5 Feb 2021

Inquiry into Strategic Tourism Assets programme welcomed

From Checkpoint, 5:16 pm on 5 February 2021

Businesses which missed out on grants from a controversial government tourism fund could seek compensation if an investigation by the Auditor General finds any fault with the scheme.

The Auditor-General's office has announced it is taking a closer look at the Strategic Tourism Assets Protection Programme that was set up in May last year as part of the Covid-19 recovery package.

More than $290 million in loans and grants were handed-out to businesses that had to meet criteria including being a key attraction, and bringing significant economic benefit to their region.

But three big tourism businesses had funding approved before the formal application round.

Lawyer Andy Glenie complained to the Auditor-General on behalf of more than 50 tourism businesses unhappy with the scheme. He told Checkpoint they welcome the investigation.

"There are concerns going all the way back to the very start of the process. If you think back to June 2020. The ministers who were responsible for this put out some press commentary, and there were statements made on the MBIE website. Those statements didn't give a clear picture of who was eligible for the scheme to start with, or what process would be.

"Those statements in fact discouraged quite a large number of people from even applying. And that's one of the major concerns, that that lack of clarity, that lack of transparency about what was going to be done with the scheme has actually put people off from even throwing their hats in the ring, and as a result, people have missed out.

"And there were some clear issues in relation to the process that was followed through June and July last year, there was a very hasty process… there were some decisions that were made along the way that might have been made differently if there had been more time," Glenie said.

In a statement the Auditor-General said: "Before the start of a formal application round, the Tourism Recovery Ministers Group approved funding for three tourism businesses." Those were Discover Waitomo, AJ Hackett Bungy and Whale Watch Kaikōura.

"There's a concern amongst the group and there's probably a concern amongst New Zealanders in general, to be reassured that it's a level playing field," Glenie said.

"I do wonder whether some of the unhappiness that has been generated by the process has arisen from that decision to treat some businesses differently from others.

"There was always supposed to be evidence given by applicants that they had exhausted their private resources; that they'd looked in their own businesses, their own networks, for other forms of support and found none.

"A lot of businesses that I've spoken to did carry out that sort of self-examination. And they found that they weren't able to put hand on heart and really swear that they had exhausted their own resources. So that discouraged them from applying for the scheme as well.

"I've even had people saying to me: 'The business was struggling, but because we were able to draw down money against our family home we therefore didn't feel that we had exhausted our private resources so we didn't apply'. Now that's concerning."

Glenie said the clients he had spoken to would like to see targeted support for those who are really struggling in the tourism sector, and not just tourism businesses.

"This obviously has an impact on certain parts of the country, I've had a number of people tell me that the West Coast is really struggling as a result of this particular tourism downturn.

"What we really want to see is a bit of initiative from the government taking on board what the Auditor-General finds. I'm not trying to prejudge the process, but I certainly hope that the ministers of tourism and small business and finance, and indeed the entire Cabinet, listen carefully to what the Auditor-General says at the end of this process."

In response to the Auditor-General's announcement, Stuart Nash, who replaced Kelvin Davis as tourism minister at the end of 2020, said the Strategic Asset Protection programme (STAP) was not likely to be restarted.

"We got this money out the door, around but $290 million, really quickly. We did it on a high trust model," Nash said.

"We followed due process. But if the Auditor-General comes out and says the process could be different, or could be improved in the future, we will take those recommendations on board.

"But it's highly unlikely that we will open up the STAP funding process again."