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Residents challenge “haste, secrecy” and public funding for movie museum

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The Mt Victoria Residents Association has this week challenged the absence of an open tender process for the Wellington City Council’s plan to spend $134m on a building to house a conference centre and movie museum. It also states its opposition to public funding for the two projects.

In a submission on the council’s annual plan, the association states:

“The Convention centre and movie museum is the main cause of the very large increase in capital spending over what was agreed to nine months ago and has major implications for other projects, especially the Town Hall.

“We support in principle the proposal for a film museum in central Wellington to increase the range of visitor attractions in the city, but not its public funding.

“From the beginning we have strongly opposed funding a new single-purpose convention centre and deplored the decision not to allow Council-owned venues to compete with it. It is contrary to the Council’s objective to increase the use of existing assets – Positively Wellington Venues (PWV) has a suite of flexible, multi-purpose and closely-located venues which can adequately cater for most conferences and has created a good niche conference market for Wellington locally, nationally and internationally.

“In addition, there will be few benefits to most Wellington citizens, apart from mostly casual, low-paid hospitality jobs, and the growth in large conferences may not materialise in light of major government and local investments in Auckland, Christchurch and Queenstown.

“We have serious concerns regarding the entire project including:

“The latest proposal has been stitched up in haste and in secret with no presentation of viable options, which is contrary to democratic processes of good local government.

“There is no evidence of any attempt to find private developers for what are essentially private operations; WCC simply states its preference to develop it itself. This is markedly different from what we were told in the 2015-25 Long Term Plan ie. the film museum and convention centre would be developed by partnerships with local and central government, businesses and other parts of the community.

“There has been no tender process for the development and construction aspects of the project – Willis Bond and Studio Pacific have been handed the project and presumably are able to charge what they wish.

“The costs and risks to Wellington’s taxpayers have escalated exponentially compared with the original proposal to spend a maximum of $4 million per year on the convention centre. The latest project’s primary object is to grow Wellington’s economy and so any benefits will be mostly private but the ratepayers must pay a very large amount for it and bear all the construction, ownership and operating risks.

“It is not core business for local government to be in the business of building and owning convention centres, hotels, or apartment/commercial buildings (except for social housing).

“There has never been any proper public consultation about whether Wellingtonians agree that existing PWV facilities, particularly the Town Hall and Michael Fowler Centre, not compete with a new convention centre. This has been another deal made in secret.

“While the convention centre is expected to generate 67 new events per year, 291 events will be ‘displaced’ from current Wellington facilities which already have the capacity for them – there is no under-supply of venues. Although the business case does not say, presumably most of the 291 events will be raided from PWV’s venues. The consequence is current venues may largely become white elephants – the costs of this are not included in the business case and WCC has not otherwise revealed the revenue lost to the Council.

“This project should not be pursued further despite the Council’s having already spent $23 million, $5.3 million over budget (although page 47 of the 2014-15 Annual Report states it was under-spent and has no explanation).

“We also call for an external review by independent experts of the combined proposal so the public can be assured of a balanced and professional assessment of the proposal. This should be followed by extensive public consultation.

“Otherwise there is a risk of the Auditor-General needing to intervene to examine the absence of an open tender process and the inadequate analysis.”

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33 comments:

  1. Ben, 12. May 2016, 14:45

    Absolutely agree with all of the above.
    Everything this council does seems to be shrouded in secrecy and lacks transparent public consultation or consideration.
    The latest round of submissions to council was a case on point. It bordered on being a farce as, at times, they struggled to get a quorum of councillors. This must have been so disheartening for the members of public who had spent time and effort preparing submissions and presentations with an expectation they would be given serious consideration. It is time these councillors were held to account.

     
  2. Pauline, 12. May 2016, 15:07

    I was at the hearing both days this week and Monday was OK as most of the councillors were there the whole time. But on Tuesday from 1-4 pm they were scratching to get a quorum as most of the councillors drifted in and out. As well as the excellent Mt Victoria submission there were other great presentations and one can only hope those absent councillors will be reading the written submissions before they vote on the consultation.

     
  3. Ian Apperley, 12. May 2016, 16:03

    As an aside, does anyone know how to complain to and engage the Auditor General from a resident perspective?

     
  4. CPH, 12. May 2016, 16:29

    Unfortunately the Mount Victoria people are wrong about conference centres not being core business for local government. A great many of the conference centres in the country are run by councils and have been for many years, such as in Napier, Hamilton and others up and down the country.

    The fact of the matter is that New Zealand is too small for the vast majority of conference centres to make any money, as the conferences are small and too far away from the rest of the world to attract large numbers of overseas conferences and attendees. As a result, many venues struggle to break even, let alone pay the capital costs on expensive facilities, and this means that the private sector isn’t interested in running them.

    However conference centres are very good at bringing extra visitors into a city, especially out of season – many conferences are run during the winter months. This helps keep the hotels and restaurants and bars full at a quiet time of the year, which is generally why councils own conference centres and/or subsidise their operations, so what the Wellington City Council is doing isn’t different or unique.

    The rest of the submission makes good sense, particularly around the cannibalisation of existing venues and why ratepayers are paying such a huge subsidy to the hospitality sector, but this sort of blanket statement about it not being core council business allows them to ignore the otherwise good points being made by the Mount Victoria people.

     
  5. Esjay, 12. May 2016, 17:55

    I support the Mt Victoria folk. The original process of the Convention Centre went belly up prior to the LTP, then out of the blue came this alternative at $134 million and a steam roller justification to proceed with the proposal. No one has discussed the effects of the competition that would impact on the pick and choose convention customers. Then of course there is the financial impact on the ratepayer. We also have to back up the airport runway extension if it should proceed and on top of that is the Movie Museum. If only my budget would allow me to spend up large and allow the bank to worry about my committments.

     
  6. CC, 12. May 2016, 22:38

    CPH, do you make a habit of emphatically promulgating assertions then shooting yourself in both feet? Obviously, if there is insufficient demand for conference facilities, then they are not needed! To then argue that because there is insufficient demand for private sector funded conference centres, ratepayers should provide them is delusional. The statement that ratepayer provided facilities are advantageous because “this helps keep the hotels and restaurants and bars full at a quiet time of the year…” is using both hyperbole and making an irrational argument to justify the nonsensical premise that it is the responsibility of ratepayers to sustain the profits of the hospitality industry during the quiet times. It is irrational for ratepayers to subsidise low paid service industry employment at a local level while the bulk of the income goes off-shore to multi-national hotel chains. It seems you have the makings of a Wellington City Councillor. Have you put your name forward yet as there are a few incumbents who need replacing.

     
  7. Marion Leader, 13. May 2016, 6:51

    I agree with CC. The other thing that is terribly wrong is the way in which the present Council is REDUCING the business rates at the cost of INCREASING the share of rates being paid by residents.
    Where the filling of hotel-rooms and business eateries is identified as the benefit (as with this convention centre) then the extra rates burden should fall on CBD businesses. Apart from anything else this might focus the minds of greedy people who rely on being so close to the officers and elected members of the current Council.

     
  8. N, 13. May 2016, 9:36

    Hi Ian, Anyone can raise concerns with the OAG, however they will only investigate if they feel is it appropriate, and of course within the scope of their work. You can check the information on this page: http://oag.govt.nz/contact-us/raising-concerns
    Good luck!

     
  9. Pauline, 13. May 2016, 10:04

    An article by Patrick Smellie in The Listener on 26th February last year quoted Texan academic Heyward T Sanders as saying “how limited and elusive the returns from convention centre investments have proven to be in the USA, despite a kind of arms race among cities to build more of them”. What research has the council done to show how many conventions with 1200 participants are being held every year in New Zealand? There’s been a mention of 67 new conference events being attracted to Wellington – that is more than one a week. Where have such figures come from?

     
  10. Ben, 13. May 2016, 12:18

    Councillors need reminding of their core function. According to Internal Affairs the purpose of local government is –
    To enable democratic local decision-making and action by, and on behalf of, communities
    To meet the current and future needs of communities for good-quality local infrastructure, local public services and performance of regulatory functions in a way that is most cost-effective for households and businesses.
    (Local Government Act 2002, section 10 (1)).

     
  11. CPH, 13. May 2016, 12:31

    CC, do you make a habit of making ridiculous assertions about industries that you clearly don’t understand? Had you spent any time at all finding out about the conference industry, you would have discovered that most conferences are indeed held in the off-season, and that all the attendees do indeed spend money in hotels and restaurants and bars at a time of the year when regular tourists are pretty thin on the ground … and that’s the reason many councils own and (sometimes) operate conference centres. Whether this is a good investment or not is a decision for local ratepayers who elect the councillors who invest in these things, and in quite a few centres the locals have obviously decided that it’s worth doing.
    Plus your assertion that the bulk of income from the hospitality industry goes offshore is just spectacularly wrong. Sure there are multinational hotel operators but the vast majority of bars and restaurants and tourist companies and practically all of the smaller hotels and motels are locally owned. There’s also nothing wrong with working in the hospitality industry – even if the wages don’t meet the high standards of chardonnay socialists, they put food on the table and pay the rent for a large number of young people, many of whom are studying to get into better careers. Don’t forget that hospitality and tourism are the first jobs that plenty of NZers have had.
    But for all that, I agree with Marion Leader. The benefits from a convention centre occur in the hospitality and tourism sectors so they should be the ones subsidising it, not the general ratepayers.

     
  12. CC, 13. May 2016, 12:55

    Marion Leader – the catch with rates paid by the business sector is that they are mythical! Every time you use the services of the business sector, their share of the rates is levied on you in much the same way as GST, then forwarded to the Council on your behalf. No doubt, there is also an indirect margin applied by the service provider when you make your payment. Worse still, a significant number of the business community and the Council seem to believe the hype about how much the sector ‘contributes’ in rates and claim dubious rights as a consequence. A current example is the Council’s gutless response today in respect of paying the ‘living wage’ after an empty legal treat by the Business Chamber of Commerce.

     
  13. Rumpole, 13. May 2016, 14:21

    Well done Mt Victoria Residents Association. The Auditor-General should be called in immediately to investigate this abuse of ratepayers’ rights. Cheaper than going to court.

     
  14. Traveller, 13. May 2016, 15:23

    Did Willis Bond have to tender for all their waterfront contracts?

     
  15. Esjay, 13. May 2016, 17:52

    CPH – There are Convention Centres in Cairns, Gold Coast, Sydney, Melbourne and Adelaide in Australia. Perhaps you can provide a reason why those who organise a convention would prefer to attend Wellington rather than those in Australia, Auckland or Queenstown.

     
  16. Hel, 13. May 2016, 19:21

    Brilliant proposal and can’t wait until the movie museum opens. As for convention centres, of course they are core business of local government, most large convention centres throughout NZ and for that matter internationally are publicly owned. I took the opportunity to participate in the public consultation process and found the material available was pretty comprehensive and supported by a wide range of expert advice. The proposal I read indicated that PWV would operate the new convention centre alongside their other venues. To think that Wellington can maintain its niche conference business in the face of significant investment in Auckland etc is an uninformed view.

     
  17. CC, 13. May 2016, 22:38

    Jeez Hel – we have water leaks all over Wellington, busted sewerage pipes, stormwater scoured out Council reserves, over a thousand volunteers battling to restore the environment, problems with decaying infrastructure and even a need for unpaid workers to service the hospitality requirements of cruise ship tourists. Meanwhile you think subsidising a facility for Peter Jackson and Weta’s movie collections and a loss making conference centre are core Council priorities. The concept of a ‘brilliant proposal’ might be motivated by an opportunity for personal capital gain, subsidised by ratepayers, rather than an objective assessment of the needs of a functioning city. The sad thing is that too many of our Councillors share such questionable values.

     
  18. City Lad, 14. May 2016, 10:28

    CC sums up the foolishness of borrowing $134m for yet another grand scheme while so much essential maintenance remains to be done. And paying in secret for the land at hugely inflated prices means ratepayers are looking forward to October. They will vote accordingly and appoint more responsible representatives.

     
  19. CPH, 14. May 2016, 13:16

    Esjay – I don’t think Wellington can or does compete with any of the centres you name, or even that it will compete very well with Queenstown and Christchurch and Auckland. We don’t have the facilities or the direct flights to really tap into the international conference market, which means that we’re competing for local conferences. That’s why its important to not overcapitalise and build a conference centre that’s the wrong scale, because if you build it they won’t necessarily come!

     
  20. PCGM, 14. May 2016, 13:39

    CC: I’m not sure where you get your strange ideas about issues around Wellington’s water supply, sewerage and stormwater. For starters, this is managed not by WCC but by Wellington Water, which is is owned by the five councils of the region – Wellington, Hutt, Upper Hutt and Porirua city councils along with Greater Wellington Regional Council: http://wellingtonwater.co.nz/about-us/vision-and-mission/

    Wellington Water has a long-term asset management approach that spans decades to which WCC is fully signed up. What’s more, the Wellington City Council is cited around the public sector as having world-class asset lifecycle management that’s driven by high quality data analytics – you can read the case study here: http://harmonic.co.nz/case-studies/wellington-city-council/

    Wellington city and the region as a whole has very good service levels and asset management for the “three waters” (potable water, stormwater and waste water), so your statement that somehow there is a problem with “decaying infrastructure” and “busted sewerage pipes” is simply wrong. There are plenty of problems in Wellington, but this isn’t one of them.

     
  21. CC, 14. May 2016, 17:10

    Obviously PCGM doesn’t get out and about much.

     
  22. PCGM, 14. May 2016, 21:36

    CC: My apologies for upsetting your preconceptions with facts.

     
  23. Build it now!, 14. May 2016, 23:18

    Cph/esjay – how about doing some research?. Wellington has the second highest numbers of conference delegates, delegate nights, and large conferences in New Zealand behind Auckland. It’s attractive for domestic and international conferences because it’s the capital. That is something that differentiates it from Auckland and Christchurch and the gold coast and Queenstown (why would they go to Christchurch over Wellington?) The government attracts a significant amount of delegate business – most conferences to do with public policy where ministers or officials are to attend. Also Wellington is home to 3 universities which also drive a lot of conference traffic.

    Also Wellington is well connected with Australia and hosts many delegates from across the Tasman. And it might surprise you that the Queenstown conference market is small and boutique. Pretty expensive place to hold a conference and you are asking everyone to travel there with no local population. Delegates tend to conference in Auckland or Wellington and then do a side trip to Queenstown afterwards.

    Wellington is a fantastic conference city with close airport to city, everything close within the cbd and great food to support.

     
  24. Polly, 14. May 2016, 23:54

    Yes Build it Now: there are many conferences held in Wellington and there are plenty of venues – Victoria University earlier this year with 200+ and recently Save the Children (in the James Cook) and again not 1200.

     
  25. City Lad, 15. May 2016, 14:01

    If it’s that good, private enterprise would have snapped up the land and built the conference centre and movie museum. Willis Bond & Co has been chosen by the council (without public tender) to build the project. Ratepayers are the sole developer taking all the risk. The council has forgotten their Zealandia disaster.

     
  26. Build it now!, 15. May 2016, 15:30

    City lad – great idea!. Let’s do what they have done in Auckland and have a casino and convention centre. Sky City would jump at the chance of having a casino in Wellington.

     
  27. Esjay, 15. May 2016, 17:49

    PCGM – If our pipes are in such a great state, then please explain why cross connections into sewage pipes create a significant overflow of partially treated sewage through the Long Outfall into Lyall Bay?

     
  28. PCGM, 15. May 2016, 20:34

    Essay – I said that Wellington Water’s network and asset management approach was amongst the best in the country, not that the system was perfect. After all, I was responding to CC’s contention that Wellington was beset with “decaying infrastructure”, which the facts simply don’t support.

    On this particular issue, have you called Wellington Water with your concerns, and if so, what have they told you?

     
  29. City Lad, 15. May 2016, 20:36

    Casinos are for losers. That’s why Auckland should keep theirs. Wellingtonians don’t want a casino. Mayor Blumsky didn’t either.

     
  30. Build it now!, 15. May 2016, 21:28

    City lad – and that’s the point. If the city doesn’t want a casino type convention centre then they have to find another way to do it. You can’t have it both ways.

     
  31. CPH, 16. May 2016, 9:54

    Build it now! – I bow to your superior knowledge of the conference market. I thought that Wellington’s conferences were mainly from NZ but obviously my information was out of date. But still, is it necessary to spend $134 million even for the international conferences?

     
  32. Helen S, 16. May 2016, 11:10

    We need neither a casino nor another conference center.

     
  33. Rumpole, 16. May 2016, 22:15

    I agree with Helen S. We need a casino like a hole in the head. A convention centre bleeding ratepayers is nonsensical too.