A tourism operator is welcoming the Auditor-General’s decision yesterday to launch an inquiry into a Government Covid-19 tourism fund businesses have been saying is unfair.
Fiordland Jets co-owner Chris Adams told 1 NEWS he was happy to see the inquiry was underway because “it’s taxpayers’ money that was given out unfairly to a handful of tourist operators”.
Adams is part of a group of about 50 businesses that had called for the inquiry after they found the application process for the Strategic Tourism Assets Protection Programme (STAPP) was “flawed”.
STAPP was announced in May last year as part of the Government’s $400 million tourism package to help businesses struggling in the pandemic.
The funding was designed to support “strategic tourism assets” and “key attractions” and has committed more than $290 million to tourism businesses already.
It gave 130 tourism businesses, from 308 applicants, grants or five-year term loans at an interest rate of three per cent, with the first two years interest-free. About half of those businesses were publicly named, and included larger, well-known operators.
“When the application process came out, it was really short. It was only about 10 weeks into Covid lockdown,” Adams said.
“One of the main criteria was that you’d exhausted all financial avenues. How many companies could put their hand on heart and say they’d exhausted all their financial avenues to continue operating?"
“Most of us hadn’t even been to a bank yet [by then], we still had other money in the bank or other assets.”
That meant a lot of small businesses, including his, didn’t think they could apply for the programme because they were “just too honest”, Adams said.
He said the programme made things unfair for businesses.
“At the end of the day, none of us actually asked for any handouts. None of us wanted it,” he said.
“It would have been a level playing field where the best man survives. But, with what’s happened, it’s actually made it so unfair … some will survive because they got Government money and other businesses will struggle to survive now.”
Adams said tourism businesses were also questioning why Ministers went against their officials’ advice.
In a briefing document to Ministers, released under the Official Information Act, the Ministry of Business, Innovation and Employment (MBIE) laid out options for the scheme. It included scrapping the scheme if they couldn’t come to an agreement, or capping grants at $500,000 and $1 million, with the option of a concessional loan for amounts above that.
Ministers opted for the latter, despite officials advising against it as it would carry “high administrative costs and create perverse outcomes”.
Auditor-General John Ryan said the inquiry would examine the programme’s eligibility criteria, what operators were told, how applications were assessed and whether there were any inconsistencies in the process.
The inquiry would also examine why three businesses were given funding approval before the formal application round opened, which lasted only two weeks.
Ryan said the inquiry would make sure “public trust and confidence is not eroded”, especially with the amount of public funding involved.
He said concerns about the programme’s clarity, transparency, and consistency had been raised with his office and the media.
Adams said he was happy to see business’ concerns had been listened to, especially as business continued to be “tough” financially and with morale being low.
He said he hoped the inquiry would mean something like this never happened again, and that it would reveal whether or not businesses applied for the programme honestly and in good faith.
An MBIE spokesperson told 1 NEWS it was supporting the inquiry and would help make sure the inquiry was “full and complete”.
It couldn’t provide further comment because the inquiry was underway.