21/03/2006 - 21:00

PCEC bail out plea just ain’t convention

21/03/2006 - 21:00

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Are the owners of the Perth Convention Exhibition Centre finding out something they should have known from the start? That running such a business is little tougher than most other infrastructure markets?

Are the owners of the Perth Convention Exhibition Centre finding out something they should have known from the start? That running such a business is little tougher than most other infrastructure markets?

Convention centres are subject to the vagaries of competition unlike almost any other infrastructure asset.

That’s because that market is fickle, mobile and knows its value. Big conventions have been around for a very long time and organisers generally know how to extract their pound of flesh. They honed their skills, packaged them up in a manual and handed them on to their successors long before our convention centre ever served a hot dinner.

Smaller conventions, con-ferences or events don’t need a dedicated centre, often a lifeless barn, to satisfy their needs.

Convention centres are in a highly competitive sector though there are mitigating factors for the host city such as population, its geographic positioning and other attractions.

Perth has none of this in any large, and therefore profitable, doses. Our population is small, we sit isolated from everything and the attractions we have are the gems to be discovered by the adventurous traveller, rather than iconic drawcards.

I am sure other tourism operators understand this, so why did we think a convention centre was going to change anything.

For business travellers, and that is what most conventioneers are, Western Australia is simply too far to travel if you don’t need to – no matter how much we hoped the centre would change things or how much the hype of pre-bookings convinced us that demand really was there.

And you don’t. Realistically, Perth is home to only a few industries that will ever hold a meaningfully big convention and value turning up here regularly. I can only think of oil and gas, mining and, perhaps, the odd branch of medical technology if we are lucky.

Throughout the region, convention centres have been popping up for years before we started ours. They are often in central locations, surrounded by big population and offer easy to reach tourist breaks we find hard to match.

Our isolation is our point of difference and we should celebrate it.

Instead, we built a convention centre and tried to compete with one hand behind our backs.

It would be silly enough if the government had done it. I could sympathise that it was done in the name of the public good to attract the tourist dollar.

But for private operators to start putting the cap out little more than two years after the convention centre was opened with $120 million or so of public assistance is somewhat surprising.

These are all pretty smart business people who must have done their sums before they got involved?

The convention centre was on the right track late last year pitching for the government to invest in tourism/hospitality infrastructure along the city’s Swan River foreshore as well as trying to get liquor licensing relaxed.

From what I recall, the government has pitched a new tourism advertising campaign, aimed at all tourists, not just conventioneers. Spending more in this regard won’t make Perth a convention capital.

And why should taxpayers, especially the rest of the business community, be asked to assist the convention centre if its business model isn’t working – especially in a resources boom when all the hotels are full already.

Press releasing their plight through selective leaks to The West Australian – at least that’s what it looks like – is a heavy handed way of asking to be rescued.

I’ll bet lots of people in business would like to be able to do that when their investment doesn’t pay off.

 

Let’s wait on taxes

Throwing in the abolition of stamp duty from mortgages is a great PR morsel – until the public realises that it’s only a tiny part of the usual taxes that often go with buying and selling a home.

As for business, well they won’t be thrown for a minute.

The tax cuts announced this week are not entirely trivial and the state government should be congratulated for continuing to attempt to address this area, the abolition of some stamp duties don’t go very far in addressing the biggest tax problem we have, the one that taxes businesses for employing people called payroll tax.

Two of the taxes cut – stamp duties on mortgages and non-real business property – are transactional taxes which only impact the decision to buy or sell. In a boom they are higher because more business and property change hands but when things cool down so do they.

So we are seeing the government cut a windfall tax at or after its peak.

Payroll tax is much more important because it is an ongoing cost every year and it is a barrier to employing people – which hurts all the time, not just in a boom.

I can only hope there’s a little more in store for us in the budget.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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