The Provincial Growth Fund is bankrolling a horse-racing track in the middle of Christchurch to the tune of $10.5 million, despite officials saying the project doesn't meet the fund's criteria.
Racing Minister and New Zealand First leader Winston Peters announced in May that the all-weather track in Riccarton would be funded, along with another track in Manawatu's Awapuni.
Documents obtained by RNZ show the Provincial Development Unit (PDU), which administers the Provincial Growth Fund (PGF), opposed paying for the synthetic tracks, saying the fund was for projects in the regions not urban centres.
"The proposed Riccarton Park synthetic racing track is located in Christchurch City, which is ineligible for PGF funding," officials wrote.
They also questioned whether the tracks would provide the other benefits required by the fund's criteria.
The PDU "assessed that the project did not meet the PGF's criteria" and it was "unclear as to the extent the proposal would increase productivity", despite likely benefits of job retention and security for industry workers.
The PDU said the racecourses would each likely create 30 construction jobs, although it was "unknown" whether permanent jobs would be created.
There is already a racing track in Christchurch, New Zealand's second largest city, as well as one in Awapuni, though neither can be used in wet weather.
In a checklist to assess whether the tracks would benefit the community, the PDU said consultation had been largely confined to the racing industry.
"There is no evidence provided that indicates public consultation has occurred on the proposal or with regional economic development governance groups."
Despite the concerns, the minister in charge of the PGF, NZ First's Shane Jones, and Labour Ministers Phil Twyford, Grant Robertson and David Parker, approved the funding.
National's economic development spokesman, Michael Woodhouse, said serious questions must be asked about why a wet-weather track was being funded when Covid-19 was creating more pressing priorities.
He believed the decision looked "ropey" and ministers had used a "side door" to get it through the PGF.
"There really needs to be a lot more rigor about the analysis of the quality of this investment," he said.
"I think serious questions need to be asked about how this got through."
Woodhouse said GP practices were denied an extra $22 million in government funding during the pandemic, yet a similar amount was spent on two race tracks. "I think that speaks to skewed priorities."
Documents obtained by RNZ reveal that as far back as 2018 the Provincial Development Unit had said the all-weather race tracks did not meet PGF criteria and had rejected a bid made for funding by the New Zealand Racing Board.
A briefing paper from 24 April 2020 shows Racing Minister Winston Peters then asked the Department of Internal Affairs to prepare a $20 million bid for race tracks in Awapuni and Riccarton.
But the department appeared cool on Peters' request, saying "This type of construction project is unlikely to be a priority project" in the next year, partly because of constraints in the building sector.
Internal Affairs said it was "unlikely construction of an all weather track will be a priority in the immediate future" and recommended it was put on hold until the following year's Budget.
But ministers then got the race tracks funded using a section of the PGF fund called 'Manifesto Commitments to the Regions', reserved for coalition agreement projects.
The Provincial Development Unit had advised that if the tracks were paid for from this fund, "there will be a corresponding decrease in the funding available for the PGF's response to Covid-19".
When Peters announced the tracks were being funded, he said they were part of a Covid19 rescue package for the racing industry.
Earlier this month, in a report on the PGF, Auditor General John Ryan criticised the Manifesto Commitments to the Regions Fund, saying more transparency and "better visibility" was needed.
He said seven projects worth $45 million had been bankrolled by the Manifesto fund and it was unclear why.
"It was difficult to find evidence of how projects had fully met the normal criteria for the fund," he said.
"Given the different way these projects were considered the manifesto commitments to the regions were in effect operating as a fund within a fund."
The racing industry has been a key financial supporter of New Zealand First, donating tens of thousands of dollars between 2017 and 2019 to an entity that bankrolled the party, the New Zealand First Foundation.
The names of the donors were not publicly disclosed - as their donations fell just below the $15,000.01 disclosure level - until earlier this year, when RNZ named them after obtaining New Zealand First Foundation records.
While announcing the $72.5 million rescue package for the industry in May, Peters said racing contributed $1.6 billion to the economy annually and provided 15,000 full-time jobs.
Shane Jones refused to be interviewed by RNZ but in a statement he said the need for all-weather tracks was highlighted in an independent review of the racing industry.
"Around 40 race meetings per annum are postponed due to weather so all weather tracks improve the financial viability of the industry as well as address animal welfare issues."
Riccarton Park racing club CEO Tim Mills welcomed the new track.
He said while the track was in Christchurch, he believed it was appropriate it was funded by the PGF as the benefits spread to the provinces.
"Whilst the actual competition might take place on a given track, the economic benefits are that the stud farms are in the provinces, many of the trainers are in the provinces and many of the farmers that breed horses are in the provinces."