HOW MUCH JUST FOR THE TOURIST CAVE?
How much just for the tourist cave? This is, perhaps, a cry we may hear asked of Governments around Australasia, given our very uncertain economic future. It is quite clear that governments at all levels are strongly pushing toward privatisation and/or commercialisation of many of their traditional areas of economic interest. It is, therefore, timely that those involved in cave and karst management take a serious look at these government headings, and consider this very question. How much just for the Tourist Cave?
Recent Privatisations
Since the last Conference in New Zealand two years ago, we have seen several occurrences which could well point to the future. Firstly, Jenolan Caves House has been turned over to private enterprise. As well, the Jenolan Caves Reserve Trust has been formed to commercialise the management of Jenolan, Wombeyan, and Abercrombie Caves. In New Zealand, Waitomo Caves have been sold off. Admittedly, the conservation of the Caves is preserved by the Department of Conservation, but how this marriage will work in the longer term is yet to be seen, particularly if an instance of commercial versus conservational conflict occurs.
Whither Funding?
Of course, both at Jenolan and Waitomo, the two largest show cave developments in Australasia, governments had an attractive commercial proposition to sell. Where this is not immediately seen as the case, governments have tended to throw the financial responsibility back at the caves themselves. Outside of the provision of wages, and a few other areas of recurrent expenditure, cave systems under many Governments in Australasia are now expected, to varying extents, to self-fund from revenues. There is no doubt that, from a commercial management point of view, this is a more efficient system, always assuming local management has the necessary commercial expertise. It does to a fair extent localise financial decision making and allows the local setting of priorities. This is not, per se, a bad thing. On the down side, it has meant that, by and large, funds for larger capital works are not available through local resources. In some cases, profitable resources have had to be used to offset costs (effective losses) in other management areas.
Overall, these developments have meant that caves are under considerable financial pressure. We have a situation where there are few, if any, cave systems that do not need a substantial injection of funds for much needed works, or even just necessary maintenance, with funds dried up everywhere.
We may not, however, have seen the last of How Much Just for the Tourist Cave. I suggest it may only be the beginning. This year we have seen governments around Australasia produce some of the most fiscally draconian budgets this century.
Effectively, most are technically bankrupt. Every tourist cave operation, looked at in isolation, does or can make money. Some are downright juicy targets for outright privatisation, at the right price. Tantanoola, Naracoorte, Buchan, Wellington, would all be good propositions. Can you imagine a cash-strapped government selling off these assets at a marked-down price? I can. In many cases, these assets are not making money for the treasury. What profits there are being held and used locally. Okay, they might be sold off at marked-down prices to make them going-concerns, but at least that is some profit for the Treasury. The added bonus is that Treasury no longer has to pay any of the recurrent costs for the caves concerned. It wins both ways. We are living in a dream if we think this scenario is not a stark possibility.
So, what is our response? We could man the barricades, and we may win some battles ... but in the end the caves would still be under-funded, infrastructure would continue to be pre-World War One vintages.
There are, however, other possibilities. Can public and private capital be married, while still preserving the necessary conservation values? I submit to that handled correctly, not only can this be done successfully, but at the same it can solve most capital funding problems.
Marrying Private & Public Enterprise
I now want to take you through a commercial scenario in developing a new tourist cave complex, bearing in mind the approach I am about to outline can equally be applied, with little modification, to virtually any existing cave operation, or groups of operations. The example I will use is the possibility of developing Kubla Khan Cave in Tasmania.
Given that Kubla Khan Cave should be developed (and there are two sides to that view), and that a management plan has been developed for the resource, then the first economic step is to mount a commercial feasibility study. We will assume, for the sake of argument, that the study would conclude that Kubla Khan is a cave of world significance, its physical development is technically feasible, and that the economic projections on infrastructure and on-costs add up. Clearly then, the only realistic source of capital for such a development must be private, and private capital when committed will demand that most scandalous of all words to the environmentalist, 'profit'.
Private & Public Interest
When visiting the doctor does one expect to consult a plumber? It would be hard to argue against the proposition that the best people to manage a cave are those with expert knowledge and expertise in the field. The collective group possessing that knowledge is ACKMA It would be difficult however, from many considerations, for ACKMA to act as a management body.
The suggestion is however, for ACKMA members to make up the majority on any commercially-based management body.
In considering the aim of having a cave developed and managed by experienced experts in cave and karst management, one needs to take into account other vested interests. These include government, the local community, and financial investors. The strategy I am about to outline takes into account all these forces which, in turn, could well provide the best chance of a result acceptable to them all, and at the same time provide effective cave management, and attract the necessary private risk capital.
A Strategy for Management
After passing the feasibility plan stage of developing Kubla Khan, which would include a plan of physical development, a strategy for management and funding must be put in place. The first stage is to create a 'Kubla Khan Management Trust', hereinafter referred to as 'The Trust'. Such a Trust needs to reflect the interests in the cave. Let us give it eleven members - five nominated by the ACKMA Committee from amongst ACKMA membership, two members from local caving clubs, two members from the Tasmanian Dept. of Parks, Wildlife & Heritage, a member nominated from the local municipal council, and one community-based member. The Trust would elect a Chairman from its own number.
The Trust, thus structured, achieves a broad representation of interest, with the majority vested in members holding expertise in cave management. While the Trust would be, assumedly, competent to devise and execute ongoing development/conservation/management strategies, it would not necessarily be competent to manage the economic/finances of the project, and it is certainly not structured to raise the necessary developmental capital. However, a trust is a legal identity which can participate, according to its deed, in capital ventures.
A Management Company
The next step in the overall strategy is for the Trust to float a public company - let us call it the Kubla Khan Corporation. The Trust would sell itself controlling interest in the Corporation at a nominal discounted figure (say 40% @ lc per share). The initial float would be, say, 4 million shares @ 50c. Thus, the Trust would take 1.6 million shares, costing (delayed payment) $16,000. Assuming the remaining 60% was fully subscribed (and properly handled it should be), it would provide a capital base of $1.2 million. One would imagine that capital would bring the tourist development on line, even if it does not cover full development.
The Trust would then sub-lease the resource to the Corporation under conditions it lays down, giving the Trust veto over all cave development and management considerations. The Trust, as controlling shareholder, would provide the majority of the Corporation's directors. The balance of the directors would include a company secretary, and a few other persons selected for their expertise in financial/corporate management. The Corporation's role would be the financial management of the resource, the setting of budgets, the paying of dividends, the arranging of extra capital through additional shares issues, as necessary, etc. There would be an on-ground cave manager, an employee of the Corporation, who would manage the day to day operation.
In summary, the Trust would set development & management policy, which would be carried out by the Corporation, which it controls. It will receive back, through its 40% equity, a dividend from the Corporation - as will the remaining 60% of private shareholders, of course. This profit could be used for other cave ventures, although initially some would need to go in meeting debt repayments, and be funnelled to additional infrastructure.
The Use of this Scenario
Overall, the scenario I have just outlined could readily be adapted to any cave development, new or existing. Of course, something similar has been achieved at Waitomo, where an overall body comprising the Maori and the Dept of Conservation has control over the conservation of the Glowworm Cave. My scenario, however, not only provides for this control, but also enables the strong participation of private capital and financial management expertise.
By this means, one can provide sorely needed capital development and maintenance to our caves, married to sound management, and at the same time potentially return an ongoing profit which augers well for future capital needs.
By this strategy, we can then have considerably less fear of the opportunistic entrepreneur who arrives at the halls of power crying: 'How much just for the Tourist Cave'.