Taxpayer cash for golf open

Course owner Sir Michael Hill (left) and American Alex Prugh, winner of the 2009 NZ Open.

Upmarket event gets millions from government, even though the returns don’t justify it.

Taxpayers will pay $1.9 million to bankroll the next two New Zealand Open golf tournaments despite the predicted economic return falling well short of the requirement for such a large investment of public money.

The Major Events Development Fund investment requires a return of $4.50 for each dollar handed out. The 2012 and 2013 golf tournaments, which received taxpayer contributions totalling $1.15 million, returned $2.55 for each dollar received, documents obtained by the Herald under the Official Information Act show.

The projected returns for the 2015 and 2016 events are in a briefing for Minister of Economic Development Steven Joyce.

But the figures have been blacked out in the version given to the Herald. The report does state that the expected returns "are lower than those that would be expected at the requested level of investment".

Mr Joyce said the projected return was "just one of the things that is taken into consideration".

The tournament's funding application relied heavily on its ability to lure wealthy foreigners and high-powered business executives to play in the pro-am format at Sir Michael Hill's private golf course The Hills, near Queenstown, alongside the likes of Prime Minister John Key.

But a second report, detailing the leverage and legacy value of the 2014 tournament, says: "Experience has shown that it is very difficult to attract the top echelon of overseas business executives (and leaders of major corporates in New Zealand) to commit a week of their time (and the money) required to take part in the four-day NZ Open".

Two $10,000-a-player entries to the 2014 tournament allocated to Tourism New Zealand as part of the $900,000 public funding deal were given back after they could not be filled.

The spots eventually went to two executives from Indonesian state-owned energy company Pertamina at the invitation of New Zealand Trade and Enterprise.

It had been hoped the visit would help New Zealand sell geothermal expertise to Indonesia.

"Unfortunately, the Pertamina representatives were not able to stay on or include stops for business discussions outside Queenstown, and Geothermal New Zealand was not able to free a senior representative to engage with them at the tournament," the report says.

New Zealand First Leader Winston Peters said the golf tournament received taxpayer funding because it was a special interest of Prime Minister John Key.

"The [government] has been posing as frugal managers of taxpayer money. This is not frugal."

But a spokeswoman for Mr Key said the Prime Minister had no influence over how the grant money was allocated.

Mr Joyce said there was "no basis" to the view the tournament was a taxpayer-funded jolly for the wealthy and well connected.

"Attracting investment and profile to New Zealand is a serious business," he said.

The Major Events Development Fund's guidelines say applications are unlikely to succeed if they have "received [fund] support or other significant government funding in the past and have no credible evidence of future financial independence from government support".

The advice given by officials to Mr Joyce says six previous tournaments received a total of $3.6 million.

New Zealand Open organising committee chairman John Hart defended the use of taxpayer money to help run the event.

This year's tournament had met all key performance targets, revenue was growing and the percentage of government funding was declining.

Mr Joyce said he had told Mr Hart the tournament would not be bankrolled by the taxpayer on an ongoing basis. The government would drop its funding from $900,000 to $700,000 for each of the next two years.

But a one-off payment of $500,000 for television coverage means total funding for the event has increased to $950,000 for each of the next two years. In real terms funding has risen in each of the past four years.

Taxpayer funding for NZ Open golf:
•2012: NZPGA $500,000
•2013: NZPGA $650,000
•2014: NZ Open $900,000
•2015: NZ Open $700,000 + $250,000 for live TV coverage
•2016: NZ Open $700,000 + $250,000 for live TV coverage