WARNING: This is a long read. This article is for the interest those who have been asking questions of the Batemans Bay Aquatic, Arts and Leisure Centre for the past five years.
To be blunt: the article is also to provide background for would-be Council candidates in the upcoming Local Government elections on December 4th 2021. The following is essential reading for any new councilor (or any current councillor wishing to run again). My advice to both is that if you are unable to get your head around the following then it might be best if you withdraw your intent to stand as the community doesn't need a councillor who would prefer to be briefed by staff rather than read, research and comprehend issues to enable them to challenge staff and best represent their community. Eurobodalla Council has finally released financial documents on the operating costs and projected losses expected of the Batemans Bay Pavilion project. Council advised that these documents would not be available. The decision came from Council’s internal review resulting in a decision to refuse access to the Operating Costs document and Financial modelling, due to an overriding public interest against its disclosure.
Council advised you that access to the Operating Costs document and Financial modelling information would remain refused under section 8 of the GIPA Act, until the overriding public interest against its disclosure was no longer relevant.
Now that the contract for the management and operation of the Bay Pavilions has now been signed and the contractor has now been appointed, the previous overriding public interest against disclosure of the Operating Costs document and Financial modelling is no longer relevant. Alarm bells have been ringing for some time over the financing of the Batemans Bay Regional Aquatic, Arts and Leisure Centre. The $70 million facility has received $51 million in Federal and State grants with the $19 million difference made up of loans, sales of council assets and internal fund movements. The first alarm bells were raised when the public applied scrutiny to the 2017 Otium Business Case that had unrealistic claims of visitation that over-estimated income while the projected operation costs were barely transparent. When this was brought to Council's attention the community were advised that there was an UPDATED business case, and that that document was "Commercial in Confidence" and not publicly available. Council pressed on with the project and, as required, submitted documentation to the Office of Local Government (OLG) to assist in the Capital Expenditure Review of the project. Note the letter below sent by Council to the OLG on March 23rd 2020:
Note that Council advises the OLG that the documents have "the potential to unduly impact our tenders are":
Quantity Surveyor estimates
Updated business case When pressured by the OLG to provide all documentation Council then emails Friday, 1 May 2020 1:24 PM saying:
Note that the documents that were withheld are attached within the email and are named: BBRAALC operating costs April 2020 and SGS extract So what was so sensitive that the OLG, the Public and the Audit and Risk Committee of Council were not allowed to read? It is important at this point to remind readers that Council says the following in regards to their Business Case
Source Firstly: Council clearly state "The final report prepared by Otium Planning Group was submitted as a supporting document to Council’s grant funding application" That final report referred to is the 2017 MACKAY PARK, BATEMANS BAY REGIONAL AQUATIC & ARTS/ CULTURAL PRECINCT - BUSINESS CASE FINAL DRAFT REPORT
FACT: NSW Sports did not approve the Grant Application made for the Aquatic Centre. Members of the public sought a release of the Grant Application for scrutiny and were blocked by Eurobodalla Council (as an unnamed Third Party). After several attempts and an NSW Civil and Administrative Tribunal (NCAT) directive to Council to desist the heavily redacted application was released that revealed Council had used the Otium Business Case contrary to advice from Otium, given that the preferred option and, therefore, financial modelling had not been approved by Council and finalised, nor had there been a transparent assessment of the economic impact of the facility on the community.
Source NOTE: the above makes reference to the "secret document" Council refused to release until this week : The SGS extract Council were hellbent on not having this application revealed to the public and did all they could to block it. Next (March 26th 2018) we learn that the local Member and the Premier make an announcement that the State Government would provide $26 million to the project, made up of $18 million for the aquatic centre, and $8 million for the arts and cultural facility. As it turned out the $8 million became embroiled in Pork Barreling revelations. On the 15th August 2018 the Hon. LYNDA VOLTZ asked a question without notice directed to the Minister for Resources, Minister for Energy and Utilities, and Minister for the Arts. The Hon. LYNDA VOLTZ: Given the Premier and the member for Bega jointly announced on 26 March that they would provide $26 million for a new indoor aquatic and cultural centre at Batemans Bay consisting of $18 million for the aquatic centre and $8 million for the arts and cultural facility, where will the $8 million for the arts and cultural component be drawn from?"
The Hon. DON HARWIN: As I informed the House yesterday, people should be aware that the Regional Cultural Fund round two is open. I imagine this project would be eligible but I need to check if there is an existing funding agreement.
The Hon. DON HARWIN (Minister for Resources, Minister for Energy and Utilities, and Minister for the Arts) (15:31): I may have covered this question in my answer yesterday but, if I did not, it is planned that round two announcements will be made before the end of this calendar year. I cannot be more specific at this stage.
The Hon. Peter Primrose: It is supposed to be a competitive process and you are announcing it already. What was revealed in Parliament was that the $8 million for the Batemans Bay Mackay Park under Round Two was announced six months before that Round opened without application. In October 2018, much to no-ones surprise, the Mackay Park theatre was Number 1 on the list, with the highest grant awarded in the state. In leaked documents obtained by the ABC it turns out however that in the expert opinion of the grants review panel the Mackay Park project came in at number 72. Documents obtained by the ABC under freedom of information laws reveal the Bega project was overlooked in favour of an $8 million investment to help build the Mackay Park Aquatic, Arts and Cultural Centre. ABC reported that "of the six-person Regional Cultural Fund assessors who made the recommendations about where the money should be sent, four were independent members from the state's arts sector. An executive from the State Government agency Create NSW and a representative from the Department of Premier and Cabinet were also on the panel.
They met for three days in late September 2018, then extended their meeting for a fourth day so each of the 116 successful projects — with a total value of $135 million — could be ranked. The assessors acknowledged only $47 million was available but ranked all the eligible projects so as to allow some ministerial discretion. Of the 159 applications, seven were deemed ineligible because they did not meet the complex entry criteria. Another 35 projects were not recommended for funding for reasons including concerns they lacked community support or were not a genuine arts and cultural project." Of interest in the above is that the the Mackay Park project had already been approved and announced six months earlier in March 2018. That being the case the "complex entry criteria" would not have been an issue, nor evidence of financial sustainability. The Eurobodalla grant application had been given The Nod that it would be in Round Two, six months before the panel met to review the 159 applications. The bottom line was that the project had received $26 million without any financial scrutiny, nor any need of reportability. It was an unconditional gift. The Federal Government then stepped in and provided a $25 million grant. Initially the process was transparent in that Council had to apply. It was made clear that if they made it past Stage One they would be required to submit a full business case for a value for money assessment. The projects approved for funding were also required to reflect the focus of the program to build on a community's existing strengths, re-invigorate industries and tap into regional tourism potential. What is known in regards to the Federal Grant was that the business plan adopted by Council in August 2017 WAS NOT a full business plan and clearly advised it was NOT to be used for the purpose of grant applications. Between October 2018 and April 2019 the application for the $25m was assessed and found to comply.
In an email to FOI@infrastructure.gov.au on 31st October 2018 by The Beagle: "The Eurobodalla Shire Council, in having been successful in Round one of the Regional Growth Grants will now be required to prepare a Full Business Case. In a telephone call to your office it was confirmed that candidates are provided a template to assist with that Full Business Case.
For the purpose of news, so as to ascertain if the Full Business Case takes into consideration the ongoing affordability of ratepayers to support such new infrastructure without it becoming a financial burden, I request a copy of the default template to establish what criteria is measured under a Full Business Case and to determine if there is due diligence paid to the proven affordability of such a grant without it becoming a financial risk requiring either a rate increase or a removal of services.
As the Full Business Case template will have no information on it whatsoever I would not consider it impinging on any commercial in confidence. Once the Eurobodalla Council provide their Full Business Case I will be seeking a copy of that document as well."
The formal request for that application has been refused by Council so the application details and business case presented remain unseen.
NOTE: November 2019 The Australian National Audit Office found and revealed that the assessment processes for a separate round of Regional Jobs and Investment Packages (that included Gilmore) were "not to the standard required by the grants administration framework" and that "there was insufficient evidence that each of the more than 60 individuals that undertook the assessments received adequate training. The Mackay Park was awarded $25 million, as per the statement by The Honourable Michael McCormack MP Deputy Prime Minister Minister for Infrastructure, Transport and Regional Development Senator the Honourable Bridget McKenzie Minister for Regional Services Minister for Sport Minister for Local Government and Decentralisation on the 2nd of April 2019 That statement said in part: $25.0 million towards the construction of the Regional Aquatic, Arts and Leisure Precinct at Mackay Park in the Eurobodalla Shire that will improve participation in cultural and community activities by local residents, create local jobs and cater for the 1.3 million visitors to the region each year. This project is expected to increase the number of overnight stays in the region by 25 per cent; NOTE: while the joint statement is from McCormack and McKenzie it is NOT the reported Sports Rorts however the Auditor General has noted that the handling of the previous round of the Regional Growth Fund "Ineligible applications were identified but not all of those identified were removed from further consideration. Various other eligibility requirements relating to the content of applications were not consistently applied."
Note that the requirement in October 2018 of the Federal Regional Growth Fund was for "a full business case for a value for money assessment." This means that the Bay Pavilions business case has not been fully financially scrutinised by any party (including Council's own Audit and Risk Committee) and that the only party to had seen the full suite of business documents (up until this week) is the OLG. Yet Council states in their Frequently Asked Questions:
So what were Council hiding?
The ever so secret SGS extract (also known as the Quantity Surveyor estimates) looks at the facility over the next 25 years. The figures speculate that, over 25 years, the Project and Maintenance Costs will be $1.9 million per year with a projected operating revenue of $1.88 million. It is important to realise at this point that these figures are for a $46.1 million complex that projected 354 visitors to the aquatic centre each and every day of the year. (See Otium Business Case page 30)
Above: From a job creation perspective:
- During construction (Years 1 to 2), NSW will benefit from the creation of 184 FTE jobs (51
direct and 133 indirect).
- During ongoing operations (Year 3 onwards), an annual average of 36 FTE jobs will be
supported (17 directly supported, 19 indirectly supported).
For those interested in dissecting the above it is necessary to also look at the other document that was withheld: BBRAALC operating costs April 2020
If we dissect the above it is clear that the annual Net Operating Profit /Loss added to Depreciation Estimate indicates that the facility will run at a loss $2.5 million per year on average. Of particular interest is the revelation that Council has identified Operating Expense Savings from the closure of the Batemans Bay Community Centre at $15,000 per year with a further annual depreciation saving of $14,300. Council states in their Frequently Asked Questions:
Imagine if Council was to sell the Batemans Bay Community Centre, as they clearly intend. Even if they sold it for $2 million and saved a further $29,300 on Operating costs and depreciation that would only cover 1 year of the Bay Pavilion financial demands. At Council's meeting on Tuesday May 28th, 2019, Councillor Anthony Mayne submitted a petition with over 1000 signatures indicating concerns for the future of the Batemans Bay Community Centre putting forward a motion that a decision on the Batemans Bay Community Centre be deferred until the capital and operation costs for the Batemans Bay Regional Aquatic, Arts and Leisure Centre have been determined. The General Manager, Catherine Dale stated that Council had not made a decision to sell the existing BBCC saying instead that it had been identified that it could possibly be sold or leased, to offset construction and/or ongoing operational costs associated with the proposed Batemans Bay Aquatics, Arts and Leisure Centre BBAALC. The General Manager also advised in writing that she "cannot give you any long term assurance on the future of the Batemans Bay Community Centre (BBCC), other than that which I have previously provided – namely that Council has not made any long term decisions," adding "The BBCC will need to remain open to the community until the new Aquatic, Arts and Leisure Centre (AALC) is constructed and operational. Maintaining the existing facility would duplicate functions and add operational costs while removing potential sale or lease options, including the revenue arising from such. This would have the effect of inadvertently increasing the operational cost of the AALC and deprive that centre of a potential source of income, therefore compromising its affordability, including the theatre." Eurobodalla Shire Council has since voted to lease out the Batemans Bay Community Centre from July 1, 2021 to SEARMS Aboriginal Housing Corporation. The decision was made at the council meeting on Tuesday, December 8, 2020. Councillors in favour were Rob Pollock, Mayor Liz Innes, Maureen Nathan, Jack Tait, Lindsay Brown and James Thomson. Those against were Phil Constable, Pat McGinlay and Anthony Mayne. Because the Batemans Bay Community Centre is Classified as Operational the Council is at liberty to sell the building without public consultation. Council recently sold the Moruya Racecourse for $1.2 million advising that that money would also be going towards the $19 million shortfall of the Bay Pavilion project. What next to help fill the coffers and help to keep the doors of the new pavilion open? Even if Council does run at an annual loss it is understood that the facility management contract ensures the contractor receives an agreed fee, irrespective of the takings at the turnstyles. Other revenues? Council will be selling the land at Dalmeny and it is understood that Council staff have already had informal preliminary discussions with a prospective lessee / buyer for the Moruya Airport. In the financial year 2020-21 the net cost to the ratepayer of operating Moruya Airport was $258,869. The last time Council considered selling the airport (20 years ago) it was suggested then a figure of $7 million. In recent years the airport has received in excess of $10 million in upgrades to its runway, facilities and ancillaries making it an attractive purchase to anyone wishing to expand into the South East region given the Master Plan that includes a air-residence development and further expansion of the runway to accommodate larger commercial aircraft. In the words of the Mayor "The community knows what the community knows". Today we know just a little more.