Fund to cover losses is axed

16:00, Feb 11 2014

A fund set up to help secure top entertainment acts for New Plymouth has been axed by the council.

More than $400,000 will be pulled out of the fund, set up to underwrite events, and put back in the coffers as councillors have voted to start cost cutting in the draft Annual Plan.

The extra cash could be used to lower the New Plymouth District Council's proposed borrowing of $2.8 million intended to halt rates rises.

The fund was set up in 2009 after the Taranaki Arts Festival Trust asked the council to underwrite three major events - Womad, the arts festival and the rhododendron and garden festival.

The fund worked as a guarantee to cover any losses should an event fail, but was always classed as a "last resort".

While the $400,000 was never drawn on or worked into a contract, its disappearance could leave Taranaki struggling to attract events in the future as promoters often demand a "risk sharing" policy.


The money would now be used to either lower council debt, reduce release payments from the perpetual investment fund (PIF), or to lower rates.

The review of the underwrite policy was discussed in a council workshop and appeared in the agenda this week without consultation with Taft.

Councillor Marie Pearce said various event organisers across the province used the guarantee fund and although it had never been drawn on it would have been prudent of the council to consult those who could be affected.

"This has come before us too quickly," she said.

Taft chief executive Suzanne Porter said she was disappointed the organisation was not given the opportunity to have input.

"It's easy to get in strife when you are running a big festival. It can happen so quickly. If that were to happen I hope the door would be open and we would get a reasonable hearing with the council," she said.

First-term councillor Keith Allum proposed the money be put on to rates, so borrowing could be reduced.

Although this idea was seconded by councillor Grant Coward and supported by Murray Chong, the trio were told they could not legally decide how the cash would be spent, as it had to be moved into the draft Annual Plan so the public could make submissions on it.

Mayor Andrew Judd said promoters would have to work harder to ensure their event was a success.

"Lionel Richie is here without an underwrite," he said. "The view is we shouldn't be underwriting any events because it is a risk to the council and the ratepayers. It's a clutch that we simply can't afford."

Judd believed the money would be best spent to reduce internal borrowing.

"That money was just sitting there doing nothing and given our financial situation it could be best used in other ways."

Public consultation on the draft Annual Plan will run from March 19 to April 17, with submission hearings set down for June 4 to 6. A final adoption is set for June 24.

Taranaki Daily News