14 Oct 2022

Ruapehu Alpine Lifts: Minister Stuart Nash defends decision to decline further funding

4:43 pm on 14 October 2022
Skiers on a chairlift at Turoa ski field.

The government will not be providing any further financial support to Ruapehu Alpine Lifts. (file photo) Photo: RNZ

The government went in eyes-wide-open when it loaned Ruapehu Alpine Lifts $15 million and it has no regrets, Economic and Regional Development Minister Stuart Nash says.

On Tuesday, the ski fields announced they were going into voluntary administration, blaming two years of Covid-19 restrictions and this year's poor weather.

The government will not be providing any further financial support.

"Two lockdowns and a really bad ski season was never going to be easy, there's no doubt about that," Nash, who also holds the Tourism portfolio, said.

Ruapehu Alpine Lifts (RAL) employs about 196 staff across its Whakapapa and Tūroa ski areas in the central North Island.

Whakapapa will continue to operate as planned, weather permitting, through to season close estimated at 24 October.

John Fisk and Richard Nacey of PwC have been appointed as the voluntary administrators.

PwC said all options were on the table to restore the business, but could not rule out the possibility the ski fields would have to close.

With that, Nash conceded the taxpayer money loaned to RAL could be gone.

"There's a long way to go before that situation plays out. Let's just wait and see," Nash said.

The Ministry of Business, Innovation and Emplyoment first loaned RAL $10m to build its Sky Waka gondola at Whakapapa in 2018, through the Provincial Growth Fund. A further $5m was later added on.

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Minister of Tourism Stuart Nash says they followed advice from officials about RAL's application for more funding. Photo: Dom Thomas

RAL later made another request for financial support. Officials focused on RAL's ongoing commercial viability, and concluded there would be no more funding.

"They did come to government and ask us for more money. Myself and the minister of finance took a good hard look at this and decided we would go with the advice we received from our officials," Nash said.

He was yet to get a report from officials about what the different scenarios might be, and was waiting for the report from administrators PwC.

"This is a commercial operation. We've put $15m in so far. They have obviously suffered during lockdown and a really bad season," Nash said.

"Nothing that we did in the Provincial Growth Fund or other funds was government-guaranteed.

"We looked at this from a commercial lens and said 'okay, it's time for us now to step back and let the receivers do what receivers do."

He pointed to reports a group of shareholders and life pass-holders had proposed a crowdfunding scheme.

"When you've got 14,000 life members, there's 14,000 people that aren't paying annual subs, life memberships can be a real drain."

Kānoa - the regional economic development and investment unit - was managing more than 1700 projects across the country, he said.

"There are very, very few that are distressed. We went through quite a strenuous and rigorous due-diligence process on all the money we invested, large and small amounts.

"This went through the same process, but sometimes the commercial reality is things don't work out the way that we planned."

On a busy day, the Whakapapa ski area on Mount Ruapehu hosts thousands of visitors, seen here leaving the field at the end of a fine day.

The Whakapapa ski field is set to continuing to operating as planned through to season close, estimated at 24 October. Photo: RNZ / Alison Ballance

Ruapehu District mayor Weston Kirton said it would be premature to write off the area's ski industry entirely.

"We're not going to be doing that lying down. We're going to be focused on seeing what we can do to get good outcomes as far as RAL is concerned first," he said.

Kirton only took up the mayoral chains on Monday, launching headfirst into the challenge.

He previously served as the district's mayor from 1995 to 2001, and said he dealt with similar anxiety in the region following the 1996 Ruapehu eruption.

There could be other ways to fund the ski fields' future, Kirton said.

"It's a matter of not going back to the existing funders, but looking at external funding, other ways of skinning the cat," he said.

"I would say the administrators would be more independent, and probably more focused on how they can move forward with a different list of options."

Rangitīkei MP Ian McKelvie said it was disappointing there would be no more government money for RAL, but it had been obvious for some time there were challenges.

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Rangitīkei MP Ian McKelvie Photo: VNP / Phil Smith

"It's just such a beautiful part of New Zealand, and if you look at the Tongariro Crossing which has obviously been at peak numbers for some time, there's room for a whole lot more recreational activity in that area that won't do any environmental damage," McKelvie said.

"I think there's more than just the skiing that's at stake here."

McKelvie plans on raising the issue with the government if that is what the electorate wants.

He is retiring next year after 12 years in Parliament, and expected this to be a big challenge facing his successor.

"You can bang your head against a brick wall in opposition all you like, it's very difficult to get influence, particularly with a dominant government like we have at the moment who don't really have to listen.

"It will become an issue for my successor, and obviously for me because I've got another 12 months to run."

The Ruapehu Mountain Clubs Association, which represents 40 ski clubs, said RAL's financial situation had been concerning clubs for some time.

Its president, Linda Danen, said RAL and the clubs were hand in glove, and the future financial viability of the clubs and how they were utilised would be affected by whatever happened next.

"It also impacts big decisions of, if there was nothing, then some clubs may need to also exit the mountain, and all have obligations within our license with the Department of Conservation of how that may happen."

Danen said the association would have its annual general meeting on Saturday, where it would decide on a more solid position and action plan.

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