The Queensland Government is commissioning a relatively large business case, at a cost of $1.3 million, for a new 1,500 seat theatre for Brisbane, but it is likely there can be no plausible business case, because the theatre would be a complete waste of taxpayers’ money. It appears the construction of a new theatre would be funded from the Government’s proceeds from the Queen’s Wharf development (see this media statement from Monday). There would certainly be better public uses, such as in health and education, for any government funding for a new theatre, which would cost many tens of millions of dollars.
Queensland already has a large theatre. The Lyric Theatre at QPAC has 2,000 seats. Presumably there is a push for a new 1,500 seat theatre because the Lyric Theatre is relatively well utilised by touring musicals. Any business case would need to clearly set out why exactly a new theatre is needed and why it deserves government funding. It would need to establish why, if there is sufficient demand for a new theatre, the private sector will not build it. And why should government funding be provided?
The Queensland Government already owns a venue, QPAC, which appears more than sufficient to host a large number of edifying cultural productions from our theatre, ballet and opera companies. Is the problem that touring musicals and cultural productions are competing for slots at the Lyric Theatre? If so, then let us wait until the unmet demand from touring musicals is sufficient to make the construction of a new theatre by the private sector commercially viable. I cannot see the need for the Government investing in a new theatre.
I would note the Government already spends significant money on the arts in Queensland ($9.3M for the Queensland Performing Arts Trust and $2.6M for the Queensland Theatre Company in 2015-16). This involves a government subsidy to the mostly well off people who attend the ballet, symphony, theatre and opera. There is not a compelling case for greater public support for the arts.
The Queensland arts community itself does not appear totally convinced there is a need for a new 1,500 seat theatre, as some in the community are arguing what we really need is a 500 seat theatre with better facilities than the Powerhouse Theatre which is around this size (see this Brisbane Times article). This makes me even more sceptical of the need for a new 1,500 seat theatre.
I suspect you are on the money here. But what really gets me is why would the State jump straight into spending $1.3M on a business case, particularly for a project that has a high probability of falling at the first hurdle?
Why not spend $20-50K on an preliminary business case? That would be enough to broadly identify the market, identify the alternatives, identify potential patronage, estimate revenues and fixed and variable costs, and undertake a preliminary BCA (including sensitivity analysis). If the project looks like it might stack up, then you go to a more detailed business case. Nothing is lost as the preliminary business case shapes and governs the major business case. But the upside is that you might avoid wasting another $1.25M on a major business case for a project that will never realistically stand up. That avoided expenditure could be spent on more worthy activities (core services, reducing debt, or business cases for other potential economic development initiatives).
This process of a doing a preliminary business case before a comprehensive one is best practice used by the ADB, World Bank, aid agencies, and most fiscal challenged nations and states. It is just a much more efficient way of allocating your analytical budget (internal and consultancies) over a portfolio of potential projects. The use of preliminary business cases by organisations like the ADB and aid agencies is also used as a tactic to manage expectations and kill off dumb ideas proposed by aid recipients (which aren’t that fundamentally different to most industries looking for government largesse). This is pretty basic stuff. Why is it somehow beyond us in Queensland?
Great point about the preliminary business case, Jim. It seems a bit of a waste to start exploring potential sites and concept designs without first establishing the need for the project.