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Review of Marlborough Economic Development, Toruism and Events

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Review of Marlborough Economic Development, Toruism and Events REVIEW OF ECONOMIC DEVELOPMENT, TOURISM AND EVENTS SERVICES Final Report for Marlborough District Council March 2018 CONTENTS Review of Economic Development, Tourism and Events Services 1 Preface 7 Executive summary 8 Introduction 15 Scope 15 Approach 16 Current situation 21 Economic development services and investment in Marlborough 21 1. Are the right economic development activities being delivered? 28 1.1 What services/activities should be delivered? 30 1.2 Are there any gaps in economic development services? 50 2. Are services effective and providing value for money? 55 2.1 What outputs are being delivered? 58 2.2 What is known about the impact and effectiveness of existing services? 68 2.3 The overall effectiveness of economic development activities 101 2.5. Are services delivered cost-effectively? 103 2.6 Assessing whether the benefits of economic development activities exceed the costs 107 3. How should the services be delivered? 112 3.1 Does the existing model need to change? 114 3.3 What arrangements could be effective and efficient options for delivering economic development activities in Marlborough? 119 3.4 What is the recommended option? 125 3.5 What are the key benefits and costs of change? 126 4. How should the improvements be implemented? 128 4.1 Key opportunities and recommendations 128 4.2 Sequencing 132 APPENDICES Appendix 1 : Marlborough economic and industry trends 133 Appendix 2 : Determining a clear rationale for local government in economic development 138 Appendix 3 : Economic development services in other regions 141 Appendix 4 : Summary of national evaluation evidence 145 TABLES Table 1. Council economic development areas of focus, activities and resourcing 21 Table 2. Key economic development delivery partner arrangements and services 23 Table 3. Challenges and opportunities identified in Marlborough research, strategies and plans 33 Table 4. Economic development outcomes and major areas of activity 37 Table 5. Consistency of economic development services with key economic opportunities and challenges 40 Table 6. Consistency of economic development activities with appropriate roles of local government 46 Table 7. Outputs from local government funded economic development activities 59 Table 8. MDC economic development KPI measures and results 65 Table 9. Resident satisfaction with Council services 66 Table 10. Business Trust Marlborough KPI output measures 68 Table 11. Business Trust Marlborough client measures 69 Table 12. MRC F&B cluster outcome and output measures 72 Table 13. Destination Marlborough’s marketing activity KPIs 78 Table 14. Achievement of Regional Events Strategy 2013-2016 83 Table 15. Progress with Regional Events Strategy 2016-2019 (goals to be achieved by November 2017) 85 Table 16. Estimated economic impacts from Council supported events (2015/16 to 2016/17) 87 Table 17. Destination Marlborough’s Event KPIs 91 Table 18. Destination Marlborough’s i-SITE activity KPIs 92 Table 19. Smart and Connected sector group priorities and achievements 94 Table 20. Smart and Connected community group priorities and achievements 97 Table 21. Example performance measures 110 Table 22. Economic development delivery arrangements in a selection of districts and regions 118 Table 23. Assessment of options for enhancing the delivery of economic development services 121 Table 24. Potential costs associated with implementing improvements 127 Table 25. Selection of economic development services offered in other regions 141 FIGURES Figure 1. Local government economic development spend as a proportion of operational expenditure (2015) 25 Figure 2. Local government regional marketing and promotion spend per ratepayer (2015/16) 26 Figure 3. Local government marketing and promotion spend per capita (2015/16) 26 Figure 4. Destination Marlborough’s expenditure 2013/14-2016/17 104 Figure 5. Components of Destination Marlborough’s expenditure 2014-2017 104 Figure 6. Proportion of staff costs to total expenditure across selected RTOs, 2015/16 105 Figure 7. Council marketing investment per guest night, Tier 3 RTOs, 2016 106 Figure 8. Visitor expenditure per dollar of Council marketing investment, Tier 3 RTOs, 2016 106 Figure 9. Example hierarchy of outcomes for destination marketing and management activities 109 Figure 10. Growth in real GDP in Marlborough 133 Figure 11. Compound annual growth in real GDP for Marlborough and New Zealand 133 Figure 12. Growth in employment in Marlborough 134 Figure 13. Compound annual growth in employment for Marlborough and New Zealand 134 Figure 14. Population estimates for Marlborough for different age groups 134 Figure 15. Growth in visitor expenditure in Marlborough over 2009-2016 ($m) 136 5 PREFACE This report has been prepared for the Marlborough District Council by Stephen Knuckey from MartinJenkins (Martin, Jenkins & Associates Limited). EXECUTIVE SUMMARY What economic development services are being delivered and what investment is being made? The main economic development activities currently being supported by the Marlborough District Council are: Destination marketing and management (e.g., marketing campaigns and collateral, events facilitation) Business development and innovation support (e.g., support for mentoring, R&D projects) Sector and community development (e.g., Smart and Connected industry and community groups and related activities). Total Council investment in economic development activities was around $1.7 million in 2014/15 and has grown to around $2.1 million in 2016/17. Around 55 percent of the investment in 2017, $1.16 million, was to support activities delivered by the combination of Destination Marlborough, Marlborough Research Centre and Business Trust Marlborough. Overall, the Council is investing a reasonable amount of resources in economic development activities: Council investment represented around 2.0 percent of total local government operating expenditure in the region in 2015 and equated to close to $41 of economic development spend per capita. This was close to the average level of Council investment in economic development activities across New Zealand (2.1 percent of operating expenditure and $36 per capita). The Council’s investment in regional destination marketing activities through Destination Marlborough is also around average, at around $20 per rateable property and $12 per capita in 2016, compared to an average of $23 per ratepayer and $10 per capita across New Zealand. Are the right economic development activities being delivered? Is there a clear rationale for local government involvement? Our assessment is that the broad types of economic development supported by the Council are consistent with the identified opportunities and needs facing the region and are generally supported by evidence. For example, activities have focused on improving the attractiveness of the region’s town and community centres, connecting local businesses to R&D expertise and growing business support services in the region, growing the number of events, and diversifying the region’s economic base. However, there are two challenging issues, which the Council and delivery partners are aware of and beginning to address, that will require greater emphasis in future: Growing, attracting and retaining skills and talent Visitor product and experience development. In part, this reflects that Smart and Connected is based on a bottom-up process to engage with sectors and communities to identify priorities that impact on them. The industry and community groups established to date have not yet emphasised skills and talent issues, although the Visitor Growth Plan has identified destination management as an area that needs to be addressed in future. The Council has also been engaging with the wine industry about the skill demands it faces. 8 There are also clear rationales for the Council supporting the majority of activities that are being delivered and services tend to be appropriately focused on facilitation, information provision and addressing collective action issues. However, the long-term role for the Council in funding research projects through the Marlborough Research Centre (MRC) may need to be reassessed given the support being provided for the Research Institute for Viticulture and Oenology (RIVO). The Council should discuss the future mix of innovation activities with MRC once RIVO is established. Economic development activities have grown progressively as Smart and Connected has been implemented. The ‘Top of the South’ economic action plan that has been proposed with central government provides an opportunity for the Council to ensure that the investment going into different economic development activities reflects the relative importance of different opportunities and challenges. Several stakeholders said they would welcome a process to determine what the economy should aspire to over the long-term and how economic development activities could support the aspirations. We believe the process for establishing and reviewing Council and delivery partner economic development priorities and for determining the mix of investment and activities can be improved by: Moving beyond the Smart and Connected framework and developing an overarching economic strategy and plan to shape the priorities for the region’s economic development investment and the related activities of the Council and its delivery partners. Holding an annual strategic workshop or forum to review economic issues and opportunities facing the region, what has been achieved through
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