Paul Kane: NZ will score as RWC benefits flow for years

Photo / NZ Herald

Opinion

Irrespective of how the All Blacks perform on the playing field, New Zealand will be a big winner during and following the Rugby World Cup.

Yes, we all want the All Blacks to win and for the team to get rid of the "choker" tag and bury forever George Gregan's famous retort "four more years", but there can be little doubt this country will score heavily not only come September and October, but next year and the years following.

There's been much debate already about the cost of the cup, the expected $40 million loss (two-thirds of which will be covered by the Government in what I prefer to call an investment), the validity of estimates on television viewing numbers, price gouging by hotels and those offering private accommodation, and the pace of ticket sales. On the flip side, there's the fact the Government will receive about $112 million in extra tax revenue.

This is the norm before events like this - before visitors arrive and start flashing around their foreign currency. The scale is different, but the same debates were voiced before the last Rugby World Cup in France in 2007, the Fifa World Cup in South Africa last year and even the upcoming Olympics in London next year.

We can only crystal-ball gaze as far as London is concerned, but both the 2007 rugby cup and 2010 Fifa cup gave their countries significant economic boosts.

The French tournament was estimated to deliver a total economic impact of $5.7 billion, while South Africa received a $3.1 billion boost.

To see how major events impact on a local economy, we should look at the recently completed Grant Thornton International report entitled "South Africa 2010 Fifa World Cup, a year in review".

During that tournament, 350,000 foreign visitors spent around R8 billion ($1.4 billion), resulting in average hotel room rates rising by 61 per cent, hotel occupancy by 18 per cent, Visa card spending by 55 per cent, retail sales 7.4 per cent, food and beverage industry income 10.4 per cent, and the beer market grew 12 per cent.

This is the type of spin-off that puts money in many different pockets, not just the corporates. There's the extra bar and restaurant staff employed, hotel staff who work longer hours, taxi drivers who ferry people to and fro, and the shops that will host them at different times throughout the competition, to name but a few.

Those were the short-term benefits for South Africa. Where the longer-term growth comes in is in tourists attracted to South Africa. Ninety-two per cent of visitors indicated they would recommend South Africa to friends and relatives and 90 per cent said they would visit again.

Even before the first rugby ball is kicked in the 2011 cup, New Zealand, thanks to the much needed infrastructure spend that's occurred, is well ahead.

Would developments such as Dunedin's magnificent new enclosed stadium and the upgrading of Eden Park, Queen's Wharf, Auckland's waterfront and parts of Auckland motorway have occurred without the Rugby World Cup?

Highly unlikely, with a cumulative spend of over $1 billion in a period of low business activity during the middle of the world financial crisis.

Just as the cup has been a catalyst for infrastructure spend, it will do the same for New Zealand business. New opportunities have or will be created, especially in the service and professional services areas via various expos and trade functions, and the myriad hosting opportunities that will be available during the event.

Auckland will be the big winner. By hosting quarter-finals, semifinals and the final, along with other pool games, Auckland will be the hub for nearly all overseas visitors, especially now that Christchurch, the gateway to the South Island, is unfortunately no longer an option.

The Reserve Bank governor, Allan Bollard, predicts that hosting the cup will bring $700 million to the New Zealand economy - there's already been the big spend on infrastructure upgrades, up to 80,000 international visitors are heading this way, and the positive spin-off from the event will continue for many years.

If we could just guarantee that the William Webb Ellis Trophy will remain in New Zealand after October 23 then the guaranteed financial windfall, combined with a psychological boost, would surely test Bollard's growing fears for inflation, and confidence would envelope the country.

* Paul Kane is a partner at accounting firm Grant Thornton.