ECONOMIC IMPACT ASSESSMENT OF PORIRUA ADVENTURE PARK

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1 ECONOMIC IMPACT ASSESSMENT OF PORIRUA ADVENTURE PARK Final Report 25 July 2018

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3 CONTENTS Executive Summary 1 The purpose 1 Economic activity 2 Economic impact 5 Potential to leverage and realise economic benefits 6 Community benefits 7 Introduction 8 Purpose 8 Background 8 Method 8 Report structure 10 The Study Areas 11 Porirua City 11 Wellington Urban area 13 Porirua Adventure Park 15 Project activity 16 Economic Impact Analysis 20 Porirua City 20 Wellington Urban area 23 Maximising the local and regional benefits of the Porirua Adventure Park 26 APPENDICES Appendix 1 : Regional I-O Multiplier Analysis 31 Appendix 2 : Interview list 33

4 TABLES Table 1. Porirua Adventure Park construction costs 16 Table 2. Park operations and employment by study area 17 Table 3. Park use by visitor type and profile 18 Table 4. Visitor expenditure by study area and profile 19 Table 5. Visitor expenditure for Porirua and the Urban Wellington area 19 Table 6. Construction impact on Porirua City 20 Table 7. Ongoing operational impact on Porirua City 21 Table 8. Park operations impact on Porirua City 21 Table 9. Visitor impact on Porirua City 22 Table 10. Construction impact on Wellington Urban area 23 Table 11. Ongoing operational impact on Wellington Urban area 24 Table 12. Park operations impact on Wellington Urban area 24 Table 13. Visitor impact on Wellington Urban area 24 FIGURES Figure 1. Porirua City 11 Figure 2. Wellington Urban area 13 Figure 3. Concept image Porirua Adventure Park 15

5 PREFACE This report has been prepared for Porirua City Council by Jason Leung-Wai and Karyn Stillwell from MartinJenkins (Martin, Jenkins & Associates Limited). MartinJenkins advises clients in the public, private and not-for-profit sectors. Our work in the public sector spans a wide range of central and local government agencies. We provide advice and support to clients in the following areas: public policy evaluation and research strategy and investment performance improvement and monitoring business improvement organisational improvement employment relations economic development financial and economic analysis. Our aim is to provide an integrated and comprehensive response to client needs connecting our skill sets and applying fresh thinking to lift performance. MartinJenkins is a privately owned New Zealand limited liability company. We have offices in Wellington and Auckland. The company was established in 1993 and is governed by a Board made up of executive directors Kevin Jenkins, Michael Mills, Nick Davis, Allana Coulon and Richard Tait, plus independent director Hilary Poole.

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7 EXECUTIVE SUMMARY The purpose Select Contracts are seeking to build the Porirua Adventure Park, which is a major investment into a destination visitor activity. The current proposal is for the Park to be located at Rangituhi/Colonial Knob in Porirua City, providing a range of activities that could attract over 200,000 visitors each year. A resource consent application has been lodged and construction is expected to begin in the first quarter of The Council s role is to assist Select Contracts in getting the project up and running. The Council is looking for a better understanding of the benefits the project might bring to the district, and the wider Wellington region. The Council is also looking at how it might leverage the project, to maximise the activity and benefits. MartinJenkins was asked to conduct an Economic Impact Assessment and quantify: visitor numbers (projected additional visitor numbers) guest nights (resulting growth in guest nights) visitor spend (total spend and on which sectors) total employment creation (both during construction and once operational) total impact on GDP The Economic Impact Assessment was undertaken for two study areas made up of territorial authority areas. The first was Porirua City. The second was the Wellington Urban area, which includes the territorial authority areas of Wellington City, Porirua City, Lower and Upper Hutt, and Kāpiti Coast. The analysis was based on discussions with Select Contracts New Zealand and Porirua City Council, reports we were given access to, interviews with key stakeholders, and media reports. We note that all estimates around construction costs and visitor projections were provided by Select Contracts New Zealand. We have not verified or tested the validity of these estimates. 1

8 Economic activity Select Contracts NZ anticipate that the project will cost $31.8 million to build. The Park will attract over 200,000 visitors each year once it is fully established in year three. Visitor numbers are forecast to grow by three percent each year from then. Operating the Park will cost about $8.6 million annually and it will directly employ about 90 people. Construction Construction of the Park is expected to take one year and cost $31.8 million. Construction costs Porirua $11,880,000 Rest of Wellington Urban $5,940,000 Wellington Urban $17,820,000 Rest of New Zealand $1,980,000 New Zealand $19,800,000 Offshore $12,000,000 Total $31,800,000 Of the $31.8 million cost of the Park, about $12 million will go directly offshore to import the Gondola, so is excluded from the analysis. The remaining $19.8 million will be spent in New Zealand. About $17.8 million (90 percent) will be spent in the Wellington Urban area, of which about $11.9 million (60 percent) is expected to be spent directly in Porirua City. Ongoing activity The ongoing activity is a combination of the activity generated by the Park operations, and the additional expenditure of visitors in the study area who are there because of the Park. Ongoing activity is presented for a single year (year three), which is when the Park will have geared up and is operating at the optimal level. Going forward, the Park operators have projected that visitor numbers will increase by three percent per year. Operations By year three, the Porirua Adventure Park will be spending about $8.6 million on operating expenditure. This is made up of wages and other operating expenses. The project business case has also stated that they will directly employ 92 people as part of their operations. Porirua Wellington Urban New Zealand Operating expenses 6,450,000 8,170,000 8,600,000 Origin of Park employees (Full and Part-Time jobs) 50% 45% 5% 2

9 The economic impact is based on 75 percent of operating expenditure occurring in Porirua, and 95 percent occurring in the Wellington Urban area. Each smaller area is a sub-set of the larger one. For employment, we estimate that 50 percent of employees will be Porirua residents, and that a further 45 percent will be residents in the rest of the Wellington Urban area. About 5 percent of employees are expected to live outside the Wellington Urban area, either elsewhere New Zealand, or overseas. Visitor profile The Park will attract visitors from Porirua, the rest of Wellington Urban, and from other areas in New Zealand and internationally. The number and profile of visitors has been developed in consultation with Select Contracts New Zealand. Porirua Rest of Wellington Urban Rest of NZ/ international Total Single day uses 9, ,875 39, ,500 Annual pass uses (users * average visits) 90,000 48,000 1, ,200 Total uses 99, ,875 40, ,700 Visitor numbers are for year three of operations, as numbers are forecast to be lower for year one (75 percent of year three) and two (88 percent of year three) as the Park is developed. As mentioned earlier, visitor numbers are expected to grow by three percent each year, from year three. The Porirua Adventure Park is expected to have just over 337,000 uses in its third full year of operation. Of these 198,500 will be single day uses, with a further 2,000 visitors who purchase annual passes using the Park 139,000 times. Single day visitors can visit multiple times during the year so the actual number of unique users could be lower. Porirua users, for example, are more likely to visit on multiple occasions. As shown in the table, visitors with annual passes are expected to visit many times during the year, to maximise the return on their investment in an annual pass. The assumptions underpinning the number of visits by annual pass users are that: people who live locally will visit the park 90 times during the year, on average people from the rest of Wellington Urban area will visit the park 50 times, on average people from out of the area will visit an average of 30 times a year, on average Of the 337,700 uses (or visitor numbers through the gate), close to 100,000, or 30 percent, will be from Porirua City. A further 197,000, or 58 percent, will be from the rest of the Wellington Urban area. The remaining 41,000 visitors (12 percent) will be from outside the Wellington Urban area and will be either national or international visitors. 3

10 Visitor expenditure There is no official daily spend data for visitor expenditure in the Wellington region. Our analysis uses estimates based on an assessment of other likely activity undertaken by visitors to the Park, as well as other studies that have determined daily spend of visitors. Porirua Rest of Wellington Urban Rest of NZ/ international Annual pass user daily spend (in Porirua) $0 $20 $20 Annual pass user daily spend (rest of Wgtn Urban) $0 $0 $20 Single day user daily spend (in Porirua) $0 $30 $50 Single day user daily spend (rest of Wgtn Urban) $0 $0 $150 Annual pass user expenditure (in Porirua) $0 $960,000 $24,000 Annual pass user expenditure (rest of Wgtn Urban) $0 $0 $24,000 Single day user expenditure (in Porirua) $0 $2,977,500 $794,000 Single day user expenditure (rest of Wgtn Urban) $0 $0 $794,000 Daily expenditure is broken down by annual pass users and single day users, and whether they are from Porirua, the rest of Wellington Urban, the rest of New Zealand, or from overseas. We have then estimated their likely daily spend in Porirua, and the rest of Urban Wellington. Note that expenditure does not include spend within the Park, as this spend is already captured in the Park s operational expenditure. Similarly, we do not count the spend of Porirua residents as this would be displaced spending rather than additional. 4

11 Economic impact The economic impact is calculated for construction and for ongoing operations. Ongoing operations can be split between Park operations and visitor expenditure. Ongoing operations is for year three of operation. Output ($m) GDP ($m) Employment Direct Total Direct Total Direct Total Construction Porirua City Wellington Urban Operations (annual) Porirua City Wellington Urban Visitors (annual) Porirua City Wellington Urban Total ongoing (annual) Porirua City Wellington Urban Direct and total (direct, indirect and induced) impacts are calculated for output, GDP and employment for Porirua City and for the Wellington Urban area. Direct impacts are those that are generated by the initial expenditure with businesses. Indirect impacts occur when those businesses purchase materials, goods and services from supplier firms, who in turn make further purchases from their suppliers and so forth. Induced impacts occur when employees in the businesses providing the materials, goods and services are paid wages, and the businesses generate profits, which are then spent on consumption within the study area. Output is the expenditure that occurs as a result of the activity. GDP is gross domestic product. It is the portion of expenditure (or output) that is spent on wages and that which is captured by the business through profits. Employment is calculated as FTEs, or Full-Time Equivalents. Full-Time Equivalents is generally a full-time job or a 40-hour working week. We have considered two study areas Porirua City, and Wellington Urban area, which includes Wellington City, Upper Hutt, Lower Hutt, Kāpiti Coast and Porirua City. 5

12 Porirua City Direct economic impact During construction, Porirua Adventure Park will contribute $3.4 million to Porirua City s GDP and provide 46 full-time jobs for one year. During operations, Porirua Adventure Park will contribute $6.0 million to Porirua City s GDP and provide 107 full-time jobs. Total economic impact Including indirect and induced impacts, Porirua Adventure Park will contribute $8.3 million to Porirua City s GDP and provide 100 full-time jobs for one year during construction. Including indirect and induced impacts, once operating, the Park will contribute $9.6 million to GDP and support 147 full-time jobs in Porirua City each year. Wellington Urban area Direct economic impact During construction, Porirua Adventure Park will contribute $5.1 million to the Wellington Urban area s GDP and provide 69 full-time jobs for one year. During operations, Porirua Adventure Park will contribute $5.1 million to the Wellington Urban area s GDP and provide 110 full-time jobs. Total economic impact Including indirect and induced impacts, Porirua Adventure Park will contribute $13.7 million to Wellington Urban area s GDP and provide 152 full-time jobs for one year during construction. Including indirect and induced impacts, once operating, the Park can contribute $9.3 million to GDP and support 171 full-time jobs in the Wellington Urban area each year. Potential to leverage and realise economic benefits Our Economic Impact Assessment is based on the current visitor profile and offering in Porirua City. Existing activities are underway that will improve the visitor profile, such as the city centre redevelopment and the district visitor strategy. We spoke to key stakeholders who indicated that there would be a significant amount of goodwill and energy to work together on realising the benefits, if a major tourist attraction of this size were to be located in Porirua. In order to leverage this opportunity they suggest a number of areas to focus on: Stronger partnerships and collaboration in developing major tourism projects and developing visitor experiences particularly between Porirua City Council, Ngāti Toa, 6

13 Wellington Regional Economic Development Agency (WREDA), other Councils in the Wellington Region, and sector experts such as the Wellington Trails Trust. Provide additional investment in strategic marketing and promotions further investment and full utilisation of the expertise at WREDA, drawing on their extensive national and international visitor marketing experience, in order to promote Porirua as a major visitor destination in the Wellington Region. Maintain support for existing Porirua businesses ensure that existing businesses have access to the support they need, to leverage off major developments in the city. Showcase more of Porirua s unique Māori heritage (alongside Ngāti Toa) promote Porirua s proud Māori heritage and history in multiple ways throughout the city, to provide further opportunities for all visitors to experience Māori culture in Porirua. Enhance visitor experiences by ensuring natural connections between the City centre and the Adventure Park ensure that visitors can easily move between the Adventure Park and the City Centre. Support further hospitality/accommodation/cultural offerings in the city - create a compelling proposition for visitors to spend more time in the city. Delivering across these areas would lead to increases in the number of visitors from outside the district and region, their length of stay, and their daily spend. As the current visitor expenditure is running off a very low base, particularly in Porirua City, the potential to increase expenditure is high and could result in a significantly higher economic impact for the district. Community benefits Aside from higher incomes, being employed can have positive community and social outcomes. The analysis suggests that Porirua residents will account for about 50 percent of the estimated 92 FTE jobs created as a result of the Adventure Park proposal. We would encourage efforts to increase the local share of employment, but also encourage locals to progress into higher skilled positions within the Park. There are tertiary providers in both Porirua and Wellington who provide training courses, diplomas and degrees to provide the skills and qualifications necessary. For instance, there are courses available in outdoor recreation, hospitality, visitor management and tourism marketing, with some courses offered for free. Adrenalin Forest has student placements from these courses, and it is expected that the Adventure Park operators will also be able to provide this service for the community thus doubling opportunities for Porirua students to gain on-the-job experience in their chosen field. From a physical activity perspective, the variety of activities and degree of cycling experience required at the Adventure Park could also help increase the use of local parks - as residents get in cycling practice before they move on to using the more extensive cycle trails and tracks in the Adventure Park. The Park will complement the extensive range of outdoor recreation opportunities available to the Porirua community. As stated earlier, our analysis assumes that close to 11,000 locals will visit the Porirua Adventure Park each year. 7

14 INTRODUCTION Purpose MartinJenkins has been engaged to undertake an economic impact analysis of the proposed Porirua Adventure Park on the local economy of Porirua City, and the regional economy of Urban Wellington. The purpose of the report is to identify the economic impact at the local and regional levels resulting from the activity generated by the Adventure Park project. The report also looks at how the opportunities presented by the proposed Porirua Adventure Park can be realised and maximised. Background The Porirua Adventure Park is a major visitor attraction based at Rangituhi/Colonial Knob in Porirua City. The project will provide a number of unique attractions that will appeal to a broad market, but particularly to the Mountain and Trail Biking community - locally, regionally and nationally. The Porirua City Council considers that the Park will be a major asset to the District and is consistent with its own strategies and plans for encouraging economic growth in the City. Council officers, amongst others, are working to ensure that the proposed Porirua Adventure Park has every chance of success and that the proposed benefits can be realised. Method The underpinning method is Input-Output (I-O) multiplier analysis, which estimates the economy-wide effects that an initial change in economic activity has on a particular economy. This report, and the economic impact assessment in particular, is based on information provided by the Council, and by Select Contracts New Zealand, which is the promoter of the Porirua Adventure Park. While we have provided a general sense-check around orders of magnitude, we have not questioned or assessed the validity of the information provided to us. In addition to the economic impact assessment, we interviewed a number of stakeholders to get their views of the proposal, and to provide them an opportunity to give feedback on how the City and region could realise the opportunities presented by the Porirua Adventure Park, and leverage off its success. Regional input-output multiplier analysis The economic impact analysis follows the accepted practice of identifying the impact from the direct expenditure associated with the project and then applying regional multipliers 1 to determine the indirect 1 There is no official set of regional input-output tables. Regional tables are calculated by several private providers. The input-output tables and multipliers used in this analysis were generated by Butcher and Partners limited and are based on the latest national input-output tables. Butcher and Partners are acknowledged and respected providers of regional input-output tables, which have been used in numerous economic impact studies in New Zealand over the years. 8

15 and induced effects of that initial expenditure in terms of gross output, value added (GDP), and employment. 2 Direct impacts are those that are initially generated by the initial expenditure with businesses. Indirect impacts occur when those initial businesses purchase materials, goods and services from supplier firms, who in turn make further purchases from their suppliers and so forth. Induced impacts occur when employees in the businesses providing materials, goods and services are paid wages and the businesses generate profits that are then spent on consumption within the region. Regional I-O tables and multipliers are constructed from a detailed set of industry accounts, which measure the commodities produced by each industry and the use of these commodities by other industries and final users within the region. An initial change in economic activity results in diminishing rounds of new spending, as leakages occur through saving or spending outside the region. Regional I-O multiplier analysis - limitations and accuracy A static model Regional I-O multiplier analysis is a static model that does not allow for price changes resulting from activity. Further the approach requires that economic activity applied to the model is additional to existing activity, and that it does not include displaced activity from other areas of the economy. While this project is significant to Porirua we do not consider that its operations will result in price changes at a local or regional level. Therefore a static model is a valid method for this study. Accuracy at the regional level The smaller the geographic area being assessed and the more aggregated the analysis of industries, the less accurate the model. Industry accuracy is enhanced by assigning expenditure into the appropriate industry rather than lumping it all into a single associated industry. This ensures that the multipliers and relationships between expenditure, GDP and output are as accurate as possible. In our analysis we have incorporated estimates of direct employment where applicable. This ensures that our employment multipliers are consistent with our understanding of the likely level of employment activity. However, as there is good connectivity across the Wellington region, the flows of goods and services are higher and so the level of accuracy at the territorial authority level is lower. At the Wellington Urban area level we consider that the level of accuracy is relatively high. There are no official regional I-O tables. There are several private sector providers of regional I-O tables. This analysis uses regional I-O tables supplied by Butcher Partners. Butcher Partners is a recognised supplier of regional tables that have been used in a number of economic impact analysis studies of industries and events throughout the regions of New Zealand. 2 Gross output, value added and FTE employment are defined in the appendix 9

16 Economic activity The analysis includes economic activity from the initial set up and construction of the Park, and then the operational costs of running the Park. The economic activity for construction is based on the Park taking one year to build. The economic activity for operations is for the third year of operations, when the Park is functioning at its desired level. Activity in year one and two will be lower. After year three, the Park operators have forecast growth in user numbers of three percent each year. Direct activity is measured in terms of capital investment in the construction phase, and then annual average operational expenditure and likely visitor expenditure. Most of this information has been provided directly by Select Contracts New Zealand and is derived from their business plan. Operational expenditure is assigned to the appropriate industry category, and ratios and multipliers are applied. As tourism expenditure is not a sector in its own right, we have applied ratios calculated from the Ministry of Business, Innovation & Employment s Regional Tourism Estimates, where visitor spend by visitor type (domestic and international) is broken down into eight categories at a territorial authority and Regional Tourism Organisation level. Once assigned, the totals for each industry are aggregated to provide the direct, indirect and induced economic impacts in terms of gross output (expenditure), value added (GDP) and employment (FTEs). As stated above, we have incorporated estimates of direct employment by Select Contracts New Zealand (over-riding the employment to output ratio). This provides a more accurate assessment of the likely employment impacts as a result of activity. Visitor numbers are based on the Select Contracts New Zealand business case, and visitor spend is based on our understanding of likely spending patterns, drawing on other studies that have attempted to identify daily visitor spend. Study area The report looks at the economic activity within two study areas Porirua City and Urban Wellington. The Urban Wellington study area is made up of five local authorities Wellington City, Lower Hutt, Upper Hutt, Porirua and Kāpiti Coast. Prices All prices are expressed in nominal New Zealand Dollars unless otherwise noted. Report structure The report is split into four sections. The first section provides a definition and brief economic overview of the two geographic areas being considered in the analysis Porirua City and Wellington Urban. The second section discusses the project and the likely activity it will generate. The third section is the economic impact analysis, where we determine the impacts of the project on the two study areas in terms of GDP and employment. The fourth section explores how the study areas could leverage and maximise the benefits from the proposed Porirua Adventure Park. 10

17 THE STUDY AREAS This report considers two study areas: Porirua City and the Wellington Urban area. These are discussed in turn. Porirua City The first study area is Porirua City, which surrounds the Porirua Harbour and Pauatahanui Inlet on the lower west coast of the North Island, to the north of Wellington City (yellow shaded area in Figure 1). Porirua is well connected to Wellington City - by SH1, which goes through to the Wellington International Airport, and by train commuter service to the Wellington train station. Porirua is directly south of Kāpiti Coast district, again well connected via SH1 and commuter rail. To the east is Upper Hutt and Lower Hutt, where access is via SH58 connecting to SH2 in Silverstream, or via SH1 connecting to SH2 in Ngauranga. Figure 1. Porirua City Porirua City had an estimated population of 56,100 in The city employs about 18,700 people. Like the other districts in the region, Porirua City is very dependent upon Wellington City for employment with a number of its residents commuting to work there. Being adjacent to, and with good connections into, Wellington City means that many of Porirua s residents undertake activities and use amenities in Wellington City, and vice versa. The pending arrival of Transmission Gully and the Kenepuru Interchange will only increase connectivity across the Wellington Urban area - increasing opportunities for Porirua residents to engage in the larger, regional economy, and offering growth opportunities for Porirua businesses. 3 Current MBIE estimate (2017)

18 As noted earlier, transport infrastructure, such as Transmission Gully and the Kenepuru Interchange will have an effect on travel patterns. On balance we consider that improved connectivity will have a positive impact on business and resident growth in Porirua. While there will always be a level of dependency upon, and interaction with, Wellington City as the major centre in the region, Porirua City is developing its own economy and identity. In particular, there is a strong focus on developing the City Centre and building a diversified economy. Porirua currently generates $1.7 billion in regional GDP, driven by the health care and social assistance, professional, scientific and technical services, education and training, and construction industries. In developing its own amenities and activities, Porirua City Council is looking to encourage visitors to the district, but also to improve the offering to existing and potential residents. Porirua City is undergoing considerable economic growth right now, and there are a number of significant developments currently underway which are contributing to, or will contribute to the momentum of, sustained growth. There are strong signs of residential growth, with significant housing projects underway in the City. This includes the Aotea Subdivision, Plimmerton Farm and Kenepuru Landing, which together account for 3,500 homes. There are also apartment developments in the City Centre, with 36 apartments due to be completed this year in the old Post Office building, and other large developments including in Titahi Bay, which is potentially a mixed residential / commercial opportunity. Alongside this, the City Centre revitalisation project is in full swing. This will provide a modern public space, new children s play area, wayfinding signage and better lighting, and improved connections from the City Centre to neighbouring communities. There have also been significant commercial developments in the City Centre, with the sale of North City Mall and the KFC site, and the potential for a new Cobb & Co in the old McDonalds building. Media reports suggest that over 240 staff from the Ministry of Business, Innovation & Employment have set up in Porirua, along with staff from Te Puni Kōkiri. We understand that other government agencies are actively looking at moving some parts of their activities to Porirua. There will also be developments that occur directly as a result of the Porirua Adventure Park to service visitors. For example, Torpedo 7 has recently opened its regional store in Porirua. You would expect that the Park would have had some bearing on their decision to open their regional store in Porirua. Visitor activity Porirua City is not renowned as a visitor destination. In the year to April 2018, visitors spent about $94 million in the district. Of this, $70 million was from domestic visitors and $24 million from international visitors. The district has seen strong growth in the last year, with expenditure increasing by 12.3 percent compared to 9.3 percent nationally. 4 The tourism sector is estimated to contribute about $44 million to Porirua City s economy and employ 638 people. The sector accounts for about 2.6 percent of the City s GDP and makes up 3.4 percent of 4 Infometrics. Porirua City Quarterly Economic Monitor March

19 employment. This is in contrast to Wellington City, where tourism accounts for 4.7 percent of GDP and 11.3 percent of employment. Benefits from the Porirua Adventure Park The Porirua Adventure Park will generate a number of benefits for Porirua City. Benefits from the construction of, and operation activity generated by, the Porirua Adventure Park. Benefits from users of the Porirua Adventure Park that come from outside the City. Benefits via improvements in visitor infrastructure, services and amenities, which will have flowon effects for the visitor market and resident community. Benefits if Porirua residents participate in exercise more frequently, as a result of the Porirua Adventure Park. Wellington Urban area The second study area is the Wellington Urban area, which is made up of the five Wellington Region districts on the western side of the Rimutaka Ranges (highlighted in yellow in Figure 2). More specifically, the Wellington Urban area includes: Figure 2. Wellington Urban area Wellington City Lower Hutt City Upper Hutt City Porirua City Kāpiti Coast District With excellent connectivity by road and commuter trains, the Wellington Urban area tends to operate as a single market for business services. Porirua City provides education, health, personal, retail and recreational services for its own resident population. It also provides business services for local businesses. Located near the centre of the Wellington Urban area, Porirua is only about 20 minutes from Lower Hutt and Upper Hutt and about 30 minutes from Wellington City and Kāpiti Coast. This allows its residents and businesses to leverage activity and amenities in other districts. Similarly, businesses in Porirua draw on customers from the wider Wellington Urban area. 13

20 The Wellington Urban area is also a relatively large and growing catchment area for employees and for potential users of the Porirua Adventure Park, with a resident population of about 470,000 that has been growing by about 1.3 percent each year over the last four years. 5 The Wellington Regional Economic Development Agency (WREDA) is responsible for delivering economic development and visitor activity support for all districts in the Wellington Urban area. Visitor activity Wellington City is the major visitor destination in the Wellington Urban area, and is a major destination nationally for domestic and international visitors. In the year ended April 2018, visitors spent a total of $2.35 billion in the Wellington Urban area. Wellington City accounted for about 77 percent of that visitor spend. Of the $773 million in international visitor expenditure, Wellington City accounted for $635 million or 82 percent of that. 6 According to Infometrics, tourism in the Wellington Region 7 generated $1.28 billion in GDP and employed 12,930 people in the year to March The tourism sector accounted for 4.1 percent of GDP and 4.7 percent of employment in the region. 8 Benefits from the Porirua Adventure Park The Wellington Urban area will benefit from the construction and operation of the Porirua Adventure Park, considering the activity in the area will be additional. In terms of visitors, the benefit to the Wellington Urban area is limited to visitors coming into the area from other parts of New Zealand and from overseas. The Park will be a key attraction for the Mountain and Trail Bike community, and will be a cornerstone piece of trail infrastructure. It will enhance the growing reputation of the region as a place to go to have a quality mountain biking experience. 5 Statistics NZ Subnational Population Estimates MBIE Monthly Regional Tourism Estimates Note that the Wellington Region is different from the Wellington Urban area and includes the Wairarapa districts Carterton, Featherston and Masterton. 8 Infometrics Regional Database 14

21 PORIRUA ADVENTURE PARK The Porirua Adventure Park is a major visitor attraction based at Rangituhi/Colonial Knob. The project will provide a number of unique attractions that will appeal to a broad market including: gondola surf simulator two cafés function centre children s low ropes course and adventure playground additional cycling and walking tracks bike rental, instructor and park retail centre The project will particularly appeal to the Mountain and Trail Biking community, locally, regionally and nationally. The current concept plan for the Porirua Adventure Park is shown in Figure 1. Figure 3. Concept image Porirua Adventure Park Select Contracts New Zealand are leading the development of the Porirua Adventure Park. They are a specialist company that has been involved in designing, building and operating leisure and 15

22 entertainment projects, both in New Zealand (Christchurch Adventure Park, New Brighton playground and Splash Park 9 ) and internationally. Project activity The Porirua Adventure Park will provide benefits through its own activities, including construction and operations, and through additional activity from visitors that come to Porirua or the Wellington Urban area, to visit the Park. As such, activity is determined for three areas construction, operations, and visitors. Construction activity is over a defined period, which is when the Park is being built. Operations and visitor expenditure occurs once the Park opens. Activity is generated as long as the Porirua Adventure Park is operating, and so the benefits are ongoing. Construction Construction activity has been provided by Select Contracts New Zealand. The latest estimates are for the Porirua Adventure Park to cost $31.8 million to build. The contractor is confident that the Park will be constructed over a one-year period. Expenditure Total expenditure for constructing the Park is estimated at $31.8 million. The breakdown of these construction costs across the study areas is shown in Table 1. Table 1. Porirua Adventure Park construction costs Construction Costs Porirua $11,880,000 Rest of Wellington Urban $5,940,000 Wellington Urban $17,820,000 Rest of New Zealand $1,980,000 New Zealand $19,800,000 Offshore $12,000,000 Total $31,800,000 Of the $31.8 million cost of the Park, about $12 million of that will go directly offshore to import the Gondola and so is excluded from the analysis. The remaining $19.8 million will be spent in New Zealand. About $17.8 million (90 percent) will be spent in the Wellington Urban area of which about $11.9 million (60 percent) is expected to be spent directly in Porirua City

23 In terms of the economic impact analysis we consider $11.88 million in the Porirua economic impact, and $17.82 million in the Wellington Urban area economic impact. Ongoing activity The ongoing activity is a combination of the activity generated by the Park operations, and the additional expenditure of visitors in the study area who are there because of the Park. Ongoing activity is presented for a single year (year three), which is when the Park will have geared up and is operating at the optimal level. Park operations By year three, the business case projects that the Porirua Adventure Park will be spending about $8.6 million on operating expenditure. This is made up of wages and other operating expenses. The project business case has also stated that they will directly employ 92 people as part of their operations. These will be full time and part time positions. Table 2. Park operations and employment by study area Porirua Wellington Urban New Zealand Operating expenses 6,450,000 8,170,000 8,600,000 Origin of Park employees (Full and Part-Time jobs) 50% 45% 5% The economic impact is based on 75 percent of operating expenditure occurring in Porirua, and 95 percent occurring in the Wellington Urban area. For employment we estimate that 50 percent of employees will be Porirua residents, and that a further 45 percent will be residents in the rest of the Wellington Urban area. About 5 percent of employees are expected to live outside the Wellington Urban area, either in the rest of New Zealand, or overseas. Visitor expenditure User numbers The Park will attract visitors from Porirua, the rest of Wellington Urban, and the rest of New Zealand and internationally. The number and profile of visitors has been developed in consultation with Select Contracts New Zealand. 17

24 Table 3. Park use by visitor type and profile Porirua rest of Wellington Urban Rest of NZ/ international Total Single day uses 9, ,875 39, ,500 Annual pass uses (users * average visits) 90,000 48,000 1, ,200 Total uses 99, ,875 40, ,700 Visitor numbers are for year three of operations as numbers are forecast to be lower for year one and two as the Park is developed. The Park operators have projected that visitor numbers will increase by 3.0 percent per year after year three. Visitor numbers and profile were identified through discussions with Select Contracts New Zealand, where just over 200,000 users are expected to use the Porirua Adventure Park each year. Of these 198,500 will be single day visitors, with a further 2,000 visitors purchasing annual passes. Single day visitors can visit multiple times during the year. Porirua users, for example are more likely to visit on multiple occasions. Visitors with annual passes are likely to visit many times during the year. The assumption underpinning the number of visits by annual pass users is that 1,000 local annual pass users will visit the park 90 times during the course of a 365 day year, on average. A further 960 annual pass users from the rest of the Wellington Urban area will visit the park 50 times on average and 40 out-of-area annual pass users will visit an average of 30 times. Looking at total uses, or visitor numbers through the gate, close to 100,000, or 30 percent, will be from Porirua City. A further 197,000, or 58 percent, will be from the rest of the Wellington Urban area. The remaining 41,000 (12 percent will be from outside the Wellington Urban area (national and international). Daily spend There are no official daily spend numbers for visitor expenditure in the Wellington region. Our analysis uses estimates based on an assessment of other likely activity undertaken by visitors to the Park, as well as other studies that have determined daily spend of visitors. 18

25 Table 4. Visitor expenditure by study area and profile Porirua Rest of Urban Wgtn Rest of NZ/ international Annual pass user daily spend (in Porirua) $0 $20 $20 Annual pass user daily spend (rest of Urban Wgtn) $0 $0 $20 Single day user daily spend (in Porirua) $0 $30 $50 Single day user daily spend (rest of Urban Wgtn) $0 $0 $150 Annual pass user expenditure (in Porirua) $0 $960,000 $24,000 Annual pass user expenditure (rest of Urban Wgtn) $0 $0 $24,000 Single day user expenditure (in Porirua) $0 $2,977,500 $794,000 Single day user expenditure (rest of Urban Wgtn) $0 $0 $794,000 Daily expenditure is broken down by annual pass users and single day users and whether they are from Porirua, the rest of Urban Wellington, or the rest of New Zealand or international. We have then estimated their likely daily spend in Porirua, and the rest of Urban Wellington. Note that expenditure does not include spend within the Park, as this spend is already captured in the Park s operational expenditure. For example, all users would purchase tickets and most would also purchase at least a drink or food while at the park. Visitor expenditure for economic impact analysis To determine the economic impact analysis of visitor spend we have identified the average expenditure of visitors based on where they are from. Benefits to Porirua are from expenditure of all visitors from outside the Porirua district. So the spend of Porirua residents is not included. For the Urban Wellington area, only expenditure from visitors outside the Urban Wellington area is included. This expenditure is shown in Table 5 Table 5. Visitor expenditure for Porirua and the Urban Wellington area Porirua Urban Wellington Expenditure for economic impact $4,755,500 $1,636,000 Based on our assumptions around visitor numbers, where they are from, and how much they spend; the additional expenditure in Porirua as a result of the Park is estimated at about $4.76 million. The additional expenditure in the Urban Wellington area as a result of the Park is estimated at about $1.64 million. 19

26 ECONOMIC IMPACT ANALYSIS This section sets out the economic impacts for Porirua City and for the Wellington Urban area, which includes Porirua City. The economic impact analysis looks at the direct, indirect and induced impacts on output, GDP and employment. Porirua City Porirua Adventure Park will contribute $8.3 million to Porirua City s GDP and provide 100 full-time jobs for one year during construction. Once operating, the Park can contribute $9.6 million to GDP and support 147 full-time jobs in Porirua City each year. Construction Of the $31.8 million construction cost, about $11.9 million will be spend directly in Porirua City. The construction is forecast to occur over one year. The economic impact of construction on Porirua City is shown in Table 6. Table 6. Construction impact on Porirua City Porirua Direct Direct + Indirect Direct + Indirect + Induced Output ($m) GDP ($m) Employment (FTEs) Expenditure of $11.9 million in Porirua City will directly contribute about $3.4 million to GDP and support 46 full-time jobs. Considering indirect and induced impacts, expenditure of $11.9 million will contribute $8.3 million to GDP and support 100 full-time jobs. Ongoing Ongoing operational expenditure is made up of the Park s operations, and additional expenditure that occurs outside of the Park from people that have visited the Park. 20

27 Total Ongoing Porirua Adventure Park is expected to generate additional spend in Porirua City of about $11.2 million in year three. The economic impact of this expenditure is shown in Table 7 below. Table 7. Ongoing operational impact on Porirua City Porirua Direct Direct + Indirect Direct + Indirect + Induced Output ($m) GDP ($m) Employment (FTEs) Expenditure of $11.2 million in Porirua City will directly contribute about $6.0 million to GDP and support 107 full-time jobs. Considering indirect and induced impacts, expenditure of $11.2 million will contribute $9.6 million to GDP and support 147 full-time jobs. The following sections break down ongoing expenditure into operational spend and visitor spend. Park operations It is estimated that the Park will spend about $8.6 million each year in operating costs (including wages) of which about $6.5 million (75 percent) will be spent directly in Porirua City. The impact of the Park s annual expenditure on Porirua City economy is shown in Table 8. Table 8. Park operations impact on Porirua City Porirua Direct Direct + Indirect Direct + Indirect + Induced Output ($m) GDP ($m) Employment (FTEs) Expenditure of $6.5 million in Porirua City will directly contribute about $3.3 million to GDP and support 55 full-time jobs. Considering indirect and induced impacts, expenditure of $6.5 million will contribute $5.4 million to GDP and support 82 full-time jobs. Visitor expenditure Visitors to Porirua Adventure Park are estimated to spend about $4.8 million in Porirua City. The impact of this visitor spend on the Porirua City economy is shown in Table 9. 21

28 Table 9. Visitor impact on Porirua City Porirua Direct Direct + Indirect Direct + Indirect + Induced Output ($m) GDP ($m) Employment (FTEs) Visitor expenditure of $4.8 million in Porirua City will directly contribute about $2.7 million to GDP and support 52 full-time jobs. Considering indirect and induced impacts, expenditure of $4.8 million will contribute $4.3 million to GDP and support 65 full-time jobs. 22

29 Wellington Urban area Porirua Adventure Park will contribute $13.7 million to Wellington Urban GDP and provide 152 full-time jobs for one year during construction. Once operating, the Park can contribute $9.3 million to GDP and support 171 full-time jobs in the Wellington Urban area each year. Construction Of the $31.8 million construction cost, about $17.8 million will be spent directly in the Wellington Urban area. The construction is forecast to occur over one year. The economic impact of construction on the Wellington Urban area is shown in Table 10. Table 10. Construction impact on Wellington Urban area Wellington Urban Direct Direct + Indirect Direct + Indirect + Induced Output ($m) GDP ($m) Employment (FTEs) Expenditure of $17.8 million in the Wellington Urban area will directly contribute about $5.1 million to GDP and support 69 full-time jobs. Considering indirect and induced impacts, expenditure of $17.8 million will contribute $13.7 million to GDP and support 152 full-time jobs. Ongoing As noted earlier, ongoing operational expenditure is made up of the Park s operations and additional expenditure that occurs in the Wellington Urban area from people that have visited the Park. 23

30 Total Ongoing Porirua Adventure Park is expected to generate additional spend in the Wellington Urban area of about $9.8 million in its third year of operations. The economic impact of this expenditure is shown in Table 11 below. Table 11. Ongoing operational impact on Wellington Urban area Wellington Urban Direct Direct + Indirect Direct + Indirect + Induced Output ($m) GDP ($m) Employment (FTEs) New expenditure of $9.8 million in the Wellington Urban area will directly contribute about $5.1 million to GDP and support 110 full-time jobs. Considering indirect and induced impacts, total additional expenditure of $9.8 million will contribute $9.3 million to GDP and support 171 full-time jobs. Park Operations It is estimated that the Porirua Adventure Park will spend about $8.6 million each year in operating costs (including wages) of which about $8.2 million (95 percent) will be spend directly in the Wellington Urban area. The impact of the Park s annual expenditure on the Wellington Urban area economy is shown in Table 12. Table 12. Park operations impact on Wellington Urban area Wellington Urban Direct Direct + Indirect Direct + Indirect + Induced Output ($m) GDP ($m) Employment (FTEs) Expenditure of $8.2 million in the Wellington Urban area will directly contribute about $4.2 million to GDP and support 92 full-time jobs. Considering indirect and induced impacts, expenditure of $8.2 million will contribute $7.7 million to GDP and support 148 full-time jobs. Visitor Expenditure Visitors to Porirua Adventure Park are estimated to spend about $1.6 million in the Wellington Urban area. The impact of this visitor spend on the Wellington urban economy is shown in Table 13. Table 13. Visitor impact on Wellington Urban area 24

31 Wellington Urban Direct Direct + Indirect Direct + Indirect + Induced Output ($m) GDP ($m) Employment (FTEs) Visitor expenditure of $1.6 million in the Wellington Urban area will directly contribute about $0.9 million to GDP and support 17 full-time jobs. Considering indirect and induced impacts, expenditure of $1.6 million will contribute $1.6 million to GDP and support 23 full-time jobs. 25

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