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Secret Singapore deal latest in mixed history for growth fund

Sep 30th, 2016 | By | Category: Featured Article, Local body elections, News

Singapore Airlines ‘Capital Express’ passengers enjoyed champagne, flowers and positive press in at Canberra  – but the welcome has been cooler in Wellington since last week.

After traditional Māori tarmac greeting for the first flight on September 21, the air here been turbulent in Wellington as its council faces scrutiny over its decision to subsidise this new service.

A subsidy approved from the Wellington Economic Initiatives Development Fund will subsidise Singapore Airlines’ new Wellington flights costing ratepayers up to $800,000 a year over the next decade.

Mayoral candidate Justin Lester confirmed the figure during a press conference held earlier this week at Whitireia Polytechnic.

“You take an $800,000 investment and get a $45 million return, that’s a wonderful outcome,” said Mr Lester.

The Wellington Economic Initiatives Development Fund was set up in 2013 by the newly appointed council chief executive Kevin Lavery who floated the idea of providing seed funding for events and partnerships to help stimulate the local economy.

Initially suggesting a $2 million fund, the council put aside $3 million thanks to the expectation of a budget surplus.

Funding decisions for initiatives over $100,000 were made by Mayor Celia Wade-Brown, Councillor John Morrison, Councillor Jo Coughlan, and chief executive Kevin Lavery while decisions under $100,000 were made by Lavery.

Councillors raised concerns the fund’s usefulness would be stymied by over-reporting of the fund which led to an agreement that an annual report would be sufficient.

“If you over-legislate you’ll end up killing the goose that lays the golden egg,”  Morrison was quoted in the (publisher), in (date).

Morrison was credited with luring private company CallActive to Wellington in the same year that loaned $300,000 from the fund with the expectation the company would bring jobs to Wellington.

CallActive was put into liquidation in November 2015 and the council was left trying to recover the funds.

In the wake of the failed loan to CallActive and concerns raised by counsellors about the way the fund was being administered, the Development Fund panel was increased to eight members in March 2016.

Those voted on to the panel were Simon Marsh, Ray Ahipene-Mercer, Simon Woolf, Mark Peck and Sarah Free.

Contributing to events such as the Cricket World Cup, the Cuba Dupa annual street festival, World War I commemorations and the restoration of Bats Theatre are among over 30 applications funded so far.

The subsidy paid to Singapore Airlines was approved by the Wellington City Council in January, linking Singapore for the first time with the capital cities of both New Zealand and Australia.
Singapore Airlines announced the new Capital Express route in January saying the new service would be aimed at the leisure, government and corporate markets which are more likely to fly business class.

The ACT Government and Canberra International Airport also welcomed the new service after working with Singapore Airlines for some several years to commence international flights from Canberra.

This included the expansion and refurbishment of Canberra International Airport which cost in excess of $400 million, according to reports in (publication).

 The direct international flights are expected to create significant positive economic and social impacts for Canberra.

Wellington city councillors continue to argue that criteria for panel decisions including business loans need to be reviewed and that comprehensive reports should be presented to councillors on a regular basis.

At the news conference this week attended by mayoral candidates Jo Coughlin, Lester, Leggett, Nicola Young, Helene Ritchie and Andy Foster and Whitireia journalism students on Tuesday, Mr Foster said there needed to be a review of delegation of authority for all discreationary funding.










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