Tourism awaits funding news after criticism of 'Hackett cash'

Monday, 27 July 2020

Tourism’s $400 million rescue package has copped some flak from smaller businesses.

Hundreds of tourism businesses will learn this week if they are worth saving when the Government hands over millions through its controversial rescue package.

Dubbed “Hackett Cash” by some in the sector, the strategic assets protection programme was described as “corporate welfare” after AJ Hackett Bungy was awarded $10.2 million in grants and loans.

The social media backlash included a Facebook post suggesting cash-strapped St John Ambulance would have been a more worthy recipient than the bungy business.

Davis has previously said most of the $400m tourism rescue package would go into saving up to 60 businesses that contributed significantly to regional economies, with about 300 applying for money that was supposed to be distributed by late July.

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The opening of a new 4-star hotel in Kaikōura is allowing the small town, which has fewer than 2500 permanent residents, to cater for corporate meetings and incentive groups.

* Picking winners? Govt has to decide which tourism operators 'important'

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AJ Hackett Bungy says financial assistance from the Government meant it could keep running attractions at locations around the country, including its Nevis swing near Queenstown.

The Tourism Ministers’ Recovery Group selects successful bidders, based on recommendations from Ministry of Business Innovation and Employment (MBIE) officials, and it is understood the group met on Friday.

An announcement is likely later this week, and it can't come soon enough for applicants like Encounter Kaikoura.

Co-owner Lynette Burman said it was “crunch time” with the end of the wage subsidy looming, it was hard to get money out of banks in the current climate, and low interest loans would help.

A $1.5 million Government funding boost helped Whale Watch Kaikōura set a July 4 date to resume its tourism operation.

“We’re not expecting to be bailed out, everybody has to be making concessions.”

The Reset group represents about 300 smaller tourism operators and spokeswoman Jacqui Wilkinson is critical of the strategic assets fund.

She said the emphasis on “mass tourism” attractions in announcements to date was contrary to the Government’s own tourism strategy, which favoured “value over volume.”

”Most of the operators are quite angry. There's a lot of disappointment, there's a lot of disbelief that the largest most successful operators in the country have received the money first.”

Davis has defended the decision to support AJ Hackett Bungy, despite the personal wealth of company owners.

According to a copy of AJ Hackett Bungy New Zealand’s request for funding lodged on May 27, it faced reducing employees from 225 down to 66, with the remaining crew members taking pay cuts, along with a 20 per cent reduction in directors’ fees and executive salaries.

The company argued that it attracted more than 1 million visitors a year, and it was worried about losing skilled staff needed to run its six sites in Queenstown, Auckland and Taupo.

An MBIE briefing paper said the company had urgently sought support “due to significant risks of financial failure” and officials had confirmed the company had been unsuccessful in securing private or commercial funding.

In early June the Tourism Ministers Recovery Group approved the $5.1m grant, which could be matched by a loan of the same amount if necessary.In a written statement to Stuff, AJ Hackett chief executive David Mitchell said the funding reflected “Bungy’s position as an iconic part of New Zealand’s tourism offering”, and it had retained more than 80 jobs nationally.

Tourism Holdings Discover Waitomo ($4m) and Whale Watch Kaikoura ($1.5m) also received strategic assets money.

THL chief executive Grant Webster said it had saved about 30 jobs and gave them the confidence to keep all aspects of the Waitomo business going.

Whale Watch Kaikoura chief executive Kauahi Ngapora said the funding they received would cover three quarters of their annual living wage bill for the permanent workforce of 37.

MBIE has confirmed there is no security for taxpayer funds invested in the scheme, and it would not make a claim against assets if a business failed.

Wilkinson said the recent upsurge in Covid-19 cases overseas meant it could be well into next year before international visitors returned, so there were risks.

“There's a massive risk, we’re looking at even more prolonged border closures in my opinion than what we are willing to even accept yet … the world is a very scary place right now with this pandemic.”