Auditor-General asked to prob tourism assets funding

Monday, 28 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.

The Auditor-General has been asked to launch an enquiry into the handling of $270 million of Government funding for key tourism businesses.

The strategic assets protection programme (Stapp) has come under fire for the way in which it chose 130 tourism operators out of the 308 who applied for support in the form of grants and loans.

Lawyer Andrew Glenie is acting for at least 35 operators who missed out on grants of up to $500,000, and he said it was appropriate that the Auditor-General, who oversaw the spending of public money, had a good look at how the Stapp package was handled.

“This is a very large chunk of public funds and I think it’s fair to say there’s fairly widespread dissatisfaction with the way the scheme was carried out.

Abel Tasman National Park kayak tour owner Rohan Haskell is part of a group of mostly smaller South Island operators challenging the fairness of a scheme to save important tourism businesses.

“What we really want is independent scrutiny, and we want that to be done promptly, given the proximity of the general election, and that’s relevant because elections are an all-change moment and you don’t know who the Government is going to be.”

Seeking a judicial review of the decision-making process was still a last resort option if they did not get any engagement from the Tourism Recovery Ministers Group who selected businesses to support

Those decisions were based on advice from Ministry of Business, Innovation and Employment (MBIE) officials who became so concerned about the process, they at one stage recommended abandoning it altogether.

Southern Discoveries was among the successful applicants to the strategic assets fund and received the maximum grant of $500,000. It operates a number of scenic attractions in the Fiordland and Otago regions..

Glenie said they wanted to know why money was given to large privately owned and publicly listed organisations [such as AJ Hackett Bungy and Tourism Holdings Ltd] that did not have to prove they had exhausted all private avenues of support.

The decision to offer AJ Hackett Bungy $10.2m in Government grants and loans caused an uproar in the tourism industry. So far 116 of the 130 recipients of the strategic assets funding have been announced and the remainder will be made public once they have negotiated contracts with the Ministry of Business, Innovation and Employment.

Questions and requests for documents sent to ministers on September 2 were treated as Official Information Act requests which were not due for a response until Wednesday, and that time frame could be extended, Glenie said.

The group wanted to know how ministers selected successful applicants, how they decided how much money to give them, and why the Government was comfortable intervening in local markets by supporting some competing businesses, but not others.

If the enquiry uncovered “questionable” actions, Glenie said they would like the Government to look at how things could be put right, such as through a targetted wage subsidy, or offering another round of Stapp funding.

”They could do it again and do it properly.”

Tourism Export Council chief executive Lynda Keene they would like any unused grant or loan funding to be allocated to transport, day tour operators, accommodation and other unsuccessful Stapp applicants.

“We understand the concern tourism businesses have about parity, equity, level of due diligence and some decisions made against the [Stapp funding] criteria.”