Part 6: Promotional Activities in South Africa and South America

Inquiry into certain events concerning the New Zealand Tourism Board.

We were asked to investigate expenditure by the Board on promotional activities in South Africa and South America during 1998. The expenditure was alleged to be inconsistent with the Board’s accountability documents.

Background to the Expenditure

The South African visit was planned to coincide with a rugby test between the All Blacks and South Africa in August 1998. It was part of the Government’s policy of establishing a partnership between major sports events and tourism marketing. The Minister invited the Board to participate and assist with the exercise.

The Board agreed, after some initial unease about the cost and some staff reservations. Members told us that – despite their initial scepticism – they considered the trip well worthwhile in establishing new relationships and identifying the potential of the South African visitor market.

The tourism mission to South America took place in November 1998. It was designed to take advantage of an increase in the number of direct flights between Auckland and Buenos Aires, and was consistent with the Government’s policy of placing a strategic focus on opportunities in South America. The mission was directed by Cabinet on the recommendation of the Minister of Foreign Affairs. The Minister of Tourism asked the Board to support and assist the mission.

We were told that the Board at first responded, on 2 October 1998, by raising concerns about the desirability and timing of the mission, especially coming so soon after the South African visit. However, the Board eventually agreed to support and assist it. The Minister told us that, if necessary, he would have been prepared to use his power of direction under section 9 of the Tourism Board Act to ensure that the mission was assisted – because it was a matter of Government policy.

Neither visit had been planned for by the Board in its annual budgeting process. We were told that any tourism mission including a Minister requires considerable time and diversion of resources at a senior level. We also learned of some debate between the Minister and senior executive staff of the Board about what the budget would be for the South American visit. However, at no stage was it suggested to us that either visit involved expenditure that was inconsistent with the Board’s statutory object or its annual accountability documents.

Our Conclusions

We are satisfied that the expenditure by the Board was authorised in terms of:

  • the Tourism Board Act; and
  • the Board’s statements of intent.

The expenditure was also consistent with the applicable purchase agreement25 (although see the discussion on purchase agreements in Appendix 10). We were unable to determine whether the expenditure was authorised in terms of the Board’s annual section 8 statements, because no such statements existed.

We have drawn the Board’s attention to a number of audit comments on the internal procedures relating to the expenditure. None of those comments are of sufficient seriousness to require mention in this report.

None of the Minister’s own travel costs, or those of his staff, were met from the Board’s funds. We have not audited that expenditure, but on each occasion the Cabinet approved the Minister’s travel in accordance with the procedures specified in the Cabinet Office Manual.

25: The purchase agreement for 1997-98 continued in effect until the end of October 1998, at which time the agreement for 1998-99 was signed.

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