Treasury says economic benefits from the last challenge not established.

Treasury has advised against taxpayer backing for Team New Zealand in the next America's Cup, labelling it "poor value for money".

The Government contributed $5 million to Team New Zealand to help retain key staff soon after its 8-9 loss in the 34th Cup in September last year - against Treasury advice - and is considering investing a similar amount to the $36 million contributed last time.

Treasury repeated its opposition in March, documents released to the Herald under the Official Information Act show (see documents below).

It told Economic Development Minister Steven Joyce and Finance Minister Bill English that Team NZ should get private backing and that "the extent of any positive economic impacts from a Government contribution [to the last challenge] have not been established" and could be gained without putting in public money.


"A number of benefits from Government support are often claimed, including increased economic activity, tax revenue, employment and an opportunity to promote New Zealand industry and tourism.

"However it is likely that many of these benefits would be achieved if TNZ were to enter without Government support."

The Government could run promotional activities similar to San Francisco at a cost of $4 million at the next campaign without a large investment in TNZ, it said.

The documents released to the Herald are heavily redacted. The total figure sought from the Government has been withheld but was to involve payments up until 2017.

Taxpayers contributed about 20 per cent of the cost of the last campaign, and Mr Joyce has said a similar investment is possible this time.

Since Treasury's advice in March, an economic impact report estimated the last campaign added $87 million to the economy, raised $17 million additional net tax and about $38 million direct and flow-on tax.

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Treasury yesterday told the Herald the economic impact report done by Market Economics following its last advice, did not include "a cost-benefit analysis".


"We note that economic impact assessment reports tend to overestimate benefits of activities as they often do not distinguish what additional activity is created."

In particular, given the reputation of the boat-building industry, businesses would have attracted some business and labour and resources would have been employed in the absence of funding of Team NZ.

Mr Joyce said he disagreed that Team NZ was poor value for money.

"If you look back in history I don't think Treasury has ever been a fan of this stuff or anything that fits into the national promotion argument. Sometimes their caution is well placed and certainly we should be cautious but if we took a blanket approach to things that Treasury didn't like in this area then there's a whole lot of things we wouldn't be doing about promoting New Zealand on a world stage."

He also disagreed that New Zealand could necessarily reap the benefit of any challenge without putting money in because a challenge may not otherwise be possible.

"If you go back to the reason the Government became a sponsor in the first place it was literally because the alternative was not having a challenge at all."


Venue would be important in the decision, with San Diego preferred to the Bermuda, Mr Joyce said.

Team NZ chairman Dr Keith Turner said the study done after Treasury gave its advice showed that the public investment last time more than paid for itself in tax revenue without factoring in intangibles such as bolstering awareness of "brand New Zealand" and developing carbonfibre and other yachting technologies.

"You have to be somewhat strategic in thinking about the benefits as well as strictly economic."

Government backing was "absolutely critical" to fund a credible challenge, Dr Turner said and he did not believe New Zealanders would like a half-baked entry.

Some public funding was needed because New Zealand did not have many very rich people prepared to back a campaign as challenges from Italy and Switzerland and also Oracle have had. The venue will be announced on December 3.