Page 969 - Week 03 - Thursday, 3 April 2008

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MR MULCAHY: This could be true, Mr Barr. That is certainly not an area of their strength, as we have observed this year. But they seem to be highly questionable investment ventures, given that the university is primarily concerned with academic research and teaching.

I was the one vocal critic in this town when the previous government set up the Australian International Hotel School. I warned about it. I said it would fail, and it did. It was a disaster. It was very ill advised for people to go into that particular exercise in Canberra. All sorts of people were running around the planet on wonderful trips across to Asia, to America and so on. A good life was had by one and all. But the fact is that it had no prospect of competing against colleges such as the Blue Mountains one and other leading hotel schools and it became an albatross around the necks of the taxpayers of the ACT. Academics know lots about research and the like, but I worry about them when they try to get into commercial activities.

This is not, of course, the first time that we have seen governments and government related institutions move into lines of business that are outside their core areas of expertise. We have already seen large losses borne by taxpayers from business ventures like Rhodium. I recall speaking against that in my first formal speech in this place and warning of its dangers. Sadly, my predictions were vindicated and confirmed, as we have seen now in this ongoing tragic saga.

I think we are moving to the same kind of risky territory when we have a university council consisting of academics, student representatives and other university officials begin ventures like aged care facilities. That is not a reflection on the competence of the people I met; the vice-chancellor and the chief operating officer seemed to have very impressive credentials. But I am very much of the view that one should stick to one’s knitting. It seems to me that, if these kinds of ventures go ahead, we have learned nothing from the experience of Rhodium. I would have thought that the core lesson from that scandal would have been to confine the government’s ventures to areas in which they hold some expertise and experience.

Aside from the high level of risk involved, there is another issue raised by these kinds of outside ventures and that is the issue of a proper division of labour and a focus on the core areas of responsibility. There is no sense in having members of a university council, whose attention should be focused squarely on the university, spending substantial amounts of time trying to become familiar with the workings in aged care facilities in the ACT in order to conduct an investment venture and hope that they get it right.

We already have entire areas of ACT government departments that focus, day in and day out, on the dynamics of aged care and we have a number of reputable operators in the field in the ACT who seem to be very well equipped in terms of the product they are offering. I feel that there is little sense in breaking this existing division of labour. The development aspects of these kind of projects, whether building office blocks or aged care facilities, is a matter that is best handled by, in my view, private developers, not just statutory bodies, which are created for an entirely different purpose.

The division of labour is one of the oldest and most sound principles of economics. But we detract from the efficiency and value of this specialisation when we start

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