Economic Development Minister Melissa Lee said the 2025 World Street Dance Championships would bring in million in benefits, but an MBIE mistake meant those benefits were actually higher. Photo: RNZ / Angus Dreaver
The country's mega-ministry has been incorrectly calculating its cost benefit analysis for taxpayer-funded events for more than two years.
The error came to the attention of the Ministry of Business, Innovation, and Employment (MBIE) during the process of responding to an RNZ Official Information Act request on the economic benefits of the 2025 World Street Dance Championships.
The event - joint-funded by the government and Auckland Council - was announced by Economic Development Minister Melissa Lee on 22 August, just a day after the prime minister had blasted mayors for wasting money on "nice-to-haves".
MBIE had initially calculated the cost benefit analysis (CBA) for the event as a net benefit of $4,182,896 for the country, and $1,360,543 for Auckland.
But when officials re-ran the calculation, it discovered the benefits - in this instance - were higher: $4,773,094 for the country and $2,500,985 for Auckland.
MBIE general manager of economic development and tourism Heather Kirkham said that discovery prompted further investigation into other applications to the Major Event Fund, going back as far as May 2022.
"We all know that sinking feeling in your stomach when you realise something is wrong and you want to work out how systemic it is," Kirkham told RNZ.
"We were trying to be careful... we discovered it was more than just a one-off."
MBIE uncovered a total of 10 CBAs with errors across 14 different applications. Of those errors, four returned a better outcome, four had marginal changes, and two returned worse outcomes.
In all instances, MBIE said its advice would have still been to fund the events, taking into account all other factors.
"The way that our investment advice is framed, the CBA is just one part of what goes into that information," Kirkham said.
MBIE did not provide the names of the two events that returned worse outcomes, saying they were "part of ongoing commercial negotiations".
For the same reason, it also did not provide information about two applications that returned minor variances, and one that scored a stronger benefit after it had been recalculated.
MBIE staff calculated the CBAs by inputting information into a spreadsheet. The results were then peer-reviewed. At neither stage were the errors identified in all 10 miscalculations.
"Our systems and processes have let us down," Kirkham told RNZ.
She said human error was to blame, but Kirkham was reluctant to say exactly how many staff were at fault: "It's definitely not hundreds."
MBIE had immediately rolled out staff training and was investigating whether its processes were adequate, Kirkham said.
"We have also kicked off an external review of our systems and processes to make sure we can improve them to make sure this doesn't happen again."
Both Lee and the chief executive were notified of the errors after MBIE realised the mistake.
"[The minister] understood, she was disappointed but appreciated the work we were putting in to own it and also fix it," Kirkham said.
In a statement, Lee told RNZ she made her expectations clear to MBIE that this did not happen again.
"Major events play an important role in growing our economy but it is essential that decisions involving taxpayer money are made with robust and accurate advice.
"MBIE has reassured me that they have put the appropriate steps in place," Lee said.
Kirkham said the data used for CBAs was provided by the applicant and the calculation was "not an exact science".
The 2025 World Street Dance Championships are a joint funding initiative between the government and Auckland Council. Taxpayers are contributing $750,000 and the council is picking up the rest of the bill.
In the media statement announcing the funding in August, Lee said the dance contest was expected to attract at least 2000 international participants, supporters and officials.
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