Otago is a funny place

Nothing in this story makes sense.

A Dunedin shop that makes and sells cordials and soda on one side of the shop, and brews and stocks alcohol on the other side, is getting shut down by the licensing authority. Why? Because the cordials side is too popular, so they get less than 85% of their sales from alcohol.

Otago police aren't known to be reluctant to object to licensing renewals, but didn't object to this one. The District Licensing Committee renewed the licence, then the medical officer of health and district licensing inspector appealed to the Alcohol Regulatory and Licensing Authority.

The mayor seems unimpressed:

Dunedin Mayor David Cull said the legislation was hard to make sense of.

"To drive a small company out of business because it sells both cordial and alcohol in close proximity, when supermarkets do the same, isn't logical," he said.

Cull said it was pointless to have a local DLC if any decisions it made were going to get overruled.

What was the basis for the appeal?

The appeal focused on the company's use of a curtain to separate the two sides of its business – which trade under "Wests Cordials" and "Wests Southern Liquor".

Poore and Cashell-Smith argued the curtain did not stop all customers using the same till and entering through the same door.

That meant it was the same premises and in order to qualify for a liquor licence, it needed to prove 85 per cent of sales were from alcohol – which it had not done.

Wests points out that if they sold more alcohol, then they'd not be shut down.

I wonder if Mayor Cull needs to revisit his town's local alcohol policy. None of the rules that were put on Wests seem to make any sense, and application of those rules through ARLA is leading to an outcome that the town doesn't want.

I also wonder how it can be the case that the health system is apparently starved for cash at the same time as medical officers of health apparently have infinite resource to shut down bars and bottle shops.

HT: Eli Gray-Stuart

Stadium exam questions

We still don't know whether Christchurch will get a big covered stadium.

Meanwhile, in Dunedin:

The idea of mothballing Dunedin's Forsyth Barr Stadium might raise eyebrows, but it is officially on the table for the Dunedin City Council.

The move was confirmed by council staff yesterday, even as Mayor Dave Cull said it was not a ''particularly constructive'' idea and was unlikely to solve the council's stadium-sized financial headache.

''My personal view is you can mothball the stadium but you can't mothball the debt, so you may as well have the stadium,'' Mr Cull told the Otago Daily Times.

His comments came after council chief executive Dr Sue Bidrose said mothballing the venue was one option among many being considered as part of the stadium review.

The review, which aimed to address $3.79 million of losses forecast by Dunedin Venues Management Ltd over the next three years, was announced in January and due to be completed by early August.

I really don't know whether mothballing helps: it depends what portion of the ongoing losses are sunk for the Council and what part are operational losses that could be stemmed by shutting down.

I do expect that Dunedin stadium's financial prospects are worsened if Christchurch gets a big new stadium that would draw acts that might otherwise go to Dunedin, though there aren't many going there now.

I also expect that somebody in the Otago Econ department could set a fun intro micro exam question hitting the usual firm shut-down point problem using Forsyth Barr as set-up. If I were setting it up, I'd specify that I was using made-up numbers, and set the solution such that the stadium is worth keeping open, but only because the main debt costs are sunk. In part (b) I'd then ask whether the next city up State Highway 1 should build an even bigger stadium that would have similar finances. Ideally, the students would recognize that it's better to avoid sinking the costs in the first place.

Reader mailbag: Dunedin plastic mountains edition

In the inbox, from our Professor of Finance:

Oh the irony - the 'sustainability' of recycling

Ratepayers are going to be charged more to keep producing a 'good' that nobody apparently wants or needs! Now that's certainly a 'sustainable' policy…

The ODT article forwarded me by the good Professor Glenn Boyle notes:

As a stockpile of the city's plastic waste grows ever bigger, the Dunedin City Council is being warned it may have to increase rates if returns from recycling do not improve.

The amount Dunedin people recycle has increased by a third since a new service was introduced in 2011.

That increase, combined with the high New Zealand dollar and a four-month stay on sending some plastics to the main Chinese market following a crackdown on contaminants in recyclables that has put traders off selling to China, resulted in the council running the service at a loss last year.

...The situation has prompted council solid waste manager Ian Featherston to warn the council this week that although the exchange rate was falling and new markets for the materials were being sought, the reduced target of a $210,000 return this financial year might also be difficult to achieve.

In that case, the kerbside recycling targeted rate would need to be increased next year from $64 to $69, he said.

Mr Featherston said Dunedin people recycle about 30 tonnes of material a month.

The stockpile of plastics being held had now reached about 150 tonnes.

Recycling programmes can still make sense even if they run at a loss, but only if the costs of disposing of this kind of plastic via the recycling system is lower than the costs of disposing of it via landfill. If it costs $30/tonne to get rid of waste at the landfill and the net costs of a recycling programme are $20/tonne, we're still $10/tonne better off by having it.

When I'd run some ballpark numbers on Christchurch's system in 2009, it looked like we were paying at least twice as much to get rid of waste via recycling, on average, as we were paying for disposal at Kate Valley. Some recyclables are of high value and are worth sending through a recycling system, but most of it is not worth the cost.

The numbers in Christchurch have likely changed with our newer bin system that separates out composting waste; the Otago numbers too could vary. I'd be surprised if it made sense to be stockpiling plastics in hopes of shipping them to China, but it's not impossible.

Marijuana snark

Ole Rogeberg produced a pretty thoughtful critique of the Dunedin Longitudinal Survey group's finding that marijuana use reduced IQ. And, he subsequently wrote a very nice summary of the dispute, along with some musings about whether scientific progress is helped or hindered by media sniping.

Rogeberg's critique wasn't based on replication of the Dunedin study. Indeed, Rogeberg couldn't even get some summary stats out of the Dunedin group. He writes:

When I originally started looking into this last August, I sent an e-mail to the corresponding author asking for a couple of tables with information on “pre-treatment” differences between the exposure groups. I did not receive this. This is quite understandable, given that they were experiencing a media-blitz and most likely had their hands full. I therefore turned to past publications on the Dunedin cohort to see if I could find the relevant information there. 

Do read the whole thing. It has a whole lot of very substantial critique. But this bit above piqued my interest. Because he was criticized by Dunedin's Prof Poulton for, well, you read it:

Rogeberg said the political approach to cannabis could change depending on whether there was a change in young smokers' IQ because of the drug itself, or because of living conditions.

He said his study did not mean the results of the Dunedin study were discredited, but it was fair to say the New Zealand study's methodology was flawed and the results premature.

But Professor Richie Poulton, co-author of the Dunedin research, said Rogeberg's data was not taken from real people.

"Rogeberg's challenge is based on simulations, but we used actual data on 1000 people to carry out the analyses he suggested," he said. [emphasis added]

I'm going to take this as Poulton offering to share his data with Rogeberg. Because it would be rather, well, gauche to criticize somebody for failing to use data you've refused to share.

I completely understand the Dunedin Longitudinal folks' unwillingness to share data given the rather high costs they've incurred in collecting it; it just seems off to critique somebody for having used simulations rather than data after you've refused to share the data.

Dunedin aftermath

Given that Dunedin chose to burden itself with a ridiculous stadium investment, it then became optimal for Dunedin Council to bail out the local rugby team - it cost less than Council would have lost in rental revenues from the stadium if the Otago Rugby Union went bankrupt.

Here's Dunedin Mayor Dave Cull (who was on Council but wasn't mayor when Council decided to build the stadium; he had voted against the stadium):

The ORFU was bailed out because "the financial model around the so-called private sector funding component of building the stadium is dependent on revenues from the games that professional rugby play there.

"I'd have to say, before it was being built and right up until now, that was the most imprudent, risk-laden way of financing anything. It was basically pretty stupid, but we've got it, and we have to find a way of maintaining the revenue stream for that, or it falls back on the ratepayer. This deal has avoided that,'' he told Radio Sport.

The NZ Rugby Union had previously said the new stadium would be key for the Otago team's viability; I doubt they expected it to be key in ensuring a Council (and NZRU) bailout.

Meanwhile, there's an investigation into what the stadium actually did cost the city.

Previously...