Tasmanian Times


Letter to the Editor … on the Cable Car …

A visualisation of the cable car. Satire: Andrew James

The Mount Wellington Cable Car proposal looms over the imminent Hobart City Council elections, but how can we decide its worthiness when so much critical information remains hidden; in particular, who benefits from the cable car and by how much?

The government has ignored objections from the community to offer a private company the commercial monopoly to a treasured public asset, without even an open tender; a process wide open to corruption.

Under such circumstances, the deal must be transparent, so that Tasmanians can make an informed decision – rules of commercial-in-confidence cannot apply.

So, let’s ask what ticket price was proposed to investors? Likely answer: too much for Tasmanian families (I have seen estimates over $300 return per family).

Why is the price not currently available?

Because they know local support will evaporate once Tasmanians realise they can’t take their kids to the snow.

What will be the direct returns and risks to the State, and is the return to the investors within reasonable limits?

Even if the government had a social mandate, will Tasmania get a good deal for selling a treasured asset?

How long will access to the summit be closed?

They can hardly allow cars and hikers in the area with blasting and excavation above.

What happens when there are cost blowouts?

How much damage will be done to the Pinnacle Rd by concrete trucks and heavy machinery and who will pay?

I am against the deal in principle and on the basis of bad governance, but how can anyone support the deal on economic grounds when so much information has been withheld?

Author Credits: [show_post_categories parent="no" parentcategory="writers" show = "category" hyperlink="yes"]


  1. Christopher Eastman-Nagle

    November 18, 2018 at 9:55 am

    George, I hear where you are coming from. Capitalism is a carnivorous plant, and so government decision making under its canopy is always a tough call somewhere between Bjelke-Peterson’s Queensland and Wilson’s United Kingdom, and I’ll grant you that Tasmania is vulnerable to the former.

    However, governments all over the world provide sweeteners for projects considered desirable. You take your capital to any of the ‘special economic zones’ in Asia and South-East Asia, and you can expect a 10 year tax holiday. You can only imagine what Nevada did to get the Tesla gigafactory into their state. South Australia would have bent over backwards for Sonnen batteries to set up shop in the old Holden Plant in Elizabeth.

    Beggars can’t be choosers, mate.

    Part of the brief of any government is to provide whatever good offices it can to attract capital so that its future citizens and voters have got jobs to go to, besides working for the government. And yes, there are boundaries beyond which ‘facilitating development’ becomes poor governance, and the Gold Coast is a good example of the genre.

    So I think the real argument we are having here is whether the Skyrail project is, on balance, good for Hobart and Tasmania. I think that not just I ,and not just the state government, thinks it is a cracker of a project, but so does a majority of the populace. And I think it is a fair bet that come next election, the government will will be keen to show it off as a key marker that Tasmania is ‘open for business’ and no longer the provincial economic backwater it once was.

    You are not just going to lose the argument, but you are giving the coalition another own goal like the unprepared attack on the gambling industry last time. If you want to get rid of the coalition government, pick fights you can win and which do not paint yourselves into an ideological corner where the only things that seem to matter to you are your own narrow sectional interests and values.

    Pretending to yourselves that you have some kind of moral lockdown is pure self-defeating and indulgent conceit.

  2. George Smiley

    November 6, 2018 at 10:28 pm

    Like with any visionary project Chris E-N. you have to know the rules. The first is to acquire an asset for what will be a bargain basement price when the rules that held it down are changed in your favour, thus de-risking and locking in the viability of the project. This takes friends in high places and happens all the time, like in local government where our elected representatives/proponents virtuously recuse themselves from zoning decisions on their behalf, leaving a debt to others in council to be repaid in kind. Who knows what and how such debts will be repaid to our state legislators but we understand the when -before elections with disclosure long after.

    Your naive version of market logic could well be disparaged by anyone who has ever worked for a developer, from Penguin to Atlantic City. Well I missed out on Atlantic City but they were all scum anyway, thick as thieves with the people who mattered and screwing over the stakeholders who actually did the work and lucky if they got all their money. The boot in the face is an essential part of the vision. It’s good market logic, just part of de-risking the project. And if that’s not enough it’s structured so someone else ends up holding the bag.

  3. Christopher Eastman-Nagle

    November 3, 2018 at 6:38 pm

    Like any visionary project, the proof of the pudding is going to be in the eating of it.

    Now folks, it does not matter a fig to the citizens of Hobart if the project is a financial dud and produces no extra benefits, because they didn’t have to fund it. It is no skin off their collective nose if the project heads south and the proponents go bust. The worst that can happen is that no commercial operator will subsequently touch it, and the state government inherits an asset that cost it next to nothing. What is taking down three towers going to cost? Peanuts!

    The upside is that it becomes an iconic fixture that helps put Hobart and Tasmania on the map, in a way that it isn’t now, in the same way that MONA did. Did we hear all this environmental spiritual nonsense when it was built? MONA would likely have ecologically cost ten times what the cable car project is going to cost. It really was a major piece of excavation and construction. But MONA ticked all the petty bourgeois ideological boxes beloved of the cultural cognoscenti – didn’t it?

    I love the project and I will be heading down to Tassie to make the ride as soon as MWCC finishes building it. I can hardly wait. It is going to be spectacular and make the obstructors, detractors and naysayers look the myopic bunch of traditionalist reactionary idiots they really are.

    The only reason that a new route has had to be developed is because the obstructionists sabotaged the first one. But I like the new route. 2.1 km of cable with no towers is going to be fantastic to ride. I can hardly wait, and it will be an important iconic Australian journey that should be on the bucket list of things to do before you die, like going to the zoo.

    One of the things I cannot abide in the Greens and the ideological do-gooders who stand behind them is their thoroughly unbusinesslike petty bourgeois, small time bureaucrat consciousness that you can only get among people who get paid come-what-may from an always self replenishing fiscal magic pudding. And if it is left to them, environmentalism will always be a provincial and narrow minded recipe for poverty and lack of opportunity, and an absolutely guaranteed impasse with all the other stakeholders.

    If we want to get everyone on board with major environmental reform, where everyone takes responsibility for reducing their ecological footprint and participating in a compounding reform cascade that will start to move capitalism onto a plausibly sustainable trajectory, we have to start becoming a bit more ideologically inclusive.

    I do not for a moment suggest that is going to be an easy project, but if we do not have all the stakeholders on board we are not going to save our future because we will be stymied by ideological deadlock. Saving our future does not mean canceling all investment for the future, especially for projects like the cable car which are, of their nature, ecologically light weights to begin with.

    The tourist industry is as much responsible for ecological stewardship as any other, and getting it to come on board and incorporate sustainability into the business model is exactly the same process as any other industry.

    But bloody-minded obstructionism isn’t going to get anything over the line other than entrenchment of the status quo, which right now is a Mexican standoff where everyone is digging in ever deeper .. and nothing much changes other than the loudness of the rhetoric.

  4. Mike Eric Seabrook

    November 3, 2018 at 5:21 pm

    Ask about parking and road restrictions, and costs.

  5. Emmanuel Golstein

    October 28, 2018 at 10:12 pm

    Christopher Eastman-Nagle states “Obviously Simon, you have not had much to do with the commercial world.”

    Like many mainlanders, Eastman-Nagle has no understanding of the unique business atmosphere that exists for some in Tasmania .. such as the importance of direct friendships with elected representatives and public servants, the role of family relationships in securing permits and the all important concessions, grants and ongoing financial support .. commercial-in-confidence of course.

    The people of Tasmania have no business knowing how politicians are gifting the tax dollars they steal from hard working Australians to give to their chums. The business theories trumpeted by Christopher make no mention of ongoing government largesse accounting for the lion’s share of filthy profits to be realised by the project proponents, like so many before them.

    Obviously Christopher, you have not had much to do with the commercial world in Tasmania.

  6. Ben Jones

    October 26, 2018 at 2:09 pm

    Christopher Eastman-Nagle:

    It seems to me that Dr Simon Wright’s letter, and the replies to your original comment, are more about demanding fairness, proper process, transparency, and accountability than people’s love or hate of the proposed cable car development.

    Yes, everyone is free to put their money and reputations on the line, but the MWCC’s business proposal is to build a large commercial development within a public park. Investors in the MWCC are not just putting their money and business reputations on the line, for they are also proposing to privatise public commons.

    The Government has legislated to give the company rights and privileges not available to anybody else, and if the proposal goes ahead it will change Hobart’s iconic landscape and the way we all experience being on Kunanyi/Mr Wellington.

    Therefore the MWCC’s proposal affects all of us. We all have a stake in it, we all have a right to more information, and we all have a right to comment on the business proposal. Not to do so would be negligent and irresponsible.

  7. Christopher Eastman-Nagle

    October 26, 2018 at 8:58 am

    All the above comments are written by people who hate the project and will find any reason at all why it is not a good idea.

    Fair enough. If the proponents haven’t done their homework properly then they will lose money.

    Unlike the objectors, the proponents are putting their money and business reputations on the line.

    I do not pretend to know what the business case is. I do not need to. My money isn’t at stake. If the proponents haven’t done their sums properly … it is their skin.

    Proving to me conclusively that the project is a financial dud is irrelevant. Tell the proponents. They are the ones who should know ‘the awful truth’.

    And if the critics of the project are infallibly right, and the project becomes a white elephant, it will be sold off for a song. The venture capitalists will take a bath. The new owner will buy at a price that makes profitable sense on the trading figures to deliver the service at an attractive enough price to improve them.

    That is how it works. That is all any of us need to know. I’ll leave the business of telling business grandmas how to suck eggs to ‘the experts’.

  8. Geoff Holloway

    October 23, 2018 at 10:53 am

    Christopher Eastman-Nagle .. I hope that you read and understood Ben Jones´ excellent economic analysis of the rent-seeking cable car proposal.

  9. R. Rands

    October 23, 2018 at 10:35 am

    The Business Plan figures are only available to the true believers. That includes our pathetic state government of the day which ignores anything beyond the reach of its delusional spin.

    Have a look at the Table Mountain Annual Report for 2017 from that bustling business enterprise, the Table Mountain Cable Car Company. Not a whisper of a financial number.

    Those with more time than I may do a detective job on the finances of the Table Mountain Cable Car. Here are some details from the Annual Report:

    Moore Stephens Chartered Accountants

    First National Bank Southern Africa Limited

    Company registration number


  10. Richard Glazebrook

    October 23, 2018 at 6:57 am

    There is also the scary prospect of Old Farm Road becoming a parking lot for the MWCC venture.

    No cost/benefit analysis would compare with the determination evident in the community to put beyond doubt the future of Kunanyi.

    Thank you, Simon.

  11. Christopher Eastman-Nagle

    October 22, 2018 at 2:53 pm

    Obviously Simon, you have not had much to do with the commercial world.

    The project would never have got to first base without a cost/benefit analysis that would provide a business case for it. If there were not sufficient projected demand at an acceptable price to the consumer, and it could not be built at a reasonable capital cost to deliver a projected profit stream sufficient to attract investors, you would never have heard anything further.

    The fact is that the business case stacked up and the proponents were able to sell the benefits to the state government, which thinks it is a great idea, along with most of the population of the state who rather like the idea of little Tassie getting a project that will help put Hobart on the map in the same way MONA did.

    And like any other private venture, if the proponents have got it wrong, and cannot build and run it on its projected budgets, then they will lose money. And if they get it really wrong, they will eventually go bankrupt. The project will then be sold at a substantial discount sufficient to make it viable for someone else.

    And if it is more successful than anticipated, the investors will make a poultice, which they will be happy about, because not all projects make money no matter how good the commercial judgement behind them is. Every project is a risk. It is easier to lose money than make it, and every investor has a portfolio of failures that they have had to learn from … the hard way.

    Unlike bureaucrats and teachers whose salaries and benefits appear rain, hail or shine, every month or fortnight out of some abstract fiscal magic pudding, the venture proponents are putting themselves and their money on the line. And even if everything goes to plan they won’t see anything back on their investment until some years into the project … usually a minimum of two to three, to get even a sniff at some profit taking.

    • AM

      October 22, 2018 at 6:04 pm

      Wow, I can think of many major project financial assumptions that have turned turkey … Forestry Tas, Maydena Developments and Sydney cross suburb tunnels to name a few. All were bailed out, or sold at a great loss.

      If these proponents want a return in two or three years it just shows how greedy they are, and it reveals the poor principles you and they adhere to.

    • B Rogers

      October 22, 2018 at 8:08 pm

      Obviously Christopher, you have not had much to do with making relevant replies to comment.

      The Doctor raised some pertinent and important questions about the supposed benefits to the Tasmanian community from the proposed cable car, and your comment has almost completely ignored all of them.

      If you’re inclined to disagree with his remarks, you could do worse than speak to the points he raised and prove him wrong, because your comment constitutes little more than deflection.

    • Tony Tringrove

      October 22, 2018 at 8:54 pm

      Can you tell me where I can peruse this cost/benefit analysis for myself, please?

      I heard figures of $54 million bandied about over a year ago, before all the news breaking about the restaurant/function centre was plonked in with it.

      I too, am skeptical about local families being able to afford to use it, or many tourists either, when you can drive up there for free. You would have to drive part way to the summit just to get to the South Hobart base station, so why wouldn’t you keep driving?

      Please show me these calculations that are going to give investors the confidence to even consider putting some of their cold hard cash into this ”pie in the sky“.

    • Elizabeth Spiegel

      October 23, 2018 at 7:33 am

      The catch is that if the proponents have got it wrong we are left with a large lump of construction on the mountain, and damage to its environment. A 2.3km road, for example, cannot simply be removed and the area returned to its previous state.

      If the figures are so good, MWCC should be willing to share some of them, eg the proposed ticket price. I’m unwilling to rely on the commercial judgement of investors when so many are willing to socialise losses and privatise profits.

    • Ben Jones

      October 23, 2018 at 8:58 am

      Christopher Eastman-Nagle. There is no credible cost/benefit analysis for the MWCC’s proposed development on Kunanyi/Mt Wellington that shows that the business case stacks up. The MWCC claims that the project will cost $55 M to develop, provide 50-80 operational jobs, and have a stabilised economic impact between $79.47 million and $99.91 million. The cost is likely to be far more, the number of jobs less, and with long term financial viability unlikely.

      The MWCC has promoted its cable car project on the highly unlikely scenario of strong growth beyond Year 1, perhaps as a selling point to gain public support and approval from the authorities. Visitation data for similar businesses based on viewing or lookout type activities shows they more typically have their peak visitation in the first year of operation when they are new and exciting. Visitor numbers then progressively decline over subsequent years until the businesses become distressed, and have to be rebuilt/reinvented to regenerate interest, re-positioned, restructured or demolished. Economist Saul Eslake has stated that “it’s a stretch to say that more tourists will come to Tasmania simply to ride a cable car.” The MWCC has itself recently stated on its Facebook page that “MWCC have never promised additional tourism” (Mt Wellington Cable Car 13/08/2018).

      For the kind of development that the MWCC is proposing to build on public parkland it should be incumbent on the company to first demonstrate that the development has social and economic benefits for the community. Although Adrian Bold and the MWCC have now been promoting a cable car development on Kunanyi/Mt Wellington for over seven years, the company has not yet produced a credible independent analysis to demonstrate its proposed development will be economically viable, and the company has not submitted a development application for its proposal. The often cited Strategy 42 South Economic Impact analysis of the project: it is not independent; it makes many unlikely assumptions; it does not include supporting data; it does not discuss critical factors such as wind in the economic modelling and it contradicts itself, and so cannot be used to support the argument for purported economic benefit.

      The Strategy 42 South analysis states there will be a high level of “leakage” from the MWCC to local hotels and other forms of accommodation, local restaurants, and local transport services. This seems incompatible with a large number of the potential clientele being cruise passengers who are notoriously frugal. Each cruise ship passenger will only be able to undertake one activity while in Hobart, so the introduction of a cable car simply cannibalises other potential expenditure in Hobart. The analysis assumes that because current cruise ship passenger spending in Hobart is relatively low compared to other Australian ports “there is likely to be significant latent demand for spending.” This seems to ignore the reality that these passengers will only be able to do one activity, even if they have an appetite for more expensive ones. The report assumes “there is potential for average spending in this market to increase without displacing other spending in Hobart and surrounds, which suggests that the choice of multiples for the broader wholesale channel market is conservative.” This relies entirely on sufficient growth in numbers to entirely fund the project ABOVE the growth projected to sustain existing businesses. This is unlikely. The analysis applies a multiplier for local patrons of 1.0 which “fully accounts for potential displacement effects as any indirect gains are offset by a loss of spending on other activities.” This does not consider the loss of services that the consumer could have had previously. Before the cable car these patrons could go to the mountain and have a cup of coffee and a meal. Now they will only be able to do one of these. The analysis accounts for the producer loss – but not the consumer loss.

      On a stabilised basis, after Year 1, the MWCC projections suggest the cable car will create an average economic benefit per visitor of between $160 and $195 without displacement from other options (The MWCC states a stabilised: low economic impact of $79.47 million and low visitation of 408,194, which equates to a spend of $195 per passenger; and a high economic impact of $99.91 million and visitation high of 625,000, which equates to a spend of $160 per passenger). Those numbers appear inconceivably high, given Tourism Tasmania visitor statistics for the year ending March 2017 show there was $2.23 billion spent over 10.8 million nights (Tourism Tasmania Corporate Visitor Statistics). This indicates that current average visitor expenditure per night is $205 which includes meals, accommodation and activities. In effect, the MWCC projects that the average daily spend by visitors to the cable car will increase that expenditure by an extraordinary 78% to 95%. That is, the MWCC projections are assuming either people will be spending far more money than they actually have to spend, or an unrealistically high numbers of visitors.

      The Strategy 42 South Analysis was completed on the original cable car proposal when it was assumed the proposed cable car would depart from the Cascade Brewery site. The new proposal starting from the Main Fire Trail includes 2.4 km of road building up a steep gradient that will involve significant earth moving and engineering processes to complete, as well as a massive commercial centre on the summit of the mountain that were not considered in the original cable car proposal and would therefore add significantly to the capital costs. Such a change would also affect the economic outcomes of the project. No analysis has been completed that takes these changes into account.

      • Raylan Givens

        November 14, 2018 at 8:08 am

        An excellent summary, Ben.

        Does anybody actually know who the initial investors are? I thought the MWCC was a public listed company. Perhaps this will go some way to understanding their motives – aside from the superficial. What other benefits could they possibly be looking for or receiving by investing in this?

        The recent booklet that was delivered a week or so before the council elections was amateurish, and it contains a number of factual errors. If this is the level at which the project is at, then it will be a bumpy ride.

        Of great concern was the eagerness of the state government to create the legislation to help the project through. Unprecedented. I think it’s now a done deal, as the MWCC just needs to keep complying with recommendations and the project will be steered through.

        As the original article indicated, when a company is gifted the opportunity to make irreversible changes to an important public asset, then the public is entitled to see, comment .. AND be heard on matters regarding the process.

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