As discussed in Victraders.com last week, for the first time
the City of Melbourne has required both of its wholly owned subsidiary
companies to publish an Annual Report along with their Financials.
Councillor Stephen Mayne chair of the City’s Finance and
Governance Committee made some very interesting comments at a Council meeting held
this week, which no doubt traders and others associated with the Market will
find of great interest.
QVM’S FINANCIAL RETURN TO THE CITY IS MORE THAN ANY MARKET
IN THE WORLD
Firstly, Councillor Mayne highlighted the fact that our
Market with its $5million return to council is “more than any market owner in
the world”. That return, whilst it may seem moderate, if not low if one
considers the Market as part of a property investment portfolio, is an
incredibly high profit margin if it is seen as a profit return based on its
percentage of total revenue. I would think very few entities return 22% of
revenue back as pure profit.
With the Market facing great challenges from all directions,
some traders would see this as taking essential resources away from management,
and possibly one of the primary causes of the situation the market finds itself
in today.
These traders are not alone, and some very experienced
market operators have expressed similar concerns when market owners insist on
seeing their markets as part of a property portfolio, for instance in a
response to a UK House of Commons Select Committee into Traditional Retail
Markets, George Nicholson ex Chairman of the Trustees of London's famous
Borough Market stated the following:
“There has in recent
years also been a trend – encouraged by central government – to view markets as
simply part of the wider property portfolio of an authority… If markets
are to be sustained and develop… it is crucial that adequate investment is
made and income generated is retained. “
Mr Nicholson also cites the Barcelona Market model as an
example and says:
“All 40 markets in
Barcelona are legally bound together in an independent legal vehicle that
receives the rents and uses any surpluses to re-invest in the markets.”
The impending renewal may murky the waters somewhat about the point being made here, but fundamentally the point is a simple one, and that is that for retail markets to successfully coexist and thrive alongside our retail competitors and in today’s complex and ever changing retail environment they need maximum resourcing of management and its day to day operations.
As indicated by the Barcelona model ideally this could
mean ring fencing the market and its financial resources, or in other words the
returning of its surplus back into its day to day operations budget. (
possibly including a large portion of the current $5 million return to the city
a part of the Head Lease - It is worthy of note that a counter argument to this
position is that the Market being a place of business and hence unlike other
community focussed assets, the beneficiaries (i.e. the traders) are making
profits, it would seem only appropriate that it’s owners the City also can
expect a profitable return from the Market. This is a valid point, and there is
no objection whatsoever to the City having a return once the Market has been
fully resourced both via an appropriate number of professionally proficient
personnel and adequate finances to permit the Market to perform and meet its
current challenges).
So whilst it is possible to applaud the renewed
interest in the markets infrastructure requirements, as recognised in
the Strategic Brief and the Master Plan, and towards management culture,
as shown by the requirement to lodge an Annual Report, are we seeing much of a
change in attitude or acknowledgment of these day to day challenges and in a more
flexible operational budget? Perhaps quite the contrary.
QVM’S FINANCIAL REPORTING
Councillor Mayne made another point when he commended the
Financials presented by the city’s other subsidiary company, Citywide. QVM may need to take a leaf out of their book
(or 29 pages out of their Annual Report) since Citywide’s Annual Report
contained 29 pages of Financials to QVM Pty Ltd’s 2 pages.
It would be also appropriate to say that this new
approach directed by the City does challenge some of the long standing
attitudes from other participants at the market to show like openness
and transparency in their dealings. For this new mindset and culture to
truly become a new way forward at the Market it must certainly
be embraced by all participants at the market not just its owners and
managers.
COMMENTS:
22/12/2015 12:12:24 Questioning QVM Financials "An update on the above article and a very positive sign coming from Council.
This is in fact the second time that money has been fed back into QVM in the last 6 months. In July $300k was reduced from the money budgeted to flow back from QVM to City of Melbourne.
You can read the recent resolution below:
The Council, at its meeting on 15 December 2015 Resolved: (part) - That Council authorises officers to inform QVM that no budgeted QVM licence fee payments are to be made to Council for the month of December in 2015 and that these funds of almost $400,000 are to be available for modest short-term management initiatives to improve the volume, amenity, safety and viability of the market, whilst also contributing to a higher than budgeted QVM net profit for the 2015-16 financial year."
Thank you for this update - Ed
22/12/2015 12:12:24 Questioning QVM Financials "An update on the above article and a very positive sign coming from Council.
This is in fact the second time that money has been fed back into QVM in the last 6 months. In July $300k was reduced from the money budgeted to flow back from QVM to City of Melbourne.
You can read the recent resolution below:
The Council, at its meeting on 15 December 2015 Resolved: (part) - That Council authorises officers to inform QVM that no budgeted QVM licence fee payments are to be made to Council for the month of December in 2015 and that these funds of almost $400,000 are to be available for modest short-term management initiatives to improve the volume, amenity, safety and viability of the market, whilst also contributing to a higher than budgeted QVM net profit for the 2015-16 financial year."
Thank you for this update - Ed