Heart costs on rise
Ongoing costs for the Shire of Augusta-Margaret River’s redeveloped cultural centre look likely to skyrocket, with a new report warning councillors of increased costs for the next three-to-five years.
It comes as Shire chiefs acknowledge the Heart venue still does not have an endorsed business plan, feedback from some community groups shows pushback against high user costs, and employee numbers for the centre grow.
The new information provided to councillors last week showed the “premature opening” of the Heart to meet commitments after the Shire took over management from volunteer-backed organisation Arts Margaret River meant staff levels were underestimated, with closures due to COVID-19 adding to the burden.
The report noted transition to the Shire-run facility would normally require a business and marketing strategy developed six-to-12 months ahead, which “was not possible due to the late change in management”.
An increase in full-time equivalent staff numbers also added to the Shire’s overall budget position.
“A slightly larger and more flexible team is required than initially forecast, in order to complete preparations whilst simultaneously delivering events,” the Shire report said.
Last year, the Times reported concerns Shire management would trigger escalating cost pressures on ratepayers, with the first year projected to cost about $1.152 million, inflated by one-off set-up costs.
But the new revised data forecast a $1.7 million running cost for 2020-21, which included further capital expenditure.
“The ability to offset costs through these strategies (outlined in the report) will take two-to-three years to fully determine as the Heart establishes its position and reputation in the market,” the report said.
“Council should therefore anticipate that the 2020-21 financial year budget forecast is likely to remain similar for the first three-to-five years.”
Including general manager Nicky Hansen, who started in February just before COVID-19, the Heart has eight employees equating to a total of 5.4 full-time positions, up from four full-time positions identified last year.
Predicted staff costs of $406,700 did not include a separate budget for up to 10 casual positions.
Staffing budgets should be reviewed in 12-18 months, the report said.
The Shire last week also said 27 applications were received as a result of a recent volunteer drive, with a paid part-time co-ordinator involved.
Critics previously said it would be an uphill battle for the Heart to secure business events, despite the previous council approving additions to the original redevelopment plans catering to conferences after lobbying from the local tourism and business sector.
“In the absence of current event activity, and the potential impact of touring cancellations on future calendar bookings, there is insufficient data to accurately define costs and project revenues,” the report said.
“It may be 12-18 months before accurate predictions can be made.”
The report also warned “conference attraction is a three-to-five-year process, and although there are attractive elements to the facility and the region, the facility cannot rely solely on conferencing income to balance the budget”.
The pandemic “also added to the pressure, undoing a lot of the progress that had been made with event organisers”.
But the council report noted WA’s closed borders could provide a windfall in the corporate events sector. One conference was confirmed so far for December.
More details on business events would follow the completion of a South West Development Commission-led business events strategy.
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