The Mornington Peninsula Residents and Ratepayers Association reported the shire to the Victorian Competition and Efficiency Commission for breaching competitive neutrality policy in costings for the centre and for lack of transparency.

The commission monitors unfair competition by government that threatens the financial viability of small local businesses. It aims to ensure pricing reduces the burden on taxpayers if businesses can provide more effective services at a lower cost than government.

In its investigation last year, the commission found there were "material gaps" in the shire's costing exercise and the council had not established a full cost-reflective pricing structure for the centre's business activities. As a result, it ordered the shire to review and document its commercial activities at the centre, address adjustments for payroll tax, debit tax and insurance, and conduct a public-interest test.

It also ordered the shire to provide written advice on its progress in implementing the recom-

mendations.

The residents association laid its complaint in May 2007.

It stated that the shire had not "correctly identified, accurately costed and allocated its costs across the business activities and had not priced its fees and charges to be fully cost reflective". Nor had the shire taken adequate steps to inform the community of the extent of losses and resultant subsidies, the association stated.

"Council has failed to have due regard to the efficient allocation of resources and has failed to consider and cost alternative options or means of operating the business in a transparent way and in consultation with the community," the association stated.

The commission's report quoted council minutes stating a subsidy was required after a year of operation to make the centre financially accessible to all.

The shire was unable to comment on the order, and on current losses believed to be in the region of $500,000, before The Mail's deadline.

The shire is planning to build a centre similar to Pelican Park at Rosebud once differences over a foreshore site are resolved.