Don't Speak Ill of the Dead?

Look, I could have this all wrong. But it seems to me that there is something really screwy about the finances of the Perth Convention Centre. Perhaps not screwy. Perhaps just an attempt to pull the wool over our eyes...

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Thinking Lateral
Need new thinking for your own problems? email nick leth at gmail dot com

The government kicked in millions of dollars to help build a convention centre. Part of the agreement with the builder was that the centre -- with a number of associated parts -- would be managed by the one management group. Having the one manager would allow the entire convention complex to be managed to its best advantage, for the benefit of Perth.

Well, the ink was hardly dry on the agreement before the builder reneged. Here's a bit of short-term profit, they must have thought, We can flog off the bits and pieces and get away with a very quick profit. So the builder built -- with substantial government funding -- and escaped with a substantial profit.

Now there are at least three managers: for the convention centre, for the associated hotel, for the car parking. The hotel managers would benefit from conventions -- but there are plenty of other sources of hotel guests. The car park managers know that parking in the city is at a premium -- if anything, a convention will take away parking spaces from the regulars.

Only the convention centre managers really need to have conventions. So what do they do to protect themselves? They sub-lease!

Yes, The Wylie Group have bought the right to manage the convention centre. They "manage" the centre by selling that management right to another business, Spotless. Wylie don't care whether or not the convention centre attracts conventions, their profits come from Spotless, who must pay whether or not there is any business in the convention centre.

We're left with one group -- Spotless -- who want conventions to be held at the convention centre. And lots of groups who don't really care, one way or the other.

And when business is bad...

When business is bad -- when there are not enough conventions being held at the Perth Convention Centre -- who cares?

The builder doesn't care, they have already taken their profits. The hotel manager doesn't care, they can attract guests away from other hotels in Perth. The car park managers don't care, they know that they can sell central city parking any day of the week, with or without conventions. The "head lease" owners -- Wylie -- don't care, their profits are secured by their contracts with Spotless.

When there are no conventions at the convention centre, only Spotless stand to make a loss.

This is where it gets really weird

Spotless are about to make a loss. Possibly several million dollars a year, for many years. They have willingly -- I assume! -- signed an agreement with The Wylie Group, it is that agreement which is causing the financial loss. So who do Spotless call on to cover their losses? Why, the government, of course!

Spotless have signed an agreement with Wylie. Spotless will lose money, Wylie will make a profit. Why should the government pay?! This is a commercial arrangement. Perhaps Spotless were ripped off -- but not by the government. Perhaps Spotless will make a bit less overall profit in the coming years -- why should the government prop up the profits of a commercial enterprise?

Why should the government interfere in a commercial arrangement between two businesses? Wylie and Spotless came to an arrangement, why not let them manage it for themselves? Why have Spotless gone directly to the government, demanding government money?

Even more interesting: Why does The West Australian not comment on this obvious anomaly? The West can be quite quick to spot the taint of WA Inc raising its head, of government efforts to provide money -- tax-payers money -- to commercial enterprises. Why is there no comment on this one?

Could it be because the founder of The Wylie Group has recently died?

Perhaps he was a great man, The West certainly seemed to think so. Perhaps he had great commercial acumen, the deal with Spotless certainly indicates a ruthlessly successful approach to making a profit. Does this allow The Wylie Group to quietly escape the spotlight while Spotless are crying poor to the government? Is The West politely refraining from pointing out the clear self interest in the deal that is managed by the commercial remains of the recently dead?

Why does it matter? Remember, the state government kicked in a heap of money for the building. That's our tax-payers money. The builder took a profit and ran. Two out of three managers -- of the hotel and the car park -- are presumably making profits and keeping quiet. The third manager has protected the profits from its "head lease" by sub-leasing to Spotless.

Only Spotless could be making a loss. So what? Don't they know what they're doing? If they have an issue with their contract with The Wylie Group -- let them take it up with Wylie. Please don't even consider using our money bailing Spotless out of their own bad deal. Let them sort it out with Wylie, business to business.

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Independent Thinking
Independent analysis of your problems by Agamedes Consulting. Support for your thought: email nick leth at gmail dot com