24 Jun 2020

Tourism Minister 'not sure' on interest rate for $5.1m Strategic Tourism Asset loan

From Checkpoint, 5:22 pm on 24 June 2020

The man who helped set up AJ Hackett bungy concedes the company's finances were stretched to the limit before a more than $10 million government bail out announced on Wednesday.

The business has been identified as a Strategic Tourism Asset as part of the government's $400 million tourism recovery package.

It gets a $5.1m grant and another $5.1m is available through a loan. The company's already had more than $1.3m in wage subsidies and has applied for the second round, but says despite today's cash injection it will still have to cut some staff.

The company had asked for "considerably more" than the $10m it got, but AJ Hackett Bungy co-founder Henry van Asch told Checkpoint the fund was a good outcome. 

The $5m grant will be used to help retain the highly skilled "jump master" staff, he said. The rest would be on administration, marketing, health and safety, and facility maintenance.  

"We've got 13 different activities across three locations, so we already had hibernated some of them, and put a lot of it onto just their operating part-time basically.

"We had nearly 250 crew. So we're still going to be probably around about 100 crew to keep running even with this additional funding."

Officials 'on top of' loan details - Tourism Minister

Henry van Asch said the company does not have detail on the $5.1m loan, and he's hoping they don't need it. 

"If things go well through the next 12 months we won't need that. But we'll just have to wait and see how things evolve.

Without the Strategic Tourism Asset funding van Asch said the company would have kept "stumbling along" but there would certainly have been more job losses. 

"We were up against the wall in terms of cash flow... It's definitely a lifeline for us." 

Tourism Minister Kelvin Davis told Checkpoint he was not sure what the interest rate is for the $5.1 million loan part of the funding. 

"The finer details, officials are on top of that," he said. 

"We make sure that we do support them and if they're unable to continue, that's part of the quarterly declaration and they won't receive money."

He could not answer the question of whether the government has any claim to assets of businesses that receive the public funding, but still fail. 

How are Strategic Tourism Assets chosen? 

"Myself and the other tourism recovery ministers, we look at the information put in front of us and we make the decisions then. 

"Officials go through all the applications, the ones they believe are viable they put to us. We will say yes or no to any application. At this stage we've got 300 that will be gone through." 

One of the big issues considered is the amount of "spillover" effects that a tourism asset will bring to its local economy, Davis said. 

But he did not give an exact amount of how much estimated spending in a local area would make a tourism asset viable. 

"It's a criteria that will support the community, the town, the region. It's difficult to put a dollar value on how important Whale Watch Kaikōura is to the town and district of Kaikōura. It's difficult to put a specific dollar value on how much Discover Waitomo contributes to the King Country area."