31 Mar 2022

Auditor-General finds failings in $290m tourism support scheme

7:07 pm on 31 March 2022

Ministers used unclear criteria when dishing out tens of millions of dollars in tourism grants in 2020 and kept few records explaining their decisions.

Grant Robertson

Finance Minister Grant Robertson Photo: RNZ / Angus Dreaver

Auditor-General John Ryan's office investigated the $290 million Strategic Tourism Assets Protection Programme (STAPP) after concerns were raised about its management.

Tourism operators had complained the way funding was dished out was unfair, and called for a review after papers showed minister ignored advice to scrap it.

Ryan said the fund required tourism business owners to have exhausted all other avenues before seeking funding, but it was not clear in practice what that meant or how much proof was needed.

Auditor general John Ryan

Controller and Auditor-General John Ryan Photo: Controller and Auditor General

Some businesses said they had not applied for the fund because they had not re-mortgaged their private property, he said, while others with profitable parent companies were funded.

Ryan also said he was concerned there was little evidence of why ministers ignored officials' advice to stop the fund or limit it to just a few businesses.

"Without those records, those who have made the decisions are not able to adequately explain why funding was provided. In my view, this is not acceptable practice, regardless of the circumstances," Ryan said.

However, he also found the process for assessing applicants was structured and consistent once the scheme was formally launched,

He urged the Ministry of Business, Innovation and Employment to formally review STAPP against its goals.

Ministers respond

Tourism Minister Stuart Nash responded to the report, saying: "we're always wise in hindsight."

"Ministers were operating under great urgency at a time of massive uncertainty... and they had to make decisions quickly."

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 belief that if they had gone under they 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.

Finance Minister Grant Robertson said he stood by the government's swift action on the fund, but acknowledged it could have been approached differently.

"Obviously when we're in the middle of a pandemic situation, very uncertain. The government has to act swiftly and decisively, we will always look at those decisions again and in hindsight we may make slightly different decisions.

"But overall I stand by the fact that the tourism industry needed support, there were significant issues for, particularly, operators that were very significant for their town or their region and we had to act.

"In every town and every city there are tourism businesses that play a significant role in economic development, the government was acting at a time when we needed to move quickly and swiftly and I believe that we've supported tourism businesses that are important to the industry."

Ryan noted the scheme was designed to be delivered at speed in a changing environment, but said those circumstances were no excuse for the lack of documentation and the lack of clarity around decisions.

"Trust and confidence in government depends on transparency and accountability when spending public money," he said.

"Trust and confidence can be undermined where the criteria are not clear and when some applicants are treated, or are perceived to be treated, differently than most applicants or where there is limited documentation supporting decisions made by ministers. We saw aspects of each of these factors."

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