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Statement of Proposal

Proposal by Manawatu District Council and Palmerston North City Council to establish a single Council Controlled Organisation for Economic Development and Tourism Services

What’s proposed?

At the moment Manawatu District Council and Palmerston North City Council purchase their economic development and tourism activities from Vision Manawatu (VM) and Destination Manawatu (DM). Manawatu District Council also purchases services from Feilding Promotion.

The role of Vison Manawatu is to attract and retain businesses and jobs in the region. It runs programmes like business mentoring, the Westpac Manawatu Business Awards and the Sustainable Business Programme.

Destination Manawatu helps develop the Palmerston North-Manawatu economy by improving the City and District’s image and marketing both to visitors and businesses. It also manages events in the City and supports other event organisers. Feilding Promotion supports and facilitates events for Feilding and the District as well as providing visitor information services.

The Councils are proposing to establish a single Council Controlled Organisation (CCO) to provide these services. A single organisation will improve the coordination of the services, give a one-stop shop for users, and provide some economies of scale.

A Council Controlled Organisation will ensure greater accountability for Councils’ ratepayer investment and achieve more strategic alignment to both Councils’ vision for the region. It will mean that the Councils will be able to appoint the directors of the board and will influence the setting of the strategic direction and work priorities of the organisation through a statement of intent process. This will give greater alignment between what the new organisation does and the goals of the Councils, and give greater accountability back to local communities.

Through these changes the Councils are seeking significant improvements in the delivery of economic development, including tourism, to the City and District in order to build on current economic strengths and attract more businesses and jobs to the area.

What it would cost?

The Manawatu District Council currently provides just over $658,000 of ratepayers money to economic development and tourism each year. This is unlikely to change in the future. However, if a single agency is established then Council does plan to review the level of funding one year after the agency is set up.

The City Council currently spends about $2.6 million a year on business support and city marketing and branding (excluding the Convention Centre). This amount is not expected to change as a result of this proposal.

There will be some transitional costs for the new entity, however it is anticipated these will be covered by existing budgets.

What if we don’t do it?

For the past few years economic growth in the region (Manawatu District and the City) has been behind the average growth in the country. There are many and varied reasons for this. However, continuing to purchase economic development and tourism activities from separate organisations could mean that opportunities for a more co-ordinated approach to improving the region’s economic performance are lost.

Could we do it differently?

Both Councils are committed to providing support for economic development. City Council surveys consistently show that promoting business and employment opportunities are in the top five things people think the Council should do for residents.

The Councils do not think that keeping the status quo of two external organisations is the best option as it can lead to fragmentation, lack of coordination, and a lack of clarity of roles. There are also perceived funding inefficiencies and some duplication of back-office functions.

The Councils could provide economic development services in-house (i.e. through a Council department). However, the Councils currently do not have the expertise for this. Also this option would make it harder to attract funding from Central Government or other organisations, and to undertake a more regional approach.

Another option is for the Councils to fund a single external organisation that is not a Council Controlled Organisation. This would provide the benefits of a more co-ordinated approach but there could be a perception that the Councils do not have enough influence over the direction of the external organisation, nor have enough accountability back to the community.