Otago biggest winner in tourism funding 'lottery'

Friday, 27 November 2020

New Zealand had about 20,000 tourism businesses pre-Covid and about 126 key ones received more than $270m in grants and loans to save them from possible closure.

Otago has scored by far the largest chunk of controversial funding to save key tourism businesses, reflecting its popularity with both international and domestic visitors.

Over the past four months the Ministry of Business Innovation and Employment (MBIE) has progressively named 130 chosen operators as they signed funding agreements for cash grants of up to $500,000, and Rotorua’s Tamaki Maori Village was the final recipient named on Friday.

Otago was the clear winner with 26 businesses sharing $12.3m, followed by Bay of Plenty(18, $8.7m), Canterbury (14, $7.4m), Waikato (11, $6.4m), Southland (9, $4.5m), Auckland (8, $3.7m), Northland (7, $3.2m), West Coast (7, $3.3m), Tasman (6, $2.8m), Wellington (4, $2m), Hawkes Bay (3, $1.26m ), Manawatu-Whanganui (3, $870,000) and Marlborough (1, $500,000).

A further 10 attractions, classed as “national” because they operated in more than one region, shared $9.6m, and more than half of that was a $5.1m grant to AJ Hackett Bungy.

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Tamaki Maori Village is the last strategic tourism attraction to receive a $500,000 cash grant from the Government. Pre-Covid-19 it ran overnight marae stays and kapa haka sessions that were popular with younger travellers.

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Skyline’s Queenstown and Rotorua sites received a total of $1m in grants from the strategic assets fund.

The strategic tourism assets protection programme (Stapp) got the lion’s share of the Government’s $400m Covid-19 industry rescue package, but the selection criteria attracted strong criticism from some businesses that missed out.

A group of 50 operators have asked the Auditor General to investigate the way selection was carried out and could seek a judicial review of the process which has been dubbed a “lottery.”

Auckland Council got $1.5m in total, receiving three of the eight grants to the region.

MBIE said regional spread was not a factor in decision-making by the Tourism Recovery Ministers Group who chose recipients based on recommendations from officials, and they opted to fund all applicants that scored 15 points out of 30 under the assessment criteria.

Water-borne activities feature prominently with 25 of the chosen tourism businesses running cruises, jet boat rides, and kayak and rafting trips.

Taupō’s Huka Prawn Park got the maximum grant of $500,000. Auckland’s Sealife Kelly Tarlton and the National Aquarium in Napier received similar amounts.

Wildlife attractions getting assistance showcased Kiwi, penguins, albatrosses, dolphins, and whales, along with zoos, aquariums, and the Huka Prawn Park.

Seventeen aviation operators ranging from scenic flights to skydiving got the nod, as well as half a dozen caving and glowworm trips and three glacier and mountain guiding companies.

Māori cultural experiences, 10 art galleries and museums, hot pools, gondolas, luges, Rainbows End theme park, Maniatoto‘s curling rink, Highlands Motorsport Park, and geothermal attractions all made the cut.

Those applying for money had to sign a declaration that they had exhausted all avenues of financial support from banks, shareholders or other sources.

Some tourism operators were therefore surprised that local authorities such as the Wellington and Auckland City Councils got a hand up for ratepayer-funded facilities including the New Zealand Maritime Museum, Auckland Zoo and Auckland Art Gallery.

Three tourism businesses owned by Queenstown’s Davies family declined grants worth $1.5m on the basis that revenue was better than expected, and there is pressure to have that money reallocated to others who needed it.

At the Tourism Summit in Wellington last week, new Tourism Minister Stuart Nash said he was seeking advice on what to do with grants and loans that were unused.

He has not ruled out further assistance for the industry which has been decimated by the prolonger border closure and the idea of a travel card to encourage domestic tourism is being considered.

The grants will be distributed over two years and businesses then have the option of taking up more than $203m available as low interest loans.

Lawyer Andy Glenie is acting for operators who missed out or did not apply because they did not believe they fitted the criteria describing strategic assets, only to discover competitors running similar businesses had been successful.

He said they were still awaiting a decision from the Auditor General after lodging a request for an investigation two months ago.

“We have been waiting to hear before making a decision, but in the near future, we will need to make our minds up as to whether we initiate a judicial review.”