28 August 2018
The Hon Anthony Albanese MP
Shadow Minister for Infrastructure, Transport, Cities and Regional Development
Canberra ACT 2600
I am writing in relation to the decision of the Federal Government to grant $2 million toward the construction of a private sector cinema complex in Kempsey on the New South Wales Mid-North Coast.
The $6 million complex has been approved by Kempsey Shire Council. It involves $2 million in funding from Kempsey Shire Council (ratepayers), $2 million from a private developer, Gowing Brothers and Majestic Cinemas, and $2 million from the Commonwealth Government (taxpayers) under National Stronger Regions Fund (NSRF).
The Commonwealth’s contribution of $2 million was announced on 9 December 2015, by the Member for Cowper, Luke Hartsuyker MP.
Since then the community of Kempsey has railed against this development. Ratepayers have been totally ignored by Kempsey Council. Council is ploughing ahead, not only totally ignoring the community but the NSW Office of Local Government as well. Media commentators such as Ray Hadley share the same view.
Before getting into the detail of the matter, think for a moment that taxpayers and ratepayers will contribute two-thirds of funding toward the contraction of a private sector cinema complex. What’s two-thirds of funding? Four million dollars. This is simply outrageous. I support Commonwealth investment in Kempsey but in this day and age you don’t need to be an expert to know that $4 million in public funding, including $2 million from Commonwealth, for a four-screen cinema complex is not good idea.
The bleeding obvious aside, this project has some significant issues and shortcomings. An appendix to this letter contains more commentary on this.
I ask that you question the Government about this project in the House of Representatives and that you also ask your Senate colleagues to raise this matter in Estimates Hearings before the end of the year.
Given that so much has changed in the cinema industry since the Commonwealth grant was approved in 2015, it is obvious that this information is now inconsistent, incorrect, false or misleading and the targets such as attendances, tourist numbers to the cinema and sales revenue are absolutely unachievable.
It is not too late for the Commonwealth to get out of this project. It should. It just doesn’t stack up. The Commonwealth Government should be investing in projects in Kempsey and the Macleay Valley that provide long term sustainable economic development and employment for the community.
This is our version of the “Sydney stadiums“ issue. Government should fund schools and hospitals ahead of cinemas. Indeed this Commonwealth funding could reduce the schools maintenance backlog in the state seat of Oxley, which currently stands at $14.9 million. Federal funding for schools in Cowper under the Liberal and National Coalition Government is $22 million less than it would have been under Labor in 2018 and 2019. This is another example of the wrong priorities of the Federal Government.
On behalf of the ignored people of Kempsey, I ask you to hold the government to account for the waste of $2 million on the Kempsey Cinema Project. The Federal Government should reconsider giving a grant to Kempsey Shire Council for a non viable project that currently may not fit the criteria as specified in its own guidelines.
Candidate for Cowper
Background information – Kempsey Cinema
In the Department of Infrastructure and Regional Development’s Deed of Agreement – Clause 17- Termination or reduction in scope of Agreement
17.2.2 The Commonwealth may also by notice terminate this Agreement immediately if:
(g) the Commonwealth is satisfied that any statement made in the Recipient’s application for Funding is incorrect, incomplete, false or misleading in a way which would have affected the original decision to approve the Funding.
Is the Department of Infrastructure and Regional Development aware or did the Application make reference to :
• It was originally claimed the cinema complex was to create 22 jobs per year when completed (Mayor, Liz Campbell, 14 December 2015). That figure was reduced to 8.3 FTE cinema employees per annum – total 10.6 FTE for the whole centre (GHD’s report November 2017). The 8.3 FTE figure has been questioned by two independent cinemas owners as being excessive.
• Based on data from Screen Australia, persons aged 14-24 had the highest attendance rate at around 86% (GHD November 2017). Headlines recently were “Cinema audiences a train wreck of uncertainty as online content explodes”. The article said the “movie going 18-24 year old demographic was all but finished” (Screen Australia’s CEO 1 August 2018). It is therefore assumed that the need for a cinema complex for the local youth could be over stated.
• $1.6 million cinema sales growing at 3% per annum (.id the Population Experts July 2015). Many families cannot afford to go movie cinemas these days.
• The cinema will generate around 109,750 visits per year (.id the Population Experts July 2015), however this number has changed according to Majestic’s CEO who maintains that the cinemas will ONLY attract 93,000 patrons per year. Even though this is a lower number than the previous it still equates to an average of 255 attendances per day. One doesn’t have to be an expert to know the cinema cannot attract that many people, so the economic benefit of $1.6m per annum will not be realised and is false or misleading.
• “Given that there is only one small independent cinema in Kempsey, this level of visitation and expenditure is leaked to other regions” (.id the Population Experts, July 2015). However in contradiction Kempsey Shire Council stated that there was no commercial cinema in Kempsey. This is incorrect as there is a Bandbox Theatre which with a fraction of the money could have updated facilities. The Bandbox is not in a flood area. There is also a very popular Cinema at South West Rocks which attracts both locals and visitors to the area.
• The Kempsey Central Shopping Centre is in a flood zone with the carpark being totally submerged during floods.
• Kempsey has a population of 10,000 – a four cinema complex in a privately owned complex, funded with public money is excessive to say the least, for this number of people. It is a non viable investment for this generation and for future generations.
• Is the Dept. aware that Target has vacated the building permanently (with a loss of 12 jobs) and according to Gowing Bros Ltd, Coles is running at a loss and has expressed intentions to leave the centre. The remaining businesses will struggle to survive during approximately 12 months of construction.
• There will be no economic benefit to Kempsey CBD. Six businesses have closed in the past 12 months and sadly possibly more to go. To concentrate a cinema complex in a difficult to access and a flood prone shopping centre will only worsen the prospects for existing businesses in Kempsey’s main street. There are more initiatives in this Valley that would be of real economic benefit to all residents.