Commercial Activities – the Range and Scope of Services

generation of additional revenue through charges to the private sector providers of

commercial services in national parks (being the “commercial operators”). Therefore, the potential expansion of the use of commercial operators to deliver visitor services has a number of potential benefits to Parks Victoria and to the consumer - it facilities the expanded provision of services to the increasing visitor base, it provides a potential avenue for the sourcing of financing for visitor infrastructure assets, and it provides Parks Victoria with a source of revenue not subject to State controls.

2.8.1 Commercial Activities as a Source of Funding

As is indicated by the chart below, revenue from commercial activities as a source of

financing has expanded significantly in Victoria over the last 7 years from a relatively small base. While in 1997 the importance of this funding source was not significant, it has since grown to be an area of greater importance.

- 2,000 4,000 6,000 8,000 10,000 Financial Years $ '0 00 Accommodation/camping fees - 2,620 2,997 3,548 3,667 3,839 3,927 4,047 3,913 Park entrance fees 948 2,268 2,185 2,057 2,001 1,783 1,431 1,556 1,553 Rent, leases and licences 1,737 1,912 2,754 2,941 3,371 3,325 3,680 3,973 4,498 Total Commercial Revenue 2,685 6,800 7,936 8,546 9,039 8,947 9,038 9,576 9,964 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05

Figure 2.11: Revenue from Commercial Operations

Source: Interpretation of data from Parks Victoria Annual Reports’ for 1997/98, 1998/99, 1999/00, 2000/01, 2001/02, 2002/03, 2003/04 and 2004/05

It is also important to consider each of the major revenue sources separately. Revenue from accommodation and park entrance fees represent direct consumer charges which, as noted previously, are subject to legislative constraints. The substantial increases in these revenue lines results from increased visitation and facility provision more than pricing increases. Rent, lease and licence revenue represents a more flexible revenue base and one which has experienced significant growth.

2.8.2 Commercial Activities – the Range and Number

The range of commercial activities completed in national parks in Victoria is diverse, as are the approaches taken to the structuring of these activities (discussed in Section 2.8.3). The range of commercial services provided is already significant, as is demonstrated by the data in Appendices 2 and 3. It is clear, from this list, that Parks Victoria is already either directly or indirectly providing a large range of commercial activities within the parks estate. While not explicitly clear, it is also reasonable to assume that this range of services has increased over the last decade or more, as the use of the private sector to provide commercial services in a protected environment has become a more accepted delivery method.

This position is supported by Table 2.7, which indicates that while there has been a decline in the number of approved tour operators, the number of activities provided by commercial

operators along with the number provided per operator has increased substantially. This indicates an increase in the number of services and the number of parks in which the services are provided.

Table 2.7: Number of Commercial Operators

Source: Interpretation of data from Parks Victoria Annual Reports’ for 1997/98, 1998/99, 1999/00, 2000/01, 2001/02, 2002/03, 2003/04 and 2004/05.

The table in Appendix 2 provides a breakdown of these activities in 2003 between the types of service offered and, again, this list indicates the diverse range of commercial services now being offered.

In a number of instances, the commercial activities are completed ‘in-house’ by the park authorities. However, the motivation behind this approach is based on the need to maintain control over the park and its environment – not because of a perception that the park authority is necessarily best placed to deliver the commercial activity. The overall preference is for commercial activities to be contracted out wherever possible (e.g. Victorian Government policy discourages the completion of commercial activities by the park manager as does the Australian Government Competitive neutrality policy (which has been adopted by all the States of Australia). The approaches taken to controlling these commercial activities by the national parks managers are diverse in regard to both the overall approach and the particular requirements embedded within the approach.

2.8.3 The Legal Nature of the Relationship

The contractual approaches taken to controlling external service providers by the national park managers (or the lack of a formal contractual relationship) include:

· Legislation (with penalties) · Leases

· Public private partnerships · Joint ventures

· Incentives

· Licences

· Contracts for service provision · Royalties

· Concessions · Fee for service

1998 1999 2000 2001 2002 2003 2004 2005

Number of Licensed Tour Operators 373 407 259 292 292 612 243 253 Number of Activities 550 571 N/A N/A N/A 3,027 N/A 3,800

· Voluntary guidelines · Visitor restrictions

· Draft management plans · Restrictions on activities

There is currently no consistency in the approach adopted. Similarly, there is no consistency in the delivery framework adopted by the commercial suppliers (e.g. in legal structure, in organisational structure, in strategy, in funding arrangements etc). (For further discussion on these differences refer to Bickerstaff 1999 and Department of Industry, Tourism and

Resources 2003.)

In considering the legal relationship it is important to recognise that the available options are influenced by the legislative structure under which the park manager operates. This

legislative structure varies for each State. Within Victoria the legal responsibilities and powers of Parks Victoria are specified in the Parks Victoria Act 1998 (Vic). While this Act specifies the functions of Parks Victoria along with its general powers (which include the power to “enter into agreements and arrangements for the provision of services” (see Parks Victoria Act 1998 (Vic), Act No 44/1998, Clause 8)), its actual responsibilities are more clearly defined in a Management Services Agreement between Parks Victoria, the Minister for the Environment and the Secretary of the Department of Sustainability and Environment. Under this agreement, Parks Victoria is responsible for management of:

o “all areas reserved under the National Parks Act 1975 and open space, parks and waterways under section 110 of the Water Industry Act 1994;

o nominated Crown land reserved under the Crown Land (Reserves) Act 1978; o conservation reserves reserved under the Crown Land (Reserves) Act 1978 and

managed in accordance with approved land use under the Land Conservation Act 1970; …….

o Other areas as specified under the Parks Victoria Act 1998.” (See Parks Victoria 2001-2002 Annual Report, p 3)

It is these specific Acts which provide Parks Victoria with the authority to enter into legal agreements with commercial operators while also specifying certain requirements for these agreements. For example, for Reserved Crown land, the Crown Land (Reserves) Act 1978 (Vic) details some leasing provision requirements including the permitted maximum period of any lease.

Parks Victoria, as the entity responsible for the managed of parks in Victoria, is also required to comply with a number of other legislative requirements (e.g. EPA Act (Vic), ESC Act (Vic)) along with Government regulations and policy requirements which impact operations (e.g. pricing policy).

All of these legislative and regulatory requirements need to be considered when contracting with an external organisation to provide services on public land (including national parks).