Rugby World Cup guests soak up $12m

Photo / Sarah Ivey

Taxpayers will put up an extra $12 million for the Government to hold state functions and accommodate official guests for the Rugby World Cup 2011.

The total bill might be more if the Government reimburses income and withholding taxes to organisers of the tournament - though Rugby World Cup Minister Murray McCully says this agreement, while still in place, had no practical effect.

Ministerial Services usually budgets about $4.5 million to host official guests of the Government, including receptions, ministerial functions and national anniversaries.

But this is expected to balloon during RWC 2011, as outlined in the fiscal risks of the Budget Economic and Fiscal Update.

"It is currently estimated that, beyond the annual budget of $4 million, a further $12 million will be spent on showcasing New Zealand to a wide range of overseas visitors coming to New Zealand in connection with the event," Mr McCully said.

"These costs include official events, accommodation and hospitality for the guests of the Government."

Mr McCully said the amount could change.

"Until we know how it will pan out, we just don't know what the numbers will look like. I wouldn't say there was any science around that at the moment."

Mr McCully said other agreements for the Crown to refund any taxes for the organisers of the tournament - Rugby New Zealand 2011 and the New Zealand Rugby Union - were outdated.

The agreement was listed among the unquantifiable liabilities in the Budget.

"The Crown has further agreed to review its level of support to the tournament if the actual tax revenue arising from the tournament exceeds forecasts," it says.

But Mr McCully said the clause meant nothing.

"It reflects a clause in the original agreement negotiated with the previous Government, that needs to be disclosed in the accounts, but has no practical effect.

"It was just there to reward the union if there was an exceptional outcome from the World Cup income, but ... we've moved on, basically. The circumstances in which the clause was negotiated have been superseded by the global economic crisis."

Rugby New Zealand 2011 has forecast a loss of $39 million for hosting the tournament. It will pay for accommodation, transport and other services for visiting teams, offsetting those costs with ticket sales.

The loss will be paid two-thirds by the Government and the remainder by NZRU.

Mr McCully said there had been no further discussion about paying the NZRU a reward if the tournament produces a windfall.

The tournament is expected to bring in $500 million to the national economy, mainly through spending from about 60,000 overseas visitors.