff. 

At present, the Shire employs a full-time Centre Manager on a scale of $72,361 to $78,128 and a part-time Catering Manager on a scale of $48,000 to $52,000 (figures taken from the advertisements for those positions, so they may be out of date).  I’m told that it also provides the Centre Manager with subsidised accommodation, the cost of which, if that is true, should be factored into the equation.  Casual staff are also employed at the facility.

On p.11, the discussion paper recommends that the Centre Manager should cease being responsible for bar management duties, which should then devolve to a new position, that of Bar Manager.  That, the paper argues, would leave the Centre Manager free ‘to attract bookings and develop programs’.  Maybe so, but some might regard such a step as an expensive move in support of a nebulous outcome—a move, moreover, that might reduce the profitability of the bar.

The discussion paper correctly observes (p. 7) that the principle of competitive neutrality applies only to local government businesses ‘where annual income exceeds $200,000’.  So far as I can tell, the tavern and restaurant do not generate that level of income, but that is hardly the point, especially given the unfair competitive advantage conferred on the enterprise by the Shire’s operating subsidy.

Options

My first thought on contemplating the options presented in the discussion paper was that something was missing.  Those are not the only options we should be asked to think about.

For example, we might consider, in the first instance, simply closing down the centre for a year or two pending the adoption of a detailed business plan based on sound principles and acceptable, as determined perhaps by plebiscite, to the whole community.  If nothing else, that would take some temporary pressure off the rates.  During that period, no money would be spent on upgrading or repairing sporting facilities, unless the sporting clubs themselves were to provide it. 

Which brings me to my most important point:  that whatever option is finally adopted, it should be governed as far as possible by the principle of ‘user pays’.  No operational subsidy from the rates, no upgrading of sporting facililities at ratepayers’ expense, no Shire funding of centre employees—only basic repair and maintenance of the fabric, and repayment of currently existing loan repayments, to be met from municipal funds.  Such an arrangement would best accord with assurances given to the people of York when the construction of the centre was first broached.

As for the options proposed in the discussion paper, I find it difficult to decide among them because they have not been costed, and information gleaned by the Shire from its visits to other recreation centres has not yet been made available.

Having said that, if I were forced to choose today, I would lean towards Option 2, the Sporting Association option, which effectively hands over responsibility for the centre and its facilities to an incorporated association formed from representatives of the sporting clubs.  

I would do so with this proviso, that while the Shire must retain responsibility for loan repayments and depreciation, it should not be responsible for ‘asset renewal’ to the extent of upgrading sporting facilities like tennis courts and bowling greens.  Such costs ought to be met from fundraising and where possible state and federal grants, not from the rates.

This arrangement, I believe, would encourage a degree of self-reliance and a proud sense of ownership conducive to the future success of the YRCC.

 If the sporting association decides, as would be its right, to continue with the tavern and restaurant, it should do so without any subsidy from the Shire that would give it an unfair competitive advantage over privately owned businesses.  The facility would have to survive on its own merits, perhaps with the help of volunteer workers.

In conclusion, I hope nobody will assume that I am hostile in principle to the provision by local governments of sporting and recreation facilities.  That is certainly not the case.  My argument is simply that ratepayers should always be assured that they are getting value for money, and that has not happened with regard to the YRCC.  

In my view, the money spent on the YRCC would have been better spent elsewhere, for example on the swimming pool, on cycle tracks, on the river banks and parks and on pleasant open spaces in various locations where families and their neighbours can play sport casually, run with their dogs and picnic or barbecue with friends. 

Those are facilities that almost everyone can enjoy at almost any time without having to be a member of a sporting organisation.  If a healthy and vibrant community is what you want—surely it’s what we all want—focussing on such facilities would be the best way forward.

James Plumridge

THAT’S THE WAY THE MONEY GOES…

More on the cost of the Splurj Mahal

As we all know only too well, getting information from the Shire of York about the actual cost of building, repairing and maintaining the YRCC has never been easy.  In fact, it’s been wellnigh impossible for years.

On page 10 of her February discussion paper, Ms Suzie Haslehurst, Executive Manager Corporate and Community Services, set out a table (Table 4) providing a breakdown of construction costs up to the end of calendar 2016.   

We should applaud her efforts, which must have been herculean.  She has shone a bright light into a dark and dismal corner of the Shire’s history.

As I pointed out last month, while it was a welcome novelty for those of us who take an interest in such matters, her table does not tell the whole story—not by any means. 

For example, it doesn’t include loan repayments—though she details those in Tables 5 and 6—and administrative costs, like the proportion of staff salaries and consumables relating to management of the centre project. 

Nor, unless I’ve missed something, does it specify the actual cost of labour and materials comprising the Shire’s physical contribution to the project, or include the many tens of thousands of dollars frittered away over the years on the ‘expert’ advice of expensive consultants.

Operating expenditure and revenue

However, Table 8 on page 13 of Ms Haslehurst’s paper goes some way to remedy those deficiencies.  Although understandably short on specificity, it’s quite an eye-opener.  

It breaks down operating expenditure and operating revenue from financial 2012/13 to the present, revealing annually a considerable and inexorable negative balance, or in layman’s language, a loss.

I prefer to use the word ‘loss’ rather than ‘negative balance’ or some similar weaselly circumlocution because doing so helps give the lie to the Shire’s early assurances—naïve or duplicitous, make up your own mind—that the operation of the YRCC would be governed by the ‘user pays’ principle and would cost ratepayers nothing. 

The clear implication of those assurances was that the centre would pay for itself or even perhaps operate at a profit.  It hasn’t done either yet, and without divine intervention, I doubt that it ever can or will.

For 2012/13, the net operating result was a loss of $1,128,038; for 2013/14, a loss of $1,311,945; for 2014/15, a loss of  $1,160,493; for 2015/16, a loss of $1,521,631; and for the financial year to date, $597,446.

That’s a total loss since 1 July 2012 of $5,719,553, or over the first four years (2012/13 to 2015/16) of $5,122,107.  The average annual loss over those four years is therefore $1,280,526.75.

But wait, there’s more…

As usual, that isn’t the whole story.  Table 8 concludes with a breakdown of the Shire’s capital program for the YRCC for the same period from mid-2012 to the present.   That expenditure was respectively $446,500; $281,218; $423,879; $305,675; and $52,728. 

After taking into account relatively insignificant accessions of capital income during the first three years, the total loss of $5,719,553 calculated previously balloons to $7,186,812.   Excluding the figure for the current year, that gives us $7,134,084, or an average loss per annum over the first four years of $1,783,521.

And there we all were, wondering why York’s rates are so unconscionably stratospheric (and likely to remain so into the foreseeable future).

That seems an awful lot of money to keep a small fraction of York’s minuscule population ‘healthy and vibrant’.  That phrase was reported on the other blog as having been used by Ms Haslehurst a while ago in an email to David Taylor to justify, as I recall, more spending on the YRCC. 

And don’t forget, a portion of that money is deployed to subsidise grub and grog provided by the tavern in competition with local privately owned munching and swigging stations.  So much for the principle of competitive neutrality!

A cheaper and more efficient way of helping people to stay healthy and vibrant is to get them walking, cycling and swimming while providing pleasant open spaces in various locations where families and their neighbours can play sport casually, run with their dogs and picnic or barbecue with friends.

The bottom line

For some arcane reason, table 8 sets out the final amounts—the ‘bottom line’, so to speak—under the rubric ‘Total Comprehensive Income’.  Go figure, if you’ll pardon the pun.  To my admittedly untutored eye, they look like total comprehensive losses.

If you want to give yourself a real shock, just add $7,186,812 to the $8,048,001 that Ms Haslehurst identified as the cost of construction in Table 4 on page 10 of her discussion paper. 

All right then, I’ll do it for you.  The result is—wait for it—$15,234,813. 

Savour that figure, roll it round on your tongue, and keep it in mind for when the next gargantuan rates bill slithers into your home.

YORK SPORTING CLUBS         York Ratepayer

 

HOW ESTIMATES OF POPULATION GROWTH WERE DOCTORED TO JUSTIFY THE CONSTRUCTION OF THE SPLURJ MAHAL

Early days

Until very recently, I thought that the story of York’s Great White Elephant, otherwise known as the Splurj Mahal or York Recreation and Convention Centre, began sometime in the mid- to late-noughties—say, around 2007.   I was wrong.

One of York’s elders, who would rather not be named, has kindly put me wise.  She told me that members of council and of various sporting clubs first mooted the idea as long ago as 1997.   

That was seven years before one of its most assiduous champions, Ray Hooper, sought asylum in York as a refugee from strife-torn Chittering and commenced his illustrious career as our shire’s CEO.

The idea surfaced again during the reign of Gavan Troy as the Shire’s commissioner—that is, between December 2004 and May 2006.  Apparently Mr. Troy gave it short shrift.  He pointed out that the Shire of York did not have the financial capacity to undertake and maintain a project of the kind envisaged by its proponents. 

As we now know only too well, Mr. Troy was right.  He is still right, whatever the Shire Council and administration might want to tell us to the contrary when they’ve finished gathering data from neighbouring shires.

 York’s population—an unbalanced view

Nothing daunted, after Mr. Troy had departed the idea’s movers and shakers got to work again.  In May 2008, Council adopted a ‘public open space strategy’, at the core of which was a proposal to redevelop the Forrest Oval precinct as a sport and recreation facility (at this stage, there was no mention of a convention centre). 

Council hired a ‘leisure consultancy’, A Balanced View (ABV), to prepare a ‘master plan’ for that redevelopment.   

In some respects, most notably with regard to the projected growth of York’s population over the ten years to 2018, the view presented by ABV fell somewhat short of being balanced.  

The consultancy made the mistake—if it was a mistake and not a deliberate ploy—of basing its projections on the Shire’s wildly optimistic expectation of a major increase in population following uptake of residential lots resulting from amendments to the local town planning scheme. 

Setting aside the WA Planning Commission’s ‘more modest’ population forecast of 4400 by 2021, ABV plumped for a figure of 6000 by 2018.   It’s now 2017, and it seems extremely unlikely to say the least that our current population of possibly less than 3500 will increase so dramatically over the next 12 months as to reach the ABV projection.

In 2006, the Census counted 3116 people living in York.   By 2011, the year of the following Census, the population had grown by 280 to 3396, representing an average yearly increase of 56 souls.  On that basis, it seems fair to suppose that York’s population in 2008 stood at around 3228 (3116 plus 112).

Simple arithmetic tells us that the difference between 6000 and 3228 is 2772.  So to arrive at a population of 6000 during the ten years from 2008 to 2018 would require an average annual population increase of 277 souls.

Pending the release of data from the 2016 Census, let’s assume that York’s current population has increased annually by 56 souls since 2008 and that my estimate for 2008 is correct.  That would yield a notional present population figure (calculated to the end of last year) of 3228 plus 448 (8 times 56), i.e. 3676.

(My guess is that that last figure overstates the situation by about 200, but never mind.)

If I’m right, we shall have to increase our population by 2484 or more over the next 12 months or so to reach the 6000 target.   Somehow I can't see that happening, not even if we prohibit the sale of condoms and local doctors stop prescribing the contraceptive pill.

So far as I know, there has been nothing in York’s history over the last half century to justify the degree of demographic optimism displayed by the Shire and ABV in 2008.   Yet I can find no indication that the master plan’s population projection was ever challenged in any of the planning documents that followed.

Short of a gold rush, the discovery of diamonds, or a government sponsored influx of Middle Eastern and African refugees (now there’s a thought, come on, Mr. Dutton, be a sport, give us those 'huddled masses yearning to be free'), there seems very little likelihood that York’s population will increase significantly in coming years.   God forbid, it may even decline, as the populations of country towns in WA have tended to do since the 1960s—perhaps even further back.

A grey invasion

Most of any increase in York’s population will probably—I dare say certainly— be made up of retired people aged 65 and over fleeing from the metro area in search of cheaper housing, bucolic tranquillity and a way of life defined by the absence of pushy millennials.  

Young families tend to migrate in search of employment opportunities, of which there are few in York at any given time.   Young people born and bred here will be tempted by education as well as employment opportunities to relocate in Perth, elsewhere in WA and interstate.

I think an increase in the proportion of elderly residents, resulting both from tree-changer migration and aging of settled inhabitants, will have serious implications for the economic fortunes of the Shire of York.  

Elderly people are usually less well off than younger residents of working age (younger residents with jobs, that is).   While often asset rich, many older folk are income poor.  They are likely to have difficulty paying their rates on time, and to have less money to spend in local shops.

They will also be less likely to make use of YRCC facilities and to be happy with having to pay the excessive rates that the Shire of York continues to inflict on us year after year when it should be seeking ways to reduce them.  It seems unconscionable, for example, that the same amount is charged on my property in York as on the much more valuable property of my wealthy barrister friend who lives in North Perth.

Incidentally, on page 84 of the master plan ABV notes that members of the York Bowling Club ‘may not wish to give up having [their] own clubroom facility to be part of a shared facility’.   On page 86, it makes a more emphatic comment regarding the Tennis Club:  ‘[The] Club is very happy with their current location and facilities’. 

So I wonder, what dark rhetorical arts did the Shire of York employ to persuade those good people that they would be better off in a sporting hub?  And what was in it for the Shire?