A top public watchdog has criticised the lack of clarity and transparency around a government tourism funding scheme that paid hundreds of millions of dollars to operators across New Zealand.
The $290 million Strategic Tourism Assets Protection Programme paid out to 127 businesses.
At the time a number of tourism operators complained the applications process was unclear, the decision making opaque and large operators were getting grants despite having parent companies with significant financial reserves.
An Auditor General's report has now found some of the criteria was not clear. A lack of documentation made it hard to see if funding was fair and there was value for money. No inquiries were made about parent companies' equity and resources.
It also found there was a limited assessment process to sign off on three companies before the scheme even opened.
Checkpoint spoke several times to then-Tourism Minister Kelvin Davis in 2020 about the scheme and the integrity of the choices being made.
On June 4, 2020 he explained why Discover Waitomo, owned by Tourism Holdings Ltd, was getting $4 million.
"They are a strategic tourism asset, they fit the criteria. Without them there the region would well struggle. There's significant spill-over benefits from Discover Waitomo into the local community… We're very pleased to be able to support them."
He confirmed two other companies had also already been promised a lifeline, but the Minister was coy about naming them at the time. The big reveal came later: Whale Watch Kaikōura and AJ Hackett Bungy NZ.
All three companies had funding signed off before official applications even opened for the thousands of other struggling businesses.
At the time Checkpoint queried the process. Davis said there was "capacity" for tourism recovery ministers to hear "urgent and ad hoc applications".
The minister admitted he had not even seen the application.
"I haven't seen the application but their application was recommended to myself and the other tourism recovery ministers, so we were happy to support it," he said.
The Auditor General said government ministers have broad discretion to make decisions, but spending public money comes with an obligation to ensure that decision-making is consistent and transparent.
There was limited evidence explaining these choices.
In the Auditor General's view that is not acceptable practice, especially when it comes to ensuring public confidence in the integrity of decisions made.
Checkpoint earlier revealed Whale Watch Kaikōura simply sent a letter asking for some money. The Auditor General's report confirmed how loose the process was. Whale Watch had filled out a form it created itself and there was no supporting financial information.
AJ Hackett Bungy NZ got $10.5 million, made up of a grant and loan, through the scheme. To qualify, businesses needed to show they had exhausted all other financial options. Checkpoint asked the Tourism Minister about documents obtained under the Official Information Act.
The documents showed AJ Hackett Bungy NZ said it had approached its bank, but no response had yet been provided.
"AJ Hackett was one of the businesses that said they were going to fall over and 83 jobs were going to be lost, so we made an urgent decision," Kelvin Davis said.
He also referred to the company being part of Queenstown's branding, and therefore important to protect.
The Auditor General said it was unclear what "exhausting all other avenues of support" meant. Essentially, it said applicants were not asked to provide comprehensive evidence.
One minister told the Auditor General it did not want to give money to profitable parent companies, but in reality, the government gave tens of millions to their subsidiaries.
'Infuriating'
Fiordland Jet co-owner Chris Adams told Checkpoint he is infuriated and disappointed in reading the Auditor General's report criticising the government's Strategic Tourism Asset Protection Plan.
"The Attorney General's gone to all this effort, and the average businessman was telling them this before it even began," Fiordland Jet co-owner Chris Adams told Checkpoint.
"When we went to fill in the form ourselves, we got to, "Have you exhausted all financial avenues?" We hadn't.
"It was only six, eight weeks after the lockdown. Most of us hadn't even talked to the bank..."
Meanwhile, he said some multimillion-dollar companies simply wrote N/A or said they were going to talk to their bank later.
"It's certainly shown us that the honest man loses here. The government's always said they're going to be open and transparent. The exact opposite happened.
"If we'd filled in a form like this, Inland Revenue Department would come down on us like a ton of bricks."
In response to the question of whether money should be paid back, Adams said: "Bloody oath. Why not?"
'Wise in hindsight' - current Tourism Minister
Tourism Minister Stuart Nash has responded to the Auditor General's critical report on the 2020 Strategic Tourism Assets Protection Programme, saying "we're always wise in hindsight".
"Ministers were operating under great urgency at a time of massive uncertainty as we know, and they had to make decisions quickly."
However the Auditor General clearly said such circumstances were no excuse for the lack of documentation and the lack of clarity in decisions made over large amounts of money.
Nash said the Auditor General had the ability to look at it "in the cold hard light the day".
"Ministers made really tough decisions at a point in time where no one had any knowledge of where the pandemic was going. We had some really important strategic tourism assets in this country and there was a was a belief that if they had gone under the My might have been sold to the large foreign interests."
Nash said he does not accept that money was given to large companies that did not need it.
