In the media: “Public spaces, private interests”

In the media: “Public spaces, private interests”

News Review, Sydney Morning Herald, Saturday 29 March 2014

The body managing prime harbour sites faces a funding crunch, writes Deborah Snow.

‘It’s not our task to make a lot of money.’  Geoff Bailey

When a man fell to his death after toppling over a Cockatoo Island cliff face last March, it capped what had been a horror stretch for the island’s owner, the Sydney Harbour Federation Trust.

For months there had been internal angst over another, less public disaster for the trust: the staging of what was meant to be the inaugural Cockatoo Island Film Festival in October 2012. On paper the idea looked brilliant. Proponents said the festival would draw tens of thousands of visitors to the former penal establishment and shipbuilding yard, now tourist attraction and culture hub, which sits in the Parramatta River west of the Harbour Bridge.

Trust chief Geoff Bailey wrote excitedly in his 2012 report that it would be a “cinematic extravaganza”, allowing patrons to gorge on all manner of filmic delights over five days. But several months later, the dream had turned to dust. Despite a heavily promoted opening night, paying visitors turned out to be less than a third of the number predicted. The trust lost heavily on trying to run its own ferry service for the festival. And the company which partnered with it to run the event collapsed, leaving the trust bearing total losses on the venture of nearly $600,000.

Some dissenters on the trust’s staff had tried to warn of the financial and reputational risks involved, former insiders say, but were seemingly ignored.

The couple behind the operating company, Allanah Zitserman and Stavros Kazantzidis, had previously run the smaller Dungog Film Festival, but had no experience of the island, and underestimated the logistical difficulties of getting people and supplies there. A creditor’s report blamed both sides for the fiasco, finding there was “very little documentation that shows any agreement behind the company and the trust in regard to the terms of the festival and sharing of costs and responsibilities”.

“It was a clash of cultures,” says one film industry source. “It was a fabulous idea, but how were you going to get those people on and off the island?”

Eighteen months later, a lingering  question remains for those trying to make sense of the trust’s latest moves: is there a link between the film festival failure, and a recent pitch to Chinese investors to avail themselves of prime leasehold spots in some of Sydney’s most well-known headland parks?

As Fairfax Media revealed a week ago, the trust was recently advertising – via the NSW Trade and Investment office in Shanghai – several sites on Middle and North Head for long lease and development. The online brochure talked glowingly of “unique development opportunities” for “the creative investor” and highlighted the spectacular Sydney Harbour outlooks and lush parkland surroundings as having potential for things like a boutique hotel.

The revelation caused uproar among those who insist the trust’s primary responsibilities are not commercial, but enhancing the amenity of the former Defence land it has custodianship of, with an emphasis on conserving environmental and heritage values.

The trust’s vision statement says its prime role is to “provide a lasting legacy for the people of Australia by helping to create the finest foreshore park in the world and provide places that will greatly enrich the cultural life of the city and the nation”. This sits in jarring contrast to the minutes of a trust meeting of June last year, which said “the trust will   be focusing on its core business – leasing – in the coming months”.

Set up by the Howard government in 2001 to take over the former defence sites around the harbour, the trust now has stewardship of Cockatoo Island, the Headland Park at Middle Head, the North Head sanctuary, Woolwich dock and parklands, Snapper Island, and sites at Watsons Bay and Neutral Bay.

Many of these require extensive remediation. But capital grants from the federal government ceased several years ago, putting increasing onus on the organisation to be self-funding. So far, it has done this from interest earned on the original government grants, supplemented by putting small-scale tenants in many of the ex-army buildings scattered around the former defence sites, and temporary event revenue.

Yet it is still feeling the squeeze. As the June minutes last year warned, “all efforts are being made to reduce the trust’s dependence on interest revenue as the trust’s cash reserves reduce”. Its bottom line was also hit by losing a healthy income from TV show The Biggest Loser which recently vacated a site it had been leasing at North Head.

This week a spokesman insisted the film festival losses and the exodus of the show had had “minimal effect” on the trust’s capacity to self-fund. The accounts suggest otherwise. Annual   surpluses went from $3.8 million in 2011, to $1.2 million in 2012 and just $49,000 last year. It seems no coincidence that the trust recently hired former investment banker Tim McKay to put more grunt into its leasing division.

Bailey says the trust has – for now – pulled the sites being marketed in China because “we had enough on our plate already”. He insists the trust is in a healthier financial position. “It’s not our task to make a lot of money – ideally we would be line-ball each year because the purpose of generating the revenue is to put it back into the sites,” he says.

But defenders of the original vision for the trust fear it is being forced to pursue ever more aggressive commercial leasing opportunities to keep itself running. Fierce local opposition to a proposal for an aged care home on Middle Head on trust land has been another sign of the mounting tension between the the body’s original goals, and its increasing financial constraints.

Bailey insists “we are not doing anything differently to what we have always done”. But Linda Bergin, president of the Headland Preservation Group, says the trust’s recent floating of a “greenfield” development opportunity for a boutique hotel at Middle Head is evidence to the contrary. “That plus aged care would be a completely inappropriate use for public parkland,” she says.

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