Grant kept car giant in city: mayor
Palmerston North ratepayers’ $391,000 grant to Toyota was key to securing its foreign-funded $23 million expansion and retaining its national distribution centre and head office in the city.
Mayor Grant Smith has finally opened up about the reasons for the grant, which a majority of councillors supported in a behind-closed-doors meeting in 2017.
A week after the Taxpayers’ Union revealed its existence, Smith said he and council staff had responded as quickly as they could to share information kept secret until chief executive Heather Shotter released it.
Smith said councillors had not wanted to risk losing Toyota to another centre, most likely Auckland, and the benefits of keeping the development and the large employer in the city were worth the expense. ‘‘The threat was there, and it was real, and we did not want to test that.
‘‘It was a regional economic development decision.’’
Smith said the grant, not a donation, was made with conditions that the distribution centre remained in Palmerston North and that the extension went ahead at the Roberts Line property.
It was consistent with the council’s strategies about attracting and retaining business and employment, and in this case, securing the single biggest foreign investment made in Palmerston North.
The economic benefits came through the building development itself, carried out by local contractors, the creation of 10 new jobs and retention of hundreds of others directly or indirectly reliant on Toyota.
It also helped secure Palmerston North’s role as a key logistics and distribution centre and logical home for Kiwirail’s planned new rail centre.
‘‘The threat was there, and it was real, and we did not want to test that. It was a regional economic development decision.’’ Mayor Grant Smith
‘‘It was a difficult decision. But if we had not supported it, and had lost it, it would have been really difficult to defend not doing it.’’
Employment portfolio councillor Adrian Broad said having Toyota based in Palmerston North was a powerful selling point in marketing the city’s benefits to other businesses interested in locating here.
It had helped raise the city’s profile, and its contribution to the local economy and community were tremendous, he said.
In August 2017, city councillors first debated the potential grant in the private part of a council meeting under the headline on the agenda: ‘‘Toyota Distribution Warehouse Extension – development contributions’’.
A week later, under a clause simply headlined ‘‘economic grant’’, it revoked a raft of resolutions in favour of a simple
decision delegating the chief executive to negotiate a grant of up to $518,000.
Only Cr Karen Naylor voted against it. Cr Aleisha Rutherford abstained and Cr Vaughan wasn’t recorded as present. The council never made any details of this public.
Smith said Toyota paid its development contributions of about $500,000 related to the expansion. That unbudgeted income had offset the unbudgeted spending.
Asked whether the council had made contributions to any other businesses or developments, Smith said it had provided staff time, or expertise through the Central Economic Development Agency, to help various business cases. But there had been nothing else on such a large scale.
Smith and council staff dismissed criticism they were slow to answer a series of questions from Stuff since news of the grant broke.
The Taxpayers’ Union has launched an online petition demanding Toyota NZ pays back the grant it describes as ‘‘corporate welfare’’.