Opinion, Otago Daily Times, 29 Oct 2008
From a regional perspective, the new sports stadium makes little financial sense, argues Jolyon Manning.
There can be little doubt but that many good folk in Otago are crazy about football, but that does not lay a good foundation for employing the Otago Regional Council as a taxing authority. The latest move to name the project an Otago stadium focuses attention on the elected residential population catchment.
Southland interests who have made good investment choices in their own sports and recreational community amenities in recent years have shown little enthusiasm to back up with funding support of the proposed stadium.
North Otago communities are quite lukewarm, too. The wealthy community based on Queenstown and Wanaka now have more convenient air access to Christchurch than Dunedin. (Recent Queenstown Airport passenger numbers have now moved past those recorded at the Dunedin airport).
The critical mass attendance requirement for a regular series of major metropolitan events is well beyond the Otago and Southland population base. Auckland, Hamilton, Wellington and Christchurch all command much greater regional populations and recent indications from the New Zealand Rugby Football Union regards choice of venues for the forthcoming World Cup serve to highlight this factor, with Otago (and Southland) not within the present focus.
Rates proposed for Otago households lie well beyond that being extracted in this manner by the northern territorial local authorities.
So the stadium is now to be called the Otago stadium. Reminds one of other think big events in the past 50 years - the Clyde dam, the Port Chalmers container port, the Aramoana aluminium smelter, various as yet untapped hydro-electric schemes, the proposed wind farms and cement factory in North Otago and now the Otago Stadium.
Only this time, the proposed community investment is to be funded almost entirely from ratepayers and householders both directly and indirectly (Community Trust). Commercial contributors would not begin to embrace this project without such lavish ratepayer support.
Despite the millions already diverted towards this dream project, it is surely time to pull the plug and direct these energies to other more important Otago projects. We urgently need to strengthen the linkage between the Otago hinterland and city with added value and employment.
The $37.5 million package of ratepayer funded support for the proposed Dunedin stadium represents a major departure from the Otago Regional Council’s (ORC) primary mission as set out in its Annual and Long-Term Community Plans. Indeed this could be regarded as a form of taxation for purposes well outside the prescriptive mission of the ORC.
In view of the magnitude of this enforced gifting arrangement, I am astonished that the question of the ORC mission has not been subject to closer scrutiny and challenge. The council’s capital budget has been already stretched by the investment in a handsome waterfront administrative office project.
When I survey the much more modest ratepayer per capita claims that councils in the other metropolitan districts are making on their citizens’ behalf for such stadium assets, I wonder whether the rugby entertainment agenda has taken on far too much prominence in our provincial affairs and that we have lost our sense of balance.
The apparent support of many councillors and Otago people as a whole would seem to underline the great following rugby football has in Otago, mainly I suspect for armchair viewing on Sky Television. Yet the recent record of Otago footballers and the steadily declining attendances at Carisbrook for other than top-ranked international events, and financial dependence upon council funding do not augur well for future prospects.
In common with other regional councils, the ORC was gifted with the profitable Otago Port asset, which has softened the financial burden for Otago ratepayers in meeting the primary mission of the ORC.
Not that the port operations will necessarily continue to be as profitable as in recent times. Competition for the big container trades now being concentrated in fewer ports is still placing pressure on the profitability of Port Chalmers - supplemented by the recent upsurge in cruise ship business, although this, too, is subject to periodic fluctuation of demand.
I have closely followed the work of the Dunedin City Council’s Economic Development unit, which was established in the days when I was serving as a councillor. And I was a little disappointed when Malcom Farry departed the council, since he did a good job in chairing that committee for several years.
But the whole business of the World Cup in rugby football being staged in New Zealand has captured the enthusiasm of thousands of rugby supporters. And perhaps it was therefore not surprising that a rather unholy alliance of local political figures, including chairman Stephen Cairns and CEO Graeme Martin of the ORC, Mayor Peter Chin and CEO Jim Harland of the DCC, together with Malcom Farry, launched a radical proposal for a lavish indoor stadium to replace the ageing House of Pain Carisbrook venue but still employing its iconic brand and international fame. Now, were this bold new enterprise to be funded in the main by football enthusiasts, together with the support of commercial enterprises (notably the television people) who would stand to gain profits and significant sales and revenue, one could not quibble too much. After all, as mayor Sir Cliff Skeggs used to say to fellow councillors, we live today in a user-pays society. But to place the major funding burden (tax) on ratepayers to the quite unprecedented extent of $131 million is a different matter.
And in particular to employ the ORC as a conduit for no less than $37.5 million is in my view quite outrageous. This type of expenditure lies well beyond the previously affirmed mission statement of the ORC and was in no way foreshadowed by the ORC Long Term Council Community Plan for the decade 2006-16.
I think this represents unscrupulous manipulation behind the scenes of innocent ratepayers, many of whom like myself will be quite astonished at the extravagance of this venture, unequalled by the recent record of ratepayer funding of metropolitan stadiums elsewhere. Earlier funding of the Moana Pool, and the Dunedin Town Hall, let alone such externally funded assets as the Dunedin Railway Station did not call for excessive taxing of our ratepayers to meet vested interest objectives.
The Otago Forward group of district mayors, together with a few unelected members, has, over the past decade, looked at a number of projects of provincial-wide benefit but the stadium project is overly extravagant for taxpayers compared with other suggested development projects.
Why is it that there has been such a numbed response from ratepayers and especially those coming from the outlying rural districts? Admittedly there are a lot of rugby football folk in these parts but the likelihood of tens of thousands coming into town more than a few times a year is surely a remote prospect.
Of course this is only part of the funding story. When this extraordinary edifice is erected (if ever it is) the likely annual expenditure and depreciation charges will surely overwhelm income earned in high-profile events that will call for very large attendances to break even, let alone make a lasting profit.
I understand that the ORC has set a deadline early in February next year for the final go-ahead for the stadium. I urge the people of Otago to think very carefully before committing the ORC funding for this project. There are other more obvious avenues of spending within the mission statement that deserve much higher priority in the interests of us all.
Jolyon Manning is a retired chief executive of the former Otago Council Inc. He lives in Alexandra.
