Not-for-profit activities
Evidence as to the not for profit activities that arise synergistically out of the for profit activities
1. Levy affidavit - [20] - Approximately 50% of the Applicant's specialist mental health services are provided to some of the most socially and economically disadvantaged Australians including Indigenous and Torres Strait Islander peoples from regional and rural areas who would not otherwise have access to specialist mental health care.
2. Levy affidavit - [59]- The Applicant has undertaken not for profit clinical research in collaboration with UNSW/BDI since its inception in 2008 and the hospital will be a NSW teaching hospital.
3. Levy affidavit - [63] - Due to the expertise of the Applicant's psychiatrists in the Clinical Model, the Applicant's psychiatrists will have an integral role in the research. The for profit activities of the hospital will enable the Applicant to make its psychiatrists available to facilitate the research. Without the expertise of the Applicant's psychiatrists and the availability of the hospital, the research could not be conducted.
4. Levy affidavit - [65] - The research activities of the hospital may generate several identified community benefits listed in this paragraph at (a) - (g).
5. Levy affidavit - [67] - The hospital will on a not for profit basis train psychiatry trainees in the Clinical Model. The Clinical Model is a medical model involving treatment tailored to the needs of each patient: Levy at [13], Dr Skarbek at [17] - [27]. Professor Parker's letter at Annexure "A" in the Levy affidavit provides more detail.
6. [75] - The hospital will address the shortage in psychiatrists by a mentorship programme in conjunction with UNSW.
7. Levy - [77] - The tertiary teaching above is to be conducted on a not for profit basis and is of distinct community benefit. It will better equip local public health facilities to meet the increasing demand placed on its services in circumstances where they are either struggling to do so or failing severely.
- However, and it is a substantial however, neither Exhibit G nor the material in Mr Levy's affidavit, nor the above summary, provides any assistance at all, by any economic analysis, that would help me in understanding any empirical basis for assigning a value to the public benefit said to arise from the proposed facility. As has earlier been observed, this facility will have a project construction cost of approximately $8.5 million to which, to derive the invested capital value of the project, must be added the cost of acquiring the various allotments proposed to be consolidated into the single site upon which the proposed inpatient facility is to be located. This land capital cost is approximately $5 million. The total project capital cost is, therefore, of the order of $13.5 million. As earlier noted, Mr Levy holds the view that, although in the initial years, the proposed facility will not be profitable, this position is expected to change and that, on an ongoing basis after the early years, the facility will be a profitable enterprise.
- Ordinarily, a conventional business case (and in using that expression I am not to be taken to be critical of Exhibit G, a "business case" prepared in quite a different context and for a quite specific purpose) would include a significant economic analysis giving much more specific anticipated timeframes within which the achievement of profitability might be expected; an analysis of expected income, expenditure and holding costs; anticipated taxation treatments; return on capital invested over time and, in the present context, such a document as this might well be expected to endeavour to quantify (and explain the basis for such quantification) what costs being met by the proposed facility would be attributable to (whether directly or indirectly) the provision of the teaching and research facilities said to be derived as the public benefit element.
- Without any understanding of whether or not there is a cost impact of providing the public benefit by a for-profit enterprise anticipated to become profitable within a comparatively short element of what might be expected to be the useful working life of the proposed facility, there is no basis upon which I can conclude that, in effect, the remainder of the Ku-ring-gai community who are contributing to those matters set out in the Contributions Plan for the Gordon town centre "business" category contributing works should have a greater burden imposed on them as a consequence of a discount to be given to the Clinic.
- There is no basis, on a Rose Consulting discretionary consideration, that I could conclude whether there is any appropriate basis to quantify the public benefit and, if there was, what would be the amount so derived. Finally, how such an amount should be viewed in light of the anticipated future profitability of the proposed facility is simply unknown and unknowable on the evidentiary basis presently available in these proceedings.
- In light of this conclusion and what I accept might well be the possibility that those business planning matters, properly considered, might potentially provide a better evidentiary basis for contemplating such a public benefit discount, I have considered how the matter should proceed further.
- I have done so against the backdrop that, as a consequence of my conclusion that the appropriate categorisation for the purposes of the Contributions Plan has the proposed facility to be regarded as a business with the result, as earlier set out, being that the only contribution available to be levied is that for the "Local Roads; Local bus facilities & Local drainage facilities (New Roads and Road Modifications)" pressed on behalf of the Council, the agreed position is that the parties are to explore whether there is any basis upon which a recalculated contribution might be agreed on a proper understanding of the traffic generation outcomes for the proposed facility when compared to the specified traffic generation-derived rate per square metre applied to the "business" category for the Gordon town centre.
- As earlier observed, the parties have also agreed that, if, in light of the conclusion to which I have, in fact, come, they were unable to reach some negotiated outcome able to be embodied in consent orders of the Court, further hearing days have been allocated, on a contingent basis, in mid-May 2016. Given that I am not to be taken to be concluding that there is no public benefit to be derived from this for-profit enterprise but merely no evidence that would permit me to assess whether a discount was appropriate and, if so, how much it should be, I have weighed whether the failure to discharge the evidentiary burden should cause me to dismiss, effectively, the public benefit element of the Clinic's case or whether I should permit the negotiation and (at least contingent) further hearing to encompass an opportunity for the Clinic to provide, at least initially to the Council, what it says might be a proper economic evidentiary basis in support of a proposed discount.
- I have concluded that, despite the present fundamental inadequacy of that which has been put on behalf of the Clinic (and I am not to be taken to be critical of Mr Ireland in this regard, he has cogently and competently mounted a case based on the material provided to him; it is the inadequacy of that material rather than its presentation in which I find fault), I should permit this element to go forward in tandem with the traffic generation matter for discussions between the parties and, if necessary, further evidence at a resumed hearing.
- Having taken that position, I would indicate that, if the contingent hearing days need to be utilised for the purposes of me determining issues that may remain in contention between the parties, it is my strong expectation that the totality of the resumed hearing will be confined to those two days only (albeit with the potentiality for modest extensions to sitting hours on each day to accommodate this additional aspect).