…Resort Management Boards…from Julian Brown’s book “Falls Creek How it Came to Be”

CHAPTER SEVENTEEN

ALPINE RESORTS COMMISSION AND

RESORT MANAGEMENT BOARDS

CREATE PROBLEMS FOR THE SKI INDUSTRY.

ALPINE NATIONAL PARK GAZETTED.

 

In 1984 the previous two very poor winters ushered us into the ARC era. The following years saw a decline in skier numbers. There was a world-wide slowing of public acceptance of the cost of skiing, and the various Victorian governments helped the decline along. The Victorian resorts suffered badly, Falls Creek in particular. During Bridgford’s control of ski lifts, there was little or no slope grooming. Skiers had come to expect a better performance from them, and that set us back quite a bit.

Alternative holiday destinations became vigorously promoted by travel companies and airlines, at seemingly very cheap rates. Skiers found better groomed, and longer slopes in Europe and the USA, so they skied overseas instead. New Zealand with plenty of government incentives, captured some of our market share.

Changes made by the ARC annoyed those of us under their control. Our charges to them increased and kept on increasing. At the same time our turnover kept decreasing. Winters with poor snow further reduced turnover, and those with debts found difficulty in paying them.

Not so the ARC, they don’t have bad or poor seasons, except for gate entry charges.

The ARC was a liberal party initiative, to combine the major resorts under one jurisdiction. Under the old system Hotham and Baw Baw were administered by the Lands Department, Falls Creek by the SEC, and Mount Buller by the Forest Commission. There was conjecture however as to which ministry we were to be put under. It was leaked to us it would be Environment and not Tourism. For the Falls Creek Tourist Area to be under environment, as it happened, staggered us all.

When the ARC took over, most of us in the industry thought it would be a marvelous step forward. It turned out to be totally the opposite, and the ARC was abolished in 1997.

The ARC was replaced by individual resort boards, one for each resort. It was deplorable for leaseholders to have no elected representative on the ARC. With the new Resort Management Boards RMB’s this shortcoming continued. A very strange and serious matter in such a democratic country as Australia.

The SEC was slow to make decisions, as it relied on advice from the FCTAMC. The FCTAMC was a relatively large committee, having representatives from the various government departments, whose charter overlapped into the alps. It consisted of: Appointed representatives, two for the SEC, one for the Bright Shire, one for the Country Roads Board, one for the Soil Conservation Authority. But it was also democratic in that other interests had elected representatives. Lift company had one, and other commercial establishments one, flat owners one, Victorian Ski Association representing clubs and all other skiers had two.

With so many different fields of endeavour, it is understandable that the wheels turned slowly. But they did turn.

The ARC was made up entirely of government appointees. Their field of endeavour seemed to be to perpetuate themselves. They built a huge bureaucracy and increased our rates and costs to support it, with little left over for essential services. When it came to formulating policy, and plans for the future, they showed their incompetence by employing consultants. These consultants spent most of their huge fee trying to becoming familiar with our industry. First the Kinhill Report, then the Hassell Report. Both reports have done nothing of a positive nature, and our resort received no benefits from either. One local after looking at the reports commented: “They are a waste of money and everyone’s time. The ARC could get one or two locals to write a better plan on the back of an envelope.” Looking backwards the SEC was like a fairy godmother by comparison.

In October 1983 Alpine Developments Holdings sold the Lift Company to Transfield under the direction of the Salteri/Belgiorno families. Alan Pay continued as manager for the first year under the new ownership and then David Osborn replaced him. The new owners soon invested in up to date snow groomers, to the joy of skiers.

David Osborn proved to be a very competent manager. In 1986 he saw to the construction of the new ski runs Last Hoot and Wombats Ramble. In doing so he was able to side step opposition by green groups and get the job done on time. These new runs to be serviced by our first detachable quad chair called Halley’s Comet, were completed before winter. The following year the Cloud Nine restaurant beside the top station of the lift was constructed. The toilets there were something of a godsend for skiers caught short.

Allan Pay then took over the Falls Creek Oversnow from Greg Paterson, who was married to Alan’s sister. Pato as he was known had taken over the Oversnow somewhere about the mid 70s from Graham Herbert.

When Pato took over he engaged a clever bloke to build some new oversnow vehicles. Mike Bruton at Tyabb built them. Although they are fairly basic in design, ease of maintenance was carefully considered and they are still giving good service.

Looking backwards to the early 80s and subsequent years the snow business has got tougher. The manifestations of that were the mortgagee auctions, and other sales, of previously thriving businesses. Some that were bought or built in the early to mid 80s suffered the most.

  • Astra: Was built on sites 23 and 24. Site 23 was Woomargama Ski Club, purchased 1986 for $230,000. (Astra’s building of 1593 squ. metres, cost close to $3,000,000. Adding the cost of the sites 23 and 24 the total cost was about $3,500,000. It was auctioned in 1993 and settled in 1995 for $1,380,000. Site value in 1989 $604,000. A loss of over $ 2,000,000.)
  • Dawn site 24 purchased for $350,000 in the same year. Woomargma was demolished and Dawn transferred to Windy Corner for SES headquarter.
  • The Man: Purchased in 1987 for $1,350,000 of 865 squ. metres. A mortgagee auction in 1993 realised $440,000 a loss of $900,000 site value 1989 $515,000. Compare site value $515,000 with sale of building and lease of $440,000.
  • Trackers: The owner was sick and had to sell. Auctioned in 1993 passed in but sold after auction for $825,000. Of 991 squ. metres replacement value about $2,000,000. Loss over $1,000,000.
  • Cedarwood: Of 1607 squ metres replacement value $3,000,000. Auctioned in 2000 for $820,000 loss $2,180,000
  • Nelse: Bought by SCV in 1986 for $1,520,000 of 823 squ. Metres, sold in 2001 for a reported value of under one million Loss over $500,000

There are other stories of hardship and averted forced sales.

For large sites land tax has been crippling. Arlberg at Hotham is on 3876 square metres and has a site value of $4,482,000 or $1156 per sq m. Next door to it, is the only freehold land in the alps. Of 8446 square metres it was bought in 1995 for $300,000 or $35 per sq.m, then sold in 1997 for $600,000. The site value according to the Valuer General in 1989 was $2,510,000.

Looking at the above figures of $35 per square metre for freehold against $1156 for leasehold it reveals that 35 into 1156 = 33, so leasehold is 33 times as valuable as freehold!

The Arlberg argued their case in the Supreme Court and the judge (Ashley) found in favour of the government. It beats me how legal argument can so distort the simple facts outlined above. I suppose it was important for the government to get a decision in their favour. Had they not, it could mean that they would have to refund all the land tax, that I reckon they have ripped us off for.

In June 2001 I had my objection to land tax site valuations heard by VCAT. Judge Murray Kellam sat on the bench. I produce a letter from Doug McDougall, an estate agent at Dinner Plain, which showed that freehold there was half per square meter compared to Falls Creek. I claimed it was also a ski resort. Judge Kellam volunteered information, “that it was not a ski resort, as they also get snow at Mount Macedon.”

That snow at Mount Macedon is an inconvenience, while Dinner Plain was purpose built to be in the snow, did not seem to register with him, and I reckon it provides grounds for an appeal.

Bert Altermatt provided me with the details of his experience in building the very spacious Pontrissina apartments. In 1977 his site rental was $234 pa and he paid $7200 ingoing. After he sold five of the six flats he was able to keep one for himself, at a cost to him, of $80,000, it being then worth $200,000. He sold this flat in 1998 for $335,000 which after 21 years was a poor return compared with a similar project in Melbourne. His comment was: “If I had done the project in 1988 and had to buy the site at the valuer general’s valuation of $532,000 I surely would have made a loss.” In addition his site rental in 1988 would have increased to $13,300.

While this was a poor return, it was handsome compared to the returns of Cedarwood and others, made a few years later, and outlined above. As is the case in all developments in Falls Creek, if the land were freehold, and had to be bought at the VG’s value there would always be a loss incurred. The system stinks. For a while we had a chance to obtain freehold of our sites. The SEC had freehold of the land and leased it to us; A&they bowed out, they sent a questionnaire to us. It would appear that not enough site holders ticked yes to that question.

Geoff Coleman, our minister under the Kennett Government was sympathetic to my advances on the question of free holding our sites. However he raised concern about the cost to the government, of survey and the issuing of titles. I was able to direct him to Nick Toner, a long time Falls Creek skier who worked in the titles office. He did visit Nick, and found the SEC had indeed prepared titles, thus no further cost.

It is to be hoped that some future government will be enlightened enough to grant us freehold, so as to put us on the same footing as the rest of this ‘great’ state we live in.

There has been some mention of the government altering some leases where flats are built. At present the right to possess a flat is by buying shares in a company. The new proposal is to somehow allow a type of strata within the lease. This move would do nothing to improve tenure, but it would open the door for the government to charge 9% stamp duty on the sale. As a friend said: “it is like being beware of strange men bearing gifts.”

At the time of the FCTAMC being introduced (Falls Creek Tourist Area Management Committee) Falls Creek was gazetted as a TOURIST AREA. The Cain Government after the Alpine Resorts Commission came into being, placed us under the ministry of Environment, which is still the case.

The question is, what on earth does conservation and environment have to do with tourism? Blind Freddie can see it is totally the wrong department. This department under various names but now DS&E have shown complete lack of comprehension and understanding of our industry.

The present DS&E and it’s predecessor, have enough powers to see that the environment is protected in alpine or any other areas, without trying to run tourism as well.

How different it is in Tasmania, is illustrated by an experience I had there. In 1983 I built an hotel on the shore of the Great Lake. The site is just 12 km from the Central Highlands World Heritage Area. The Tasmanian Lands Department gave me a “three-year lease with an option to purchase subject to satisfactory performance.”

The HEC Hydro-Electric Commission provided power with a connection fee of $2400. Later they asked me to sign another form confirming my intention of being “in the tourist industry,” thus entitling me to a 50% refund.

When the building was about to receive its roof, two representatives from the Lands Department called to have a look. A little later they sent me a letter stating: “A recent inspection reveals that considerable progress has been made. We now await your application to freehold the property”.

They asked $15,000 for the seven acres. By negotiation $10,000 was the final figure agreed upon.

Next, with the creation of the Bogong National Park, our enjoyment of the high plains became a thing of the past. Snowmobiles and motor bikes prohibited, except for search and rescue. Strangely, most of the people needing rescue are the ones who oppose the means by which they are rescued.

I reckon that national parks should provide access for people of all persuasions, provided that they don’t cause destruction in any way.

The first Bogong National Park’s ranger was provided with a snowmobile. I was asked to give him some instruction in its use. When I had done so I remarked that snowmobiles were just the thing for the Alpine National Park. I said to him: “I’m going out there next week.”

“You can’t do that,” he replied.

“Why not,” said I.

‘It’s a national park, and you’re not allowed in there on one of those.”

“But you can go in, on one of those, so why can’t I?”

“Because you’re not employed by parks.”

“My mother’s coming up next week and she is 84, she can’t -walk there. Can’t I take her?”

“No you Can’t,”

“So you’re saying my mother of 84 can’t see the national park. What are you going to do if I do take her?”

“You will be charged and fined.”

“I’ll see you in court.”

I was just having him on, but my resentment grew.

A few years later I managed to get Channel 7 to come up to cover an excursion. A friend of mine has three handicapped children.

Sally Moore did the reporting as we took these kids on a trip. A day or two before, I told the ranger all about my intention to do so. He arrived, was filmed, as were we. The episode went to air. I was not charged. A point that I did make and which went to air was that we did not want to have access to all the park. Just a few corridors, outside of which we would not go. There is enough room for those offended by our presence to avoid us. I stressed that we did not want to see all and sundry tearing around irresponsibly. Just a few licenced operators, who would use common sense, to be allowed a permit to operate.

After all, a national park is for all the people of the nation, not just for a few select bush walkers. Their selfishness is unbounded.

Next, I took a group out to Spion Kopje early one morning. I had some potassium permanganate (condies crystals) and with this we created a replica of the ARC’s symbol about 30 metres wide. It was cold and frosty, so nothing became visible as the crystals were applied, and the others thought it a waste of time. As we returned the sun rose higher, melting the surface, and the emblem developed like a photo in a dark room.

The ARC people were incensed, particularly as one of the boys had used the last of the (condies) crystals to print SUX below the emblem. I was still not charged.

The next winter I repeated the stunt by writing BNP SUX, (B N P = Bogong National Park). This time I was given a ticket, similar to a traffic infringement notice, for the amount of $80.

I thanked the ranger and told him how difficult it had been to obtain the notice, that I had no intention of paying the amount and presumed that court would be their way to enforce the matter. That I would see him there, to argue about whose national park it was, and that he -would once again be on television.

Not another word did I hear, and no fine was enforced.

Our early leases provided for a site rental of $104 per annum, fixed for five years. After that to be fixed by negotiation, or if not agreed upon, then to be determined by a single arbitrator.

By the early 70s a number of leases had been in existence for over five years and site rental increased by 50% to $156 pa. This was no doubt cheap rent, but by the early 1980 it was $450, still cheap. However the SEC had given us a sewerage system and reticulated water supply. They managed to fund these works and operate them with relatively modest costs to us.

Then substantial increases came about, along with big increases in service charges (actually rates but for services such as -water sewerage and garbage). Initially garbage was not charged for, as we had to take it ourselves to the shed from where the SEC or FCTAMC took it away. An increase in rates occurred when the oversnow was given a contract to collect it from sites. We were all happy to pay that small increase.

By 1990 site rental had increased many fold and continued to do so.

Garbage left out in the snow was a continual problem due to foxes and birds breaking open the bags. Then for years we were given a ‘quota of orange plastic bags, and these were the only ones allowed to be collected. So other bags were left to vermin until they -were finally cleaned up. When the quota was used up we had to buy more bags. People using those orange bags for dress ups, toboggans, or in lieu of suitcases, cost us many times the actual value of the bags.

It took many years for the ARC to find the funds to install vermin proof enclosures from which garbage could be collected.

During our existence under the ARC, huge increases in Site rental and rates came about. The increases could not continue to be absorbed by us, and had of necessity, to be passed on to the consumer, ie. the skier.

When the ARC Bill was passed, the following was read to parliament.

“I move: That this Bill be now read a second time.

“The purpose of the bill is to give effect to the government’s policy to establish co-ordinated control and management of all alpine resorts in Victoria. In implementing this policy the government is pursuing two related objectives. First, the proper development and use of Victoria’s most important natural tourist attraction. Secondly, making the experience of alpine areas and environments and the pursuit of alpine sports and recreation available to all Victorians regardless of their incomes.”

The ARC did exactly the opposite.

In the late 80s another cost was imposed on Falls Creek by the government. Previously the Country Roads Board, or its successor cleared the road of snow. They had a depot near Howmans Gap for the equipment and this was handed over to the ARC, for them to clear the road. No funding, for replacement, maintenance, or operation of the equipment was to be provided. Once again that cost was passed on to skiers.

By the late 80s our charges had multiplied many times, then under the Cam government we were deemed to be the owners of the land, for the purposes of land tax. To make matters worse land tax was assessed by a valuation that defied logic.

The Valuation of Land Act 1960 states: “Site Value of land, means the sum which the land, if it were held for an estate in fee simple unencumbered by any lease, mortgage or other charge, might in ordinary circumstances be expected to realise at the time of valuation if offered for sale on such reasonable terms and conditions as a genuine seller might be expected to require, and assuming that the improvements (if any) had not been made”.

In 1977 the valuer general valued all the sites in Falls Creek. My site was valued at $19,000 and the improvements at $230,000. In 1988 he valued the site at $458,000 or 24 times the value in 11 years! The VG placed no value on the improvements in 1988, but it would seem he added the value of improvements, to the vacant (unimproved) land value to arrive at vacant (unimproved) land value.

Shortly after the Chamber of Commerce engaged a firm A T Cox to give us an independent value. My valuation by A T Cox was worded thus … 56 beds at $9000 per bed, site value $504,000.

This insidious (and flawed) method of valuation was also used to determine site rental.

It had become so bad by 1990 that the VSA under the guidance of Darryl Gallagher and Peter Dyson made a brave attempt to curb the, out of control, escalating costs.

All site holders were given the opportunity of agreeing to the phasing in of a percentage of site value to determine site rental. I did not accept the proposition as I felt that site rental should be geared to the CPI rather than non pertinent, widely fluctuating (usually upwards) valuer general’s idea of leasehold site value.

Also to have agreed could have compromised our bargaining position in the event we resorted to a condition of the lease, where agreement could not be reached on site rental. This condition provided for a dispute to be determined by a single arbitrator. Obviously to agree to a formula that did not really protect your rights, would create a precedent which an arbitrator would have to take into account.

By the late 90s faced with yet another 30% increase, I did resort to arbitration. We (myself and an RMB representative) had a preliminary discussion with the appointed arbitrator. He promised his investigation would be thorough and possibly lengthy. I had withheld payment of any increase pending final determination, but did offer to pay a percentage of the increase. The RMB backed down and offered to gear site rental to the CPI for the remaining term of the lease, until 2008. This was far less than my offer, so I accepted with haste.

The valuations are done only every five years, so as values drop as they did in the early 90s we still had to pay on the old higher value. When we did get a lower value, and thus lower site rental, the ARC increased our rates to generate the same revenue. On the next valuation as site rental rose again, there -was no reduction in rates.

In the middle of all this, -when the rates went up, as the rent went down, due to the variation in site value, the rates did not all conform to the same amount per bed or square meter, the basis on which the rates are assessed. So, most places got another increase to bring them in line with, it seems, the highest common denominator.

When flats were built for sale the only way for individual ownership was to form a company. Each owner bought shares and when selling the flat just sold those shares. Now the RMB want a title for each flat registered which was impossible under our leases, all this does is open the way for the government to now charge 9% stamp duty on the sale of shares.

At Cedarwood Lodge the driveway encroached over the site boundary. So the RMB shifted the site boundary to include this extra bit of land. Then they wanted $45,000 for the right to use it, plus it seems extra site rental. That is just like key money which was made illegal.

This tiny bit of land which can’t be built on will no doubt interest the Valuer General so he can further increase site value. Cedarwood applied for a new lease but the RMB said their application would not go to the minister unless they agreed to pay the $45,000. So the RMB have bullied them into it and jacked up their likely land tax as well.

In 1980 Falls Creek had close to 4000 beds. There was four office staff and two outside staff, Today there is about 5000 beds and an office staff of 26, rising to over 60 in winter 2004. If we have a good season often -weeks and even if we don’t, we still have to pay to keep that staff employed all year so they can make life difficult for us and think up further ways to rip us off.

All the glowing terms that Government and its Ministers use in describing how valuable, and important our industry is, is just a lot of contradictions and double standards.

It is perhaps unfortunate that I have to finish this story on a sour note. However the criticisms I have made are because of the facts as they occurred. More of the same confronts us in the future, such as the insistence on yucky colour schemes for buildings which the RMB paid “consultants” to dream up, just look at Snowski apartments, plus unworkable planning amendments like amendment C5 which wants only 40% of a site to be built upon.

Amendment C5 was dreamed up by the nutty people at DS&E, most likely as a means of justifying their continued employment, but of no use to our industry.

I attended a meeting with DS&E staff in 2004 in response to their opportunity for public comment on amendment C5. I was informed that the proposed amendment was substantially advisory. My comment to this was, “then why is that not included in the wording of the document? ”

Later I was invited to make a further submission at a panel hearing. My comments were that the proposed amendment C5 where 40% site coverage was concerned, should be torn up, and replaced with up to 100% site coverage depending on the merits of the application. I supplied supporting data.

An architect who made his submission just before me was equally critical of amendment C5 and as we adjourned for lunch one of the panel members said; “I would like to complement the last two speakers for the amount of thought they had put into their submissions.”

With 40% site coverage being now enforced it seems to me that the supposedly democratic panel hearing was nothing but a charade, and that the DS&E had made up their minds well beforehand.

Nothing is more certain than the DS&E are the wrong ministry for administering tourism in any form.

I understand that some of the appointees to the RMB are unhappy about the direction being taken by its officers, but because of the structure of its bureaucracy, are unable to make any changes.

We had the halcyon days in the 60s and 70s, when the vigour and excitement of being part of building an industry, gave us cause for joy. We were able to look to the future with hopeful expectation.

Today our lodge buildings are worth little, unless they are converted to apartments and sold off one by one.  For a government to have allowed that to happen, or in fact to have stimulated it is appalling.

As Father Foster would say “A POX ON THEM”

This chapter was scanned from the book:

“Falls Creek How It Came To Be” – As seen by Julian Newton Brown 2005

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