By Concerned Ratepayers Kapiti
Followers of Concerned Ratepayers Kapiti will know that we’re not the greatest fans of the Council’s Economic Development programme. It costs you $3 million a year and we’re doubtful (to put it kindly) of the results that this spending will generate.So, we are always interested when the Council publishes information with the Council’s estimates of the impact this spending has.One of the things the Council talks about a lot is the return to the community from its Major Event Fund – a fund that historically has been between $200,000-$250,000.
The Fund subsidies major events such as the Kapiti Food Fair. Every year, in its Annual Report, the Council outlines what it thinks is the return to the community from this fund. On 11 July last year, Mayor Janet Holborow and Chair of the Council’s Economic Development Trust, Neil Mackay, issued a press statement bragging about the return it had made on its investment. Its key claim is that every dollar spent through the Major Events Fund earned $33.50 in return.
Other than very risky investments (think Bitcoin), no commercial investment earns this type of return, year in and year out. And as it turns out, neither does the Council’s Major Events Fund.
The brag that the Major Events Fund earns a 33½% is simply a porkie the Council tells itself and you to talk up its economic development programme.What KCDC does – through a model run by Infometrics – is compare its annual spend of the Major Events Fund (which was $200,000 in 2024/25) to the level of turnover from the events that it has sponsored. The turnover from each of the events that year was this:
In claiming that its spending earned a 33 ½ % rate of return, what the Council is saying is this: that every dollar of turnover from the events listed above is due solely to its sponsorship of these events. Every single dollar.Let’s make this real in terms of the Kapiti Food Fair (which is a great event, by the way).
The Council is saying that there was no value added by the food stall owners at the Kapiti Food Fair. Stallholders contributed their own time and money – but the Council is saying that effort didn’t add anything at all, because it’s saying that all of the turnover was due to its small subsidy. The entrepreneurship of the stallholders or their intellectual capital accounted for nothing – because KCDC is saying that all of the turnover was due to its small subsidy.
But we didn’t notice a Council stall at the Food Fair selling great food to you – did you? How can the Council claim that all of the turnover at the Food Fair was due what the Council did at the Fair? Basically, its argument is that it has “verbal feedback” from event organisers that these events would not have proceeded without the Council’s grant. But event organisers would say that, wouldn’t they? No one is going to apply for a Council grant of tens of thousands for dollars each year for (say) a Food Fair, and say in their application “well, we don’t really need your money, but it would be nice if you gave it to us anyway”. No-one writes a grant application that says that.
The Council will also say that it is uses a model run by Infometrics, and it relies on its methodology, to generate its figures. But KCDC should think about what it is modelling. It is saying that the private sector folk who runs these events – and put their own sweat, ideas, money and innovations into it – have contributed absolutely nothing to the turnover that is finally generated.That seems like an utter insult to all of the stallholders at the Kapiti Food Fair, and to all of the organisers and business people who made all the events what they were.
And KCDC is measuring turnover – not profit. You can have events that have a lot of turnover but actually don’t make much of a profit. The real economic value add of these events should be measured by the profit made and the income earnt, not by the level of turnover.
We were surprised to see the head of the Council’s Economic Development Trust, Neil Mackay, sign up to last year’s press release. We don’t know how he can plausibly be the head of an entity designed to boost the performance of private sector business if he thinks business success at Major Events is due to the level of KCDC’s subsidy, and has nothing to do with what business people do or the risks they take. The Council – and particularly some Councillors – are desperate to make the case for Council’s involvement in economic development activities that cost you – residents – about $3 million a year. Because some other Councillors are sceptical about this type of spending – and its starting to be questioned more rigorously than ever before. So, it likely that KCDC make these exaggerated claims about the Major Events Fund to shut down criticism of its economic development programme.
It’s not the only outrageous claim that KCDC makes about the economic impact of its economic development spending. We will have another article about this to share with you very soon.
At Concerned Ratepayers Kapiti we are sympathetic to keeping the Major Events Fund – at least it provides direct, public-facing events that are well loved in the community. But we say:Council should stop telling porkies and not take all of the credit for the commercial success of the events that it funds. If it’s going to continue to do this, at least it should measure profit or income, not turnover.
Council should respect the time, energy, financial investment and entrepreneurship of the private sector organisers and participants in these events – and recognise that they actually are the value of these events. These events exist – and are fun – only because of what these people organise and bring to the event. It’s not about the Council at all, even if KCDC thinks and tells you it is.
KCDC should stop bragging about dodgy statistics in its Annual Reports. And the head of the Council’s economic development agency should stop issuing press releases that are so disrespectful – and show such little understanding – of the value brought by the private sector to Major Events.
Finally, KCDC should be honest with itself – and with you – about what is the actual value its economic development investment actually delivers for you. If it doesn’t really know what the actual value add is – which it actually doesn’t – it should be honest about that, too. So that when it comes to a next debate about whether or how much to spend on economic development – during the development of the next Long Term Plan – we can actually have a debate about real things rather than about made up statistics.