ACT government looks to formalise community in Canberra Raiders contract

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Re: ACT government looks to formalise community in Canberra Raiders contract

Post by yurithe1 »

greeneyed wrote: April 18, 2019, 3:34 pm To be honest, the incentives for events provided by State and Territory governments are probably a complete waste of taxpayers' money. They shift economic activity from one location to another but they create a deadweight loss on the economy (because it has an efficiency cost - that is, it subsidises location of an economic activity and consumption of the output in a place where it wouldn't have otherwise taken place, and would most efficiently happen elsewhere)...

...The cost benefit studies that government events bodies do aren't really worth the paper they're written on... because they treat the ACT economy as "closed" along the borders of the ACT.
That's an interesting supposition, Greeneyed, and one which would be valid if it weren't for the fact that money does tend to stay in various locations be they town/city, region, State/Territory or nation unless you have people or goods moving around between them. Basically, these are pretty near to being closed economies. For a location to prosper, it depends on the importation of "foreign" money, whether that's through exports or tourism.

Hence, we do not have a global economy where pockets of poverty are eradicated. Nor do we really have a united national economy. Otherwise, there would be no need for State leaders and others to come to Canberra with their hands out for some GST dough. At the State level, we risk country towns shutting up shop or simply stagnating because the economic opportunities aren't there.

For example, back in 1985, I lived in Goulburn which had a population of about 20,000. In 1986, I moved to Canberra and worked for the Wagga Daily Advertiser. Wagga's population was about 25,000. Wagga has since grown to become NSW's largest inland town with a population of 64,000. Goulburn is at 22,000. Wagga goes out of its way to attract events. Goulburn doesn't. There's other factors at work as well, such as the opening of the Goulburn by-pass in 1986 (IIRC) almost eliminating it as a stop-over point. However, let's face it, they're both towns that people don't go out of their way to visit unless they have sufficient reason and are practically closed regional economies.

Although the ACT has a lot of tourist attractions (and at some point everyone does a school excursion to here) that's only enough to keep the local economy level-pegging from one year to the next. These big, regular events are what bring in extra foreign money and help the economy generate and sustain jobs to keep people here, etc, etc. If the population diminishes, then the tax burden on those left increases or we accept that various local government services are going to have to be curtailed or disapppear. That, incidentally, is why I become white hot under the collar every time the LNP talks about shifting a government agency away from Canberra to some country town where the National's primary vote is on life support.
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Re: ACT government looks to formalise community in Canberra Raiders contract

Post by greeneyed »

The provision of "real" public goods is different issue. There is actually a strong economic justification for locating key public service departments alongside the seat of government, the parliament - but others need to be spread geographically.

Public goods have different characteristics, and have different spatial dimensions. You can have very local public goods (park benches, local roads), regional public goods (arguably health, education) and national public goods (defence, national security). Public good theory suggests that it makes most sense to take decisions on local public goods by local government - and raise the taxes from those who benefit. Similarly at regional and national level for those public goods. The only reason the States have to ask for money from the federal government is that taxes are disproportionately raised at the national level.

Attracting private sector events to particular locations is a very different thing to all that... because there is either no, or negligible, public good element to doing so.

The Australian economy has very mobile capital and human resources. That's why it doesn't make sense to consider the Australian states and territories as closed economies. There are no barriers to the flow of goods and services, people (workers), there is a single financial system.

All that state and territory events "corporations" do is relocate private activity from one place to another. And it is because the subsidies principally ensures the private sector activity takes place in one place rather than another, we can't have a more productive Australian economy by doing do. There can't be any additional economic activity generated overall. There are costs, however - to efficiency (because the subsidy distorts decisions on what would actually be the most efficient location). In addition, taxpayers must fund the subsidies. So they don't have the money in their pockets - and economic activity that would otherwise be generated by them spending those dollars doesn't take place. The economy has to be worse off overall.

The different fortunes of Wagga and Goulburn probably have more to do with their locations than anything. Goulburn is under an hour away from Canberra, so there is a much bigger centre for goods and services virtually on the doorstep. Canberra is probably a more attractive place for some Goulburn residents to live and work, as well. Wagga, on the other hand, is a regional hub for health, social services, education, retail. It probably benefits from the location of State government services - the business of attracting events will be much less important than these basic government services.
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ACT government looks to formalise community in Canberra Raiders contract

Post by BJ »

I think the fact that Wagga Wagga has a much much higher than Australian average proportion of people working in State and Federal Government related Military, University, Health and Social Services is the key reason for the towns population growth. Not because they put on some Council funded events.

The events they put on are because of the population and labour force growth, not the other way round.
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Re: ACT government looks to formalise community in Canberra Raiders contract

Post by yurithe1 »

BJ wrote: April 18, 2019, 10:05 pm I think the fact that Wagga Wagga has a much much higher than Australian average proportion of people working in State and Federal Government related Military, University, Health and Social Services is the key reason for the towns population growth. Not because they put on some Council funded events.

The events they put on are because of the population and labour force growth, not the other way round.
I agree. However, I think the events help to keep people in these towns.

Regarding Wagga, Army and RAAF have been there for many decades, although the RAAF side might have been scaled down. The university has existed since it was known as the Riverina CAE. I can't address the public service aspect though. So, these are only maintaining numbers, not growing them.

Interestingly, Bathurst, which is home to Charles Sturt University (Mitchell CAE back in the '80s) is similar to Wagga in some ways and also pays to have the Panthers play games there. Its population went from below 20,000* to about 41,300 today. It has also attracted a fairly young population over the years as well, which is an anomaly compared to other country towns.

* (I can't recall the exact figure; I considered studying journalism there in the '80s which is why I do have a vague memory).

Anyway, my contention is that these events – among other things - attract and keep people in the location, thereby avoiding stagnant population growth and maybe an imbalance in the proportion of aged people who have to be supported through local amenities.
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Re: ACT government looks to formalise community in Canberra Raiders contract

Post by yurithe1 »

greeneyed wrote: April 18, 2019, 7:13 pm The provision of "real" public goods is different issue. There is actually a strong economic justification for locating key public service departments alongside the seat of government, the parliament - but others need to be spread geographically.

Public goods have different characteristics, and have different spatial dimensions. You can have very local public goods (park benches, local roads), regional public goods (arguably health, education) and national public goods (defence, national security). Public good theory suggests that it makes most sense to take decisions on local public goods by local government - and raise the taxes from those who benefit. Similarly at regional and national level for those public goods. The only reason the States have to ask for money from the federal government is that taxes are disproportionately raised at the national level.

Attracting private sector events to particular locations is a very different thing to all that... because there is either no, or negligible, public good element to doing so.

The Australian economy has very mobile capital and human resources. That's why it doesn't make sense to consider the Australian states and territories as closed economies. There are no barriers to the flow of goods and services, people (workers), there is a single financial system.

All that state and territory events "corporations" do is relocate private activity from one place to another. And it is because the subsidies principally ensures the private sector activity takes place in one place rather than another, we can't have a more productive Australian economy by doing do. There can't be any additional economic activity generated overall. There are costs, however - to efficiency (because the subsidy distorts decisions on what would actually be the most efficient location). In addition, taxpayers must fund the subsidies. So they don't have the money in their pockets - and economic activity that would otherwise be generated by them spending those dollars doesn't take place. The economy has to be worse off overall.

The different fortunes of Wagga and Goulburn probably have more to do with their locations than anything. Goulburn is under an hour away from Canberra, so there is a much bigger centre for goods and services virtually on the doorstep. Canberra is probably a more attractive place for some Goulburn residents to live and work, as well. Wagga, on the other hand, is a regional hub for health, social services, education, retail. It probably benefits from the location of State government services - the business of attracting events will be much less important than these basic government services.
While the macro economic view suggests that the most efficient locations should host various activities, the reality is State and local governments take a smaller picture perspective and are almost working on a zero sum game. For them to prosper, some other area must miss out since there is only so much money available across the whole of the nation. The politicians also look to ensure the best quality of life for their local community rather a higher median across the board. Achieving that means re-election for them.

There are no barriers to people moving, but realistically, people are reluctant to relocate unless there is a reason for them to do so. However, if conditions or expectations aren't being met locally, then they will move. So, the government is incentivised to put on a various events, not just footy games, to keep a location feeling vibrant and reduce the feeling that people need to look elsewhere if their expectations are to be met.

Maybe I'm a tad cynical, but I can't agree with you that if not for these events, taxpayers would continue to have the money in their pockets and this would generate economic activity. If the tax rate is in place, then a government will find something on which to spend the money and/or risk going into deficit to do so. For instance, while Mr Fluffy was something the government had no choice but to spend money on, the light rail was optional.
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Re: ACT government looks to formalise community in Canberra Raiders contract

Post by greeneyed »

The proper role of State and Territory governments is to provide good regional and local public services, efficiently and effectively and provide a stable, sensible legal and regulatory framework within which the private sector can flourish. Taking taxpayers money to subsidise private sector activity, by definition, distorts their economies, makes them less efficient and less flexible, and reduces the productiveness of the economies and their growth potential. They make themselves and their population worse off. Subsidising private goods always produces this outcome.

The only economic argument in favour of subsidising events is that there is a public good element to them. The sports we're talking about are actually 100 per cent commercial. There is very little public good element to them. The provision of public infrastructure for sports and events might have more public good element to them... but just staging the matches... I can't see any public good element to that... because they can run on fully commercial basis, regardless of what governments do.

That's the theory... maybe we can look at it another way.

Health care and social services are the biggest industry in Wagga (16 per cent of total employment). Since the turn of the century, employment in that sector has more than doubled (106 per cent growth). The average share of employment for NSW for this sector is 12.5 per cent of employment.

Public administration and safety (that includes defence personnel) is second (12 per cent). That's grown 15 per cent since 2001. The average share of employment for NSW for this sector is 6 per cent.

Retail is next (11 per cent). That's grown 13 per cent since 2001. The average share of employment for NSW for this sector is similar at 10 per cent

Education and training is fourth biggest (10.5 per cent of total employment). Employment in the sector in Wagga has grown by 17 per cent since 2001. The average share of employment for this sector in NSW is just over 8 per cent.

Accomodation and food services is fifth (7 per cent of total employment). That share is exactly in line with the average share for this sector in NSW. There has been 34 per cent growth in employment in this sector.

https://economy.id.com.au/wagga-wagga/Employment-census

https://economy.id.com.au/wagga-wagga/i ... ieir=24600

How to interpret those numbers? It is likely that Commonwealth and State decisions on location of health, education and defence activities are the biggest drivers of the growth of Wagga. Their economy has disproportionate shares of employment in those sectors. Support services like retail, food and accommodation follow - but they're not out of line with what you see in NSW on average as a share of employment.

Employment in tourism and hospitality in Wagga has declined as a share of the total in the past five years: https://economy.id.com.au/wagga-wagga/tourism-value

To the extent that the city of Wagga is building tourism from events, it doesn't seem to be reflected in the data (though it may make the lives of the residents more pleasant and the city more attractive to them).

But I suspect we're just going to have to agree to disagree. :)
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Re: ACT government looks to formalise community in Canberra Raiders contract

Post by raiderskater »

At the end of the day, for the amount of money the ACT Government are paying GWS for what, four games a year here, they could build the new rink - something that would actually benefit the ACT community year-round and even offer room for expansion - hosting AHL finals, perhaps the National Figure Skating Championships, maybe even an international Junior Grand Prix.
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Re: ACT government looks to formalise community in Canberra Raiders contract

Post by BJ »

raiderskater wrote:At the end of the day, for the amount of money the ACT Government are paying GWS for what, four games a year here, they could build the new rink - something that would actually benefit the ACT community year-round and even offer room for expansion - hosting AHL finals, perhaps the National Figure Skating Championships, maybe even an international Junior Grand Prix.

Or with the GWS money the ACT Government could throw 230 Light Rail opening day parties.
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