Mayoral Memo - 5 June 2024
Councils across the state have ended up owning and running different businesses. These businesses were started due to necessity, state government directives or arising opportunities. One such business owned by Dubbo Regional Council (DRC) is the Dubbo Regional Livestock Markets, commonly called the saleyards. As part of our ongoing service review process, we advertised an Expression of Interest (EOI) to gauge interest in buying or leasing the saleyards from Council.
Let me stress that no Councillor has made a decision regarding the saleyards yet. If a Councillor had a pre-determined position, it would constitute a breach of the Code of Conduct Policy, specifically one or more of Sections 3.4, 3.15 and 8.7.
Public debate on this topic is essential as it allows for different viewpoints and the best possible outcome. However, I have heard significant misinformation regarding this subject, and I need to address this publicly before a decision is made.
One argument against selling or leasing the saleyards is their positive economic impact. A Council report from 2019 showed that the saleyards contributed $60.9 million in total output to the Dubbo economy. However, this report does not indicate that the saleyards must be owned by a specific entity for this contribution to continue. One could easily argue that a private operator would increase the throughput of the saleyards, thereby increasing the economic impact. No one is suggesting that the saleyards be closed down.
Another argument is that the saleyards were gifted to the people of Dubbo, therefore Councillors do not have the authority to lease or sell them. The Troy Saleyards, commissioned on 28 June 1950, were initially owned by Talbragar Shire Council. After the 1980 and 2016 amalgamations, the assets and liabilities of the saleyards were transferred to Dubbo City Council and now DRC. Ultimately, the saleyards are owned by 56,720 residents. Section 232 of the Local Government Act states that a Councillor is “to represent the collective interests of residents, ratepayers, and the local community.” Councillors are charged with the responsibility of delivering the best possible outcome for the majority of the community, not pandering to any vested interest group.
Another concern is that an external operator might increase prices, driving users to other saleyards. Any organisation that bought or leased the saleyards would aim to grow the business, not lose clients. It would be illogical to acquire a business only to drive customers away. Any organisation buying or leasing the saleyards would work to improve the business, potentially increasing the contribution to Dubbo’s economy. For example, Fletcher International Exports, Dubbo’s largest employer, exports products to over 90 countries. Dubbo previously had a Council-owned abattoir, but the privately-owned abattoir is of much greater benefit to the local economy.
Some claim the saleyards deliver untold riches to DRC. The May 2024 Council meeting included the Quarterly Budget Review Statement for the saleyards, projecting a 2024 financial year-end net operating loss of $967,000. Any shortfalls in the operation and asset renewals would need to be funded by the rates from Dubbo and Wellington residents.
The other financial argument is that if the saleyards are profitable, selling them would be unwise. On the contrary, businesses are often sold at their financial peak to get the best price. Councillors must determine whether the current return on investment is the best possible outcome. An EOI process helps determine an asset's real value, and then it’s a matter of calculating the expected return. Better returns on assets reduce the need to increase rates and allow more services for the community.
Once Councillors review the EOI information and consider the facts, they must decide what is best for the community. Is there any philosophical reason the Council should own or run the saleyards? Is the community financially better off with the saleyards? Councillors should not retain and run the saleyards simply because “we have always done it that way” or “you should never sell an asset.” Business decisions should be based on business outcomes, not simply by reviewing history. Businesses like Kodak, Blockbuster and Nokia were all incredibly successful…until they weren’t. They kept repeating the same business model that had been successful in the past. That is no guarantee of success in the future.
Councillor Mathew Dickerson
Mayor of Dubbo Regional Council
Last Edited: 04 Jun 2024