Nearly a third of Government innovation agency’s $149m Covid loan book in arrears, 63 firms insolvent

Saturday, 13 June 2026

Nearly a third of the Callaghan Innovation’s $149 million Covid-era research and development loan book is in arrears, including $21.5m linked to 63 failed or insolvent businesses, as the agency enters its final months before disestablishment.

Callaghan Innovation – a government entity set up to make businesses around the country more innovative and provide grants – is now being disestablished as part of wider science system reforms.

Its functions and responsibilities are being shifted to other government departments and organisations, with MBIE taking charge of chasing up tens of millions of dollars in outstanding post-Covid loans.

Data released by MBIE under the Official Information Act show a total of 455 loans totalling $149m were awarded under Callaghan’s short-term research and development loan scheme, a temporary support measure created after the pandemic.

Of these, 51 have been fully repaid to the effect of $15.2m. About $80.3m is still being repaid as per agreement, while a further $5.4m worth of loans are being paid under negotiated terms.

Nearly a third – worth $48.1m – are now in arrears.

MBIE said 63 of the businesses Callaghan loaned money to had since become insolvent or were involved in a legal process and had made no repayments, accounting for $21.5m. Eighty had either been approved to delay repayments or were being assessed under hardship criteria.

The ministry has initiated legal action against seven companies so far, whose collective loans total $2.5m. One of these is Christchurch medical cannabis start-up Cannakiwi, which MBIE says never made any repayments on the $314,000 it borrowed.

MBIE only took over administrating the research and development loan scheme in November 2025. Grants director Spencer Willis said they were now strengthening how the remaining loans were managed.

“This includes putting in place a more robust debt management framework, clearer accountability for monitoring and escalation, and a more systematic approach to identifying risks, setting impairment provisions, and recovering funds,” he said.

“These improvements will help ensure the ministry actively manages risks and secures value for money as the loan portfolio is paid down.”

Willis said MBIE had an obligation to ensure fairness, although they understood innovation was difficult and “failure is part of the process”.

“However, we want to highlight that the programme awarded funding in a fair and equitable manner, and we want to ensure that we manage the loans in the same way.

“Borrowers are expected to continue repaying their loans, with interest, in line with their original agreements.”

Stricter approach

Science, Innovation and Technology Minister Penny Simmonds told The Press the short-term research and development loan scheme was introduced by the previous government.

MBIE’s stronger monitoring and escalation processes were part of a more systematic approach to managing risk and recovering funds, she said, to ensure “appropriate stewardship of taxpayer dollars while the loan portfolio is paid down”.

The Government recognised innovation inherently involved risk, she said, but expected loans to be repaid as agreed, and needed to keep things fair “between businesses that are meeting their obligations, and those that are not”.

“The Government remains committed to supporting research and development, while ensuring that public funding mechanisms are well-managed and deliver value for money for taxpayers.”

Labour’s science, technology, and innovation spokesperson, Reuben Davidson, said these were emergency research and development loans during Covid, which “helped companies keep their researchers employed and their programmes running when private funding dried up”.

“We prioritised lives and livelihoods during a crisis, compared with this Government which is dismantling Callaghan Innovation, costing jobs and holding businesses back,” he said.

Davidson said good science and innovation were why there were breakthroughs like the golden kiwifruit, “now a multi-billion dollar success”.

“These job losses don’t just hurt the hundreds of people and their families who lose their livelihoods, it hurts the entire New Zealand economy… If Christopher Luxon were serious about economic growth, he would be investing more in science, not hollowing it out.”

Unpaid debt ‘more positive’ than expected

Save Science Coalition spokesperson Ben Wylie-van Eerd, also a candidate for The Opportunity Party, was made redundant from Callaghan Innovation as part of the Government’s science reforms.

He said there was a “broad acknowledgement” within the science system that Callaghan’s model hadn’t been as successful as hoped.

But he said having just a third of the short-term research and development loanbook in arrears “honestly sounds more positive than I was expecting”.

“If an angel investor had only a third of their companies that they invested in fail, they’d be jumping for joy.”

Callaghan’s aim had been to take some of the great science being done in New Zealand and drive more commercial outcomes from it, but that was easier said than done.

Many of its staffers had agreed it was time for a new approach, he said.

“But we got a very rude shock when that new approach involved getting rid of so many of us.

“Every scientist who was working at Callaghan, they really, really wanted to make that commercial success story, to make it work, to make it fly… But we also expected good faith from our funders that if this approach wasn’t working very well, we'd try another one.”

Wylie-van Eerd worried the part of the New Zealand science system intended to produce more commercial outcomes was disestablished before it was clear what the new strategy would be.

He said some of the scientists who lost their jobs had left the country, “and they won’t be coming back”. The 176 science workers still at Callaghan had “no idea what their future holds”, The Post reported this week, with legislation to fully wrap the organisation up not yet introduced to Parliament.

If Aotearoa wanted to build a healthy research and development environment, it would come down to funding, he said.

“We lost over 700 science jobs and about $80m a year of science funding shortly after this Government took over. And we’re still behind, two years later, the position where we started.

“Publicly funded science … it goes into the funnel, where commercial success comes out the bottom.”