Furious tourism operators demand change over unfair funding shambles

Wednesday, 16 September 2020

New Zealand had about 20,000 tourism businesses pre-Covid and about 126 key ones received more than $270m in grants and loans to save them from possible closure.

Tourism operators say it's not too late to right the wrongs of a poorly thought out rescue package that was patently unfair.

Briefing papers show that Ministry of Business Innovation and Employment officials were so concerned, they recommended dropping the strategic assets protection programme (Stapp) altogether because of difficulties identifying which attractions were worth saving, and which ones really needed the money.

However, the Tourism Ministers Recovery Group went ahead and offered $270m in grants and loans to 130 tourism operators out of 308 who applied.

Some of those who missed out want the Government to review the whole process and do something about the inequities MBIE officials warned Ministers could occur.

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Fiordland Jet owner Chris Adams says things are looking grim for smaller tourism businesses who did not apply for Stapp funding because they mistakenly thought they were ineligible. “All I’ve learned from this is that with Government funding, honesty doesn’t matter, you just apply and hope; what have you got to lose.” FILE PHOTO

* Flawed tourism rescue plan was almost dumped

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* Ngāi Tahu Tourism receives million dollar funding boost

Ngāi Tahu Tourism was offered a total of $1.95m in grants for four businesses, including $450,000 for Dart River Adventures. It will hit the water again from December offering tickets at a 25 per cent discount.

* Tourism awaits funding news after criticism of 'Hackett cash'

* No guarantees for millions given to big tourism companies

Offering AJ Hackett Bungy NZ a $5.2m grant proved highly controversial even before other recipients had their grants capped at $500,000. MBIE officials had warned ministers not to impose the cap because it would “create perverse outcomes.”

Tourism Industry Aotearoa chief executive Chris Roberts said the final package was a “mishmash” of different recommendations after a highly unusual process.

“I don’t recall seeing papers before where officials, after doing a huge amount of work and having applications come in, recommend that a funding scheme be scrapped and alternatives looked at.”

The famous Waitomo glowworm caves would likely have closed if parent company THL had not received $4m in Government grants and loans, according the THL chief executive Grant Webster.

Roberts said it was not feasible to “unwind” the process and take back grants, “but it needs another look post election about whether any inequities or unfairness could be rectified, and whether further measures could be put in place.”

Fiordland Jet owner Chris Adams is part of a group of mostly South Island operators looking at the possibility of seeking a judicial review of the funding process.

Tourism Export Council chief executive Lynda Keene said officials told her the border would remain closed for a long time, so loans rather than grants were offered to inbound tour operators. “That just makes ITOs feel sick.”

“There needs to be an enquiry and it needs to happen quickly to level the playing field.”

Adams said he was at a disadvantage against Stapp recipients, such as Dart River Adventures, when it came to pricing and marketing to domestic travellers, and he believed other measures, such as an extension of the wage subsidy should be considered.

“Do they just want us to pull the plug, lay off our staff and walk away?”

Much of the controversy centres on the eligibility criteria which required applicants to sign a declaration that they had exhausted all alternative sources of funding.

Adams said that when Stapp applications opened in June, the industry was only 10 weeks into Covid-19 after three great summer seasons, so he did not apply.

“How many people could hand on heart say that 10 weeks into Covid they had explored all avenues [for finance]?”

MBIE contracted Deloitte to do credit checks and review two years of profit and loss statements from 145 eligible operators, but officials did not have time to independently verify applicants had in fact exhausted all alternative sources of funding.

Publicly-listed Tourism Holdings Ltd (THL) was offered a $4m grant/loan package for its Discover Waitomo glowworm caves attraction, and this week advised that it expected to make a net profit of about $20m for the June financial year.

THL chief executive Grant Webster said he had been “completely transparent” with MBIE and provided more financial information than was asked for.

He said their tourism businesses had made substantial losses since March and were likely to do so for some time, a factor that pushed them to consider closing Waitomo down, and the Stapp funding allowed them to keep it open and save jobs.

Webster also pointed out that they were still negotiating the $2m grant contract and had not yet received the money, which would have $500,000 deducted to cover the second wage subsidy and Department of Conservation concession fee relief.

The Tourism Export Council chief executive Lynda Keene said they were shocked to discover inbound tour operators (ITOs) would be offered $20m in loans after being assured in late July they would get grants.

“That caused an enormous amount of distress for our members.”

Keene said at a meeting with Minister Davis and MBIE officials, the reason given for the change was that the border would not reopen in 2020 and possibly not in 2021.

She is hoping that with questions being asked by opposition parties during the election campaign, the $400m rescue package could be extended to $600m.