The Glasshouse Port Macquarie: COVID-19 hits cultural centre’s coffers

The financial impact of COVID-19 on Port Macquarie’s premier cultural facility has been revealed, as the council sets its sights on 2027 to pay back a huge debt still costing ratepayers millions.

The most controversial development ever built on the Mid-North Coast has been hit by a $1.2 million operating deficit – although this time it is a global pandemic, and not the result of financial mismanagement, that is to blame.

In arguably its toughest period yet since the sacking of those who helped deliver it, the Port Macquarie Glasshouse posted a $1.2 million loss between June and December last year, due mainly to the effects of the centre’s COVID-19 enforced closures.

Port Macquarie Council staff will deliver a six-month financial performance report to Councillors on Wednesday, outlining the effects that COVID-19 had on the Glasshouse’s bottom line.

The Glasshouse arts, conference and entertainment centre

The bulk of the net-operating deficit, the report states, has come from expenditure costs attributed to ‘internal support’ via back of house ($459,000), front of house ($274,000) and centre management ($127,000).

These three operating areas allow the council to generate income from community, commercial and cultural activities that aim to benefit the community and provide the council with a financial return through bookings and performances.

But in a difficult period when the centre was closed for much of 2020, revenue was down and the council posted losses upwards of $340,000 across these revenue sources.

The lack of cultural performances accounted for a $265,000 deficit over the six month period, while commercial income was down $62,000 and community-sourced income was down $12,000.

Visitation to both the Glasshouse and gallery, as well as utilisation of the theatre, studio and meeting rooms, were all well below the previous financial year figures.

The Glasshouse Theatre. Pic by AAP/Narelle Bouveng)

Ashley Grummit, the council’s group manager commercial business units, said the income for 2020 was significantly impacted by COVID-19 and NSW Government Public Health Orders.

“The expenditure includes both fixed and variable costs, and in the six-month period to 31 December 2020, variable costs such as venue hire costs, performing arts show expenditure and associated theatre and gallery casual staffing costs for example were lower than forecast in line with the minimal program able to be delivered,” she said.

“The 2020 budgeted figure was a conservative forecast noting that the budget was adopted by council in June 2020, at which time the majority of the venue was still closed and there was considerable uncertainty associated with COVID-19 and Public Health Order restrictions on entertainment venues.”

COVID-19 clearly had an unfortunate impact on Port Macquarie’s premier cultural facility, which is still costing ratepayers millions of dollars 11 years after it was first opened.

More than $41 million was spent on project and construction costs for the Glasshouse between about 2000 and 2007, a cost blowout six times above the original budget of $7 million.

The then NSW Minister Local Government Paul Lynch. Pic by AAP/Paul Miller.

It led to a State Government inquiry commissioned by the then Local Government Minister, Paul Lynch.

It was completed by Inquiry Commissioner Frank Willan who recommended that the 2008 council be sacked due to the poor financial management of the project.

With interest repayments to be considered, it was estimated the total cost would eventually blow out to about $66 million – a cost that the current council is still paying off today.

The report going before councillors on Wednesday advises that of the $28 million the council borrowed to fund the project back in the early 2000s, more than $9 million is still owed.

It is estimated that on current forecasts, it will take the council another six years to finally clear the debt racked up by its predecessors.

“Loan borrowings assisted in the funding of the Glasshouse at the time of construction,” the report states.

“Of the total cost, $27,975,954 was sourced through loan borrowings that are repaid through Council general revenue. It should be noted that there was also $10,873,801 sourced through loan borrowings that are paid from the S94 restricted asset for community facilities.

“The outstanding balance of the borrowings that are repaid through general revenue, as at 31 December 2020, is $9,128,115. This demonstrates that over $18.8 million has already been repaid, with loans expected to be repaid by 2027.”

The full report can be accessed by visiting https://portmacquarie.infocouncil.biz/.