‘Midas touch scenario far-fetched’

Press, 30 March 1989, Page 21

‘Midas touch scenario far-fetched’

PA Wellington The economic benefits for New Zealand from any America’s Cup defence would depend on the buoyancy of the economy at the time, according to a prominent economist.

Business and Economic Research’s Kel Sanderson was sceptical of a “Midas touch” scenario from being the country holding the cup. He said there had been no sound economic research done on the economic benefits of New Zealand hosting a challenge.

But he foresaw the major benefits being in the form of capital investment rather than money from those who came to watch.”

Mr Sanderson said most capital investment would

be in the building of accommodation and office blocks. “But we’re not about to see a major track in the New Zealand economy over the next two and half years,” he said.

He said any long-term investment by “big business people” who came for the cup challenge would depend on the environment being conducive to investment.

“If the economy was near the bottom it would stop us going quite so low, and there could be quite a big kick if things were good at the time.”

He said the Perth experience would indicate that investment was shortlived.

“The Perth mistake was that it was a speculative boom and that is becom-

ing unravelled, people have lost out. There was lots of contraction but not much has stuck,” he said.

He said it would not be wise for New Zealanders to speculate on the back of the America’s Cup coming to New Zealand, as was done in Perth.

“It would serve themselves right if they lost out. Much accommodation and commercial property in Auckland is overbuilt at the moment.”

He said an influx would fill this empty space up rather than generate new growth.

“All it would mean would be less of a blizzard for the property market,” he said.

He said speculative investment would also depend on the venue.

“If there is some sort of sophisticated marina development th ?.n we should get a bit of a kick out of that.”

Tourism wc ild also be a money spins r with an increase in 'oreigners visiting the t intry to watch the cup icing, he said.

There could I ndirect effects such as , wth in technology, and Sanderson cited as an ample the Auckland I ersity engineering and lysics departments whi. have in the past been involved in research related to yacht design.

He said the economic benefits would tend to be localised to Auckland, but could indirectly affect the whole of the country if the economy was conducive to investment at the time.