Time to cut losses and sell Ellerslie

Last updated 09:11 15/03/2014

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Martin van Beynen

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OPINION: Local government can be boring.

Most of it is about roads, rubbish, sewerage, water and community facilities.

This must be frustrating for ambitious councillors and far-reaching council management who want to see the city progress and who dream about making things happen.

A local-body career spent ensuring things are running smoothly is not going to win kudos or leave a lasting mark on the city.

So you can't blame councillors and staff for wanting to put ratepayer money into exciting ventures which are supposed to bring visitors and income to the city and make it a more interesting and lively place.

Councillors exhibiting this tendency never seem to remind themselves that entrepreneurial activity by councils is seldom successful. The annals of local government are strewn with the carcasses of failed speculative ventures.

Neither do they seem to ask themselves another very pertinent question: If this was my money, would I be prepared to plough it into this?

In the excitement to spend ratepayer money, councillors who advise caution and emphasise the risks are called naysayers and enemies of progress. Words like vibrant, profitable, tourism and forward thinking are thrown around as though they have just been discovered.

The supporters of the project will have recourse to a glowing report talking about the benefits to the city and all the wonderful downstream financial impacts.

Inevitably things turn sour. When the venture fails to live up to its billing, councillors then have great difficulty in cutting losses and extracting the city from the debacle.

Do they throw good money after bad or do they put in more money in the hope the venture will pay dividends in the long run?

And even if it does lose money is that such a bad thing when you look at all the peripheral benefits?

In other words, a quagmire which councillors, who are not known for their business savvy, are not equipped to deal with.

Yes, they have expert staff to advise them. But if these advisers were such geniuses in business, they would not be working for a council.

And so we have the Ellerslie Flower Show.

Despite its latest major overhaul, the show this year attracted just 1000 more people this year than last.

In 2009, the show's first year in Christchurch, 75,000 tickets were sold and the show made more than $220,000 profit.

By 2010, ticket sales had dropped to 55,000 and the show lost $88,000. This year ticket sales were around 45,000.

The council bought the business for about $3m and must each year pick up the losses.

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I am not a keen gardener but I can see the virtues of gardening - especially vegetable gardening - and appreciate why it fascinates many.

Therefore a garden show for a city like Christchurch is a good idea and is no doubt a draw for visitors.

But why should the ratepayer fund the exercise? The main beneficiaries of special events in Christchurch are the hospitality and accommodation providers.

If they are so keen on special events to bring people into the city, let them fund them.

Don't forget the Ellerslie Flower Show was supposed to be a self-supporting business. It's not like the Buskers Festival which was born and bred in Christchurch and was destined to lose money.

Private enterprise is a reluctant investor in special events because they are unpredictable, risky and tend to turn into black holes. But where business people fear to tread you can usually find a local-body politician.

That is not to say ratepayers' money should never be spent on an entrepreneurial venture.

Never say never but if you are going to risk ratepayer money it must be for a very good reason

The city council has plenty of good businesses - the port, the airport, Orion - but they are licences to print money and a great investment for the city. If the opportunity to buy similar sorts of businesses arose, the city should definitely look at them.

Christchurch aspires to be a thriving city with a big chunk of skilled, well-heeled citizens and prosperous businesses. One day it might be in a position to take speculative punts.

But in its rebuilding, debt-laden state this council needs to cut it losses and sell the flower show for what it can get. And hopefully a lesson has been learned and alarm bells will ring when someone wants to be innovative and entrepreneurial with our money.

- The Press


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