Editorial: Airport new $1.6million deficit and 8,888 subsidised scones

Filed in Just In by July 26, 2023

THE deficit for the last financial year for the airport has blown out to -$1.6million. In the 2021-2022 financial year it was -$1.2million. In just two years there are -$2.8million in losses at the airport, on a project that was meant to make money.

The bottom line would have been even worse, if it weren’t for a government grant of $300,000 and that certainly isn’t something we can bank on going forward.

Special rate variation: For context, Council wants a special rate variation of 7.5%. Based on the rule of thumb that a 5% rate rise is roughly $500,000, the rate variation will only bring in roughly $750,000. It won’t even cover half the annual loss at the airport, much less adding in the saleyards, Campbell’s Corner or anything meaningful. I was the only Councillor to vote against the variation, and until or unless Council can prove it can manage money, ratepayers should not be hit in their hip pocket.

Crash landing projections

The highlights of the failed projections for last financial year at the airport were:

  • Revenue for Warbirds museum $207,409 less than predicted.
  • Expenditure for Warbirds museum $281,079 more than predicted.
  • Expenditure on airport development $439,063 more than predicted.
  • Capital projects $348,653 loss more than predicted.
  • They were out -$1.27 million just on those projections alone in one year.

Blind optimism continues

Undeterred by the financial facts, Council continue to wax lyrical about how wonderful it will all turn out, with buzzwords like “significant transformations”, “distinguished destination café”, leveraging “digital marketing” and encompassing a “marketing calendar”.

But there is still no business plan for the airport, to reality test how the losses will stop.

Subsidising scones

The costs and revenue for the Council café at the airport have finally been released and in shocking news, it is making a loss.

While revenue has increased over the 12-month period, losses have outstripped it, leaving a $53,331 deficit.

While I agree with the general manager Greg McDonald that there are some essential services provided by Council which need to be subsidised by ratepayers, I don’t agree a café in competition with local businesses is one of them.

At $6 a serving of scones with jam and cream at the café, ratepayers have effectively subsidised 8,888 scones in the last twelve months.

When Council put the café out to tender, there were no businesses who saw it as being financially viable, so instead because Council wanted a café there so very much, it decided to enter the café business. Not core Council business and not ok for Council to be in direct competition with local café owners struggling to make ends meet.

How are ratepayers best served by a Council subsidising scones, while neglecting its core functions? How about put the resources and staff time into fixing some roads!

Muswellbrook Shire Council were wise enough to close their café and it is time this Council take a long hard look at what the ratepayers want subsidised. Throwing more money after bad trying to make a café turn a profit is NOT Council core business. Put the time and resources into things Council need to do for residents.

If Council really has its heart set on selling coffees, well then come up with a plan where a local café owner can run it and the café costs ratepayers zero, zip, nada!

At the moment, a $53,331 loss is roughly equivalent to a 0.5% rate rise. Do you want to pay extra in your rates to serve subsidised scones?

Dysfunctional function centre

In March the airport committee pondered a future with an amazing take-off in visitor numbers and functions, discounting the financial realities as “harmful words”.  

So how are the functions going since March? In July to September there is a grand total of 6 functions booked, 3 of which are the airport committee meetings! And Council has floated, “the facility needs to have the ability to be more competitive with pricing for functions and events”. That sounds a lot like lowering prices to bring more people in and competing with other local venues. But only three functions in three months is not a viable business.

How many scones sold and functions held, are needed to generate enough revenue, to recover -$1.6million in annual losses and generate a profit? This ain’t a rhetorical question, this is the financial reality. And Council don’t have a business plan for the airport.

Airside operations cast-off

After the community airport meeting, many airport users expressed their concerns that their fears of airport closure were being realised. Council had promised a wildly optimistic plan that would cover the $300,000 airport operational costs, and while they tried in vain to get Council to see the risks and reality test their assumptions, they were ignored and ostracised.

When the general manager announced the airside infrastructure was going to be separated from the warbird museum, and each would have to survive on their own merits, their fears were realised. Most left the meeting despondent to be proved right, and no amount of optimistic, jargonistic thought bubbles could wish away the reality of the financials.

Figures wrong / right / needs different context

The general manager, Greg McDonald claimed in an airport meeting that the figures I published on the airport last time were incorrect (see: Editorial: Airport – oxygen is required!). A claim I predicted while compiling the editorial.

Council also claimed 2NM had aired incorrect figures, by interviewing me. But before the interview I had already sent the journalist a copy of the editorial, referencing each and every figure back to the specific pages in Council’s own documents. That way the journalist, Darren Cutrupi, was able to fact check against Council’s documents, prior to the interview.

I sent an email asking Council to specify which figures were incorrect. I received no answer. I asked again in the Corporate Services meeting and the general manager said he would send me the “correct” figures. Excellent! I then went on to explain each and every figure quoted in the editorial were sourced from Council’s own books and so I was keen to see what Council figures were wrong and what that meant for the overall airport project budget. I was then informed the figures were correct, but I had not contextualised them properly. Yeah, ok. I was told that the “correct context” would be sent, I’ve never received it.

And in all of the above, I can cite every Council figure again…

It might not be a pretty picture, but it’s an accurate picture…

Kind Regards,

Cr Elizabeth Flaherty

All of the above are my perspectives, opinions and beliefs as a Councillor on the Upper Hunter Shire Council, are my own, which may not (in fact probably don’t) reflect Council’s position, but which as an elected representative I am supported in law to freely express.

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