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Planning and preparation for the America’s Cup

28 May 2002 Hon Trevor Mallard Speech Notes

1.00pm


Thank you. It is indeed a pleasure and an honour to be here today.

Thank you to Peter for your words of introduction. In New Zealand sporting circles, Peter has always been regarded as one of this country’s top sporting commentators. What has become clear to me since I have been in this job is how highly regarded he also is, outside of New Zealand.

I think Peter’s words when Team New Zealand won in San Diego is probably one of the most replayed pieces of sporting commentary in New Zealand broadcasting history – certainly in recent times.

Those of you who are familiar with that know the pride and excitement in his voice and remember how it reverberated throughout the country. We are a great sporting nation with many proud victories. But that historic win will always be one of our finest sporting moments.

Two years ago in Auckland we felt a similar pride when Dean Barker sailed home to that spectacular welcome in the viaduct to secure the cup for New Zealand.

The pride that we felt in winning such a prestigious sporting prize was also mirrored by the pride that the event itself was so successful.

What made it such a success?

We are helped by a brilliant physical environment for such an event. I’ve been told that there is no city in the world that could offer such a suitable venue and one that integrates into the city so well. It is hard to admit, as a Wellingtonian, but I support such a view.

We have within our country – and in particular around this region - people with the skills and expertise to support such an event in areas like the marine industry and information and communication technology.

New Zealand is a fantastic country. It is beautiful, it is filled with adventure, it is relaxing, it is sophisticated, and it is safe. Qualities like this make it a great place for friends and supporters of the various challengers to come and visit. We will, of course, encourage that.

In a country our size, the impact of holding an event this size is huge not only in terms of national pride, but also with the economic benefits. That is why the government is taking such an active interest and why the Prime Minister made the decision to appoint a Minister for the America’s Cup.

It is a title that does create a bit of interest among international media who find it an interesting illustration of the importance of the event to the country.

I must confess that even after well over a year in the job – it still sounds strange even to my ears, and slightly daunting, to be associated with such an event with such a prestigious history. I do spend a lot of time explaining to people that the job gives me no jurisdiction over the event itself or the participants in it.

It is neither my business, nor my desire, to get involved in some of the internal politics within the America’s Cup World. I think I am exposed to enough of that in Wellington.

But the reason for the appointment was simple. Government involvement in such an event crosses so many different portfolios that we felt it was important that one person be responsible for facilitating government aspects of it.

I’ve been working closely with other Ministers including Immigration, Trade, Tourism, Revenue, Economic Development, and Industry Development to try and facilitate more cohesiveness in the government’s approach to making the event a success.

We are pragmatic about the cup. We are interested in enhancing the potential it offers us as a nation – including the economic potential. For us, that includes support for the industries that can use the cup to grow.

That is why Cabinet agreed yesterday to a law change what will exempt superyacht crew members from New Zealand income tax if the yacht is in New Zealand for private and domestic purposes.

New Zealand’s boat builders and refitters are among the best in the world. They have a reputation for quality and innovation that is seeing New Zealand become the preferred South Pacific destination for superyachts needing maintenance and refitting.

But how we tax the crews of those yachts while they are in New Zealand is putting a serious barrier in the way of the industry growing. Under New Zealand's tax law, crews from yachts on longer visits here are taxable under the PAYE system. Yet the reality of the situation is that they are not here to conduct business – that is, they do not enter the commerce of New Zealand. While the crew members themselves are undertaking employment for reward in New Zealand, the yachts upon which they serve are in New Zealand only for the private and domestic purposes of their owners. There is a distinct difference between this, for example, and a crew member from a container ship or a computer engineer installing a piece of computer hardware.

We are acutely aware of the problems of crews becoming less interested in staying here because of the tax issue, especially for refits lasting many months. And crews can have considerable influence as to where the vessels go for refits.

The government had two choices - keep the tax law the same, and have the yachts and the refit business leave the country or change the tax laws, keep the vessels here and help the industry flourish. That is what drove the law change, which will apply from today.

Elsewhere, the government has already approved funding of just over $3 million for America’s Cup related activities. There’s likely to be about the same amount available for allocation to initiatives covering both America’s Cup and Lord of the Rings. It’s a relatively small investment when you consider that the conservative estimate of the benefit of the last defence was that the event generated $640 million of economic activity in New Zealand.

Unfortunately, there is a distinct lack of understanding among many New Zealanders that this support is not for the racing itself, but for leverage activities. We are dealing with some resistance to government funding – even of a modest nature – going towards America’s Cup related activities.

While a lot of our focus is centred on trade, tourism and investment opportunities, we also want to help make the event a success by good facilitation of government services to syndicates. Within the bounds of our laws and regulations, we want to make your stay here as hassle-free as possible and we want to make you and your families feel welcome. Although I think it goes without saying that when it comes to the America’s Cup regatta itself, our cheering will be firmly directed towards Team New Zealand.

As far as liaising with syndicates and other visitors goes, we do want to try and make life easier. That’s why there will be a small office staffed in the viaduct basin, in Tourism Auckland’s office where government related America’s Cup queries can be directed. My intention is not for the staff in that office to be the experts on everything related to government, but for them to have a good knowledge and understanding of the issues and personnel around the America’s Cup and for them to be able to facilitate speedy access to information, advice, and assistance as necessary.

Many of the trade, tourism and investment activities centre on using the event to help realise long-term policy objectives.

For example we’re capitalising on the interest in the cup and New Zealand by funding marine sector supplements in carefully targeted marine industry magazines. The supplements will be aimed at increasing the exposure of the New Zealand marine industry and America’s Cup to subscribers of prestigious and key yachting publications. They will also highlight the technical aspects of the industry like boat building and componentry.

The European supplement, approximately 80 pages in length, will be inserted
into the July issue of Yacht Capital, Italy. The second supplement for the
USA market will be similar in length and contents and will be inserted into
the September/October issue of Yachts International USA.

We’re nearly halfway through a dozen seminars being held in challenging syndicate markets to promote the America's Cup, New Zealand Investment, Trade, Tourism as well as food & beverage. They are helping to facilitate business connections, showcase key export sectors, and promote travel packages to the event.

The early feedback from these events has been positive – including high attendance rates, good local media coverage and increased interest in New Zealand and the America’s Cup event. While, we are funding these events in the interests of our economy – I think that they will also have positive flow on effects to challenging syndicates. Increased interest in the cup in your home markets can only be an advantage.

So far events have been held in London, Italy, France. Events in the USA start next week, followed by Sweden and Switzerland.

Through Tourism New Zealand, the government is working on co-operative advertising and promotion of America’s Cup travel packages with partners in the United Kingdom, Sweden, Switzerland, Italy and the USA. These are aimed at increasing travel to the America’s Cup event; expanding advertising exposure of New Zealand in key syndicate markets and providing new distribution outlets for New Zealand travel and tour operators

For example, in the USA, a promotional campaign involving three travel operators and a magazine insert programme is being developed. This will involve a six-page insert into both Sailing World and Cruising World with a run on of 10,000 for additional promotional purposes. Specific America’s Cup advertising will continue in these publications for a follow up period of three months.

In the UK, we are working in partnership with Tailor Made Travel and other associates on a promotional programme involving marketing America’s Cup travel packages through a direct mail piece to 50,000 UK consumers and GBR supporters club, advertising in selected yachting press, presentations to 15 UK yacht clubs, attendance at boat shows and other related events.

Elsewhere in Europe, Tourism New Zealand’s offshore posts are working on three proposals. The first is in Sweden and involves the Victory Challenge’s travel agent Scanlink, the New Zealand tour operator Southern World Vacations and Singapore Airlines. In Switzerland a promotion is being formulated with Alinghi’s official travel agent FERT and Singapore Airlines. There have been 800 confirmed travel bookings from Switzerland to New Zealand for the America’s Cup to date. In Italy a more extensive pitch to potential partners is also underway.

Again, while government support for projects like this is based on commercial and economic reasoning, I think that they also contribute to making the 2002-03 event a success for all of us.

We’re also currently considering a range of options to help show case our country to international visitors attracted to New Zealand for the America’s Cup. We are a talented nation across a range of sectors. Displaying those talents more strategically around the America’s Cup event will help make visitors’ stay in New Zealand more enjoyable, as well as having the potential to open up doors to future opportunity.

More detail on work we are doing in this area will be available over the next few months.

This is an exciting time for us all. Come October, I’m looking forward to some close competition on the water. Nothing we do will influence that. But I hope that government initiatives can help make the wider event a success not only for New Zealand but also for all the participants in the Cup and other international visitors.

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