Tuesday, June 18, 2024

Point of Order: Buzz from the Beehive - 18/6/24

Good news for grannies and kiddies – but see what Woods didn’t mention when enthusing about $5.4m aero space boost

Today’s news from our ministerial masterminds is not likely to be the stuff of great controversy

The Department of Internal Affairs is upgrading the Digital Child Exploitation Filtering System, which blocks access to websites known to host child sexual abuse material.

And – ha, anyone want to jest about the nanny state? – the Government has announced that it is making it easier for people to build granny flats.

But a press statement which was recorded here on October 3 last year – we had a Labour government then – deserves to be revisited thanks to an article published today by Newsroom.

The article draws attention to something the press statement failed to mention: the Hipkins government agreed to pour $5.4 million into a project contrary to official advice that the recipients were ineligible.

The grant was given to the Tāwhaki Joint Venture to fund a sealed runway and hangar facilities to encourage investment, growth and continued research and development in New Zealand’s aerospace industry.

The Crown had already stumped up $24m to this partnership, when the government and local iwi established the Tāwhaki joint venture to secure 1000 hectares of land at Kaitorete Spit.

The Crown and Kaitorete Limited each own 50% of the shares in Kaitorete Land Holding Limited which owns 1,000 hectares of land at Kaitorete, 50 minutes’ drive from the Christchurch CBD.

Latest from the Beehive

18 JUNE 2024

The Department of Internal Affairs [Department] is making a significant upgrade to their Digital Child Exploitation Filtering System, which blocks access to websites known to host child sexual abuse material, sa

17 JUNE 2024

The Government has today announced that it is making it easier for people to build granny flats, Acting Prime Minister Winston Peters and RMA Reform Minister Chris Bishop say.

And here’s the flashback to the dying days of the Hipkins government –

3 OCTOBER 2023

The Government is helping Canterbury’s aerospace industry take off with further infrastructure support for the Tāwhaki Aerospace Centre at Kaitorete, Infrastructure Minister Dr Megan Woods has announced.

Woods confirmed a $5.4 million grant would be provided to the Tāwhaki Joint Venture to fund a sealed runway and hangar facilities to encourage investment, growth and continued research and development in New Zealand’s aerospace industry.

“Tāwhaki predicts that over the next 10 years this development will contribute to over 1,300 highly skilled, high-paying jobs and up to $2.4bn in economic benefits.

“I’m pleased to be supporting a project that so obviously benefits New Zealand. The aerospace sector works alongside our world class universities and Government agencies to help drive economic growth, innovation and new jobs.”

“Today’s funding means that Tāwhaki can immediately look at opportunities to scale up the site and help the aerospace industry in New Zealand continue to take off.

“Without this investment there is risk that some flagship aerospace companies would move offshore. We want this sector to continue to thrive here, directly benefitting the local community in Canterbury, and wider New Zealand economy.”

The $5.4 million funding would help build $6.1 million sealed runway and hangar infrastructure at Kaitorete. The $700,000 co-funding would be provided by Tāwhaki.

The current facility at Kaitorete was already being used by local companies including Kea Aerospace, Aerosearch and Swoop Aero, as well as the University of Canterbury. The new infrastructure will be used by a wider range of aerospace companies onshore and abroad, and research institutes, with the intention to scale up over time.

What didn’t Woods tell us?

Let’s turn to Newsroom:

How Tāwhaki Aerospace got millions of dollars it wasn’t eligible for

Writer Emma Hatton tells us the runway’s completed and the hangar is almost there, but official documents show Tāwhaki Aerospace was never eligible for the government cash it got to build them

She writes:

A Cabinet workaround saw Tāwhaki Aerospace centre approved for $5.4 million from a regional fund under the previous government despite officials advising it shouldn’t.

The Regional Strategic Partnership Fund came into effect in May 2021, born of a Labour manifesto commitment at the 2020 election.

Almost $200 million was set aside for projects located outside of Wellington, Auckland and Christchurch that “support the government’s vision of creating more productive, resilient, inclusive, sustainable and Māori-enabling regional economies”.

The Tāwhaki joint venture had two aims: to establish space launch and research and development facilities at Kaitorete and to protect and rejuvenate the natural environment.

In mid-2023 – when Tāwhaki brought forward plans to build a runway and hangar at the site – it initially approached the research, science and innovation minister with a request for a further $5.4m, but there was no spare cash available.

Hatton tells us:

Tāwhaki was advised to apply for funding from the Regional Strategic Partnership Fund, despite it being in the Christchurch region, which is excluded from this specific fund.

Advice from officials outlined that a consistent line had been held since the 2018 Provincial Growth Fund that projects in metropolitan centres were excluded from ring-fenced regional development funds.

In addition, Tāwhaki was not able to contribute much of its own money.

“RSPF eligibility criteria includes that other funding must be available for RSPF projects in addition to the RSPF funding sought. Although the amount of co-funding required was not specified by Cabinet, for commercial projects, the requirement is generally at least 50 percent additional funding. For non-commercial projects and Māori-enabling projects, a contribution of 20 percent is a guideline,” officials explained.

Tāwhaki contributed $700,000 – 11 percent towards the total cost.

Officials told Ministers the Tāwhaki proposal was one of 14 to consider before the fund closed to new applications.

“There would be trade-offs required as this request for funding would mean that other proposed investments cannot be funded.”

Officials recommended the proposal be declined.

“There are significant reasons why it should not be funded through the RSPF … The benefits are to metropolitan Christchurch, not regional New Zealand. Over the past five years many potential proposals presented to Kānoa that did not meet the location-based eligibility criteria were not considered for funding.

“Moreover, other proposals in Kaitorete have been declined for regional development funding previously given its location.”

Oh – and officials (unlike Megan Woods) were unconvinced about the long-term economic benefits of Tāwhaki.

“[The Ministry of Business, Innovation and Employment is unclear at this stage if funding the Tāwhaki proposal will be a good investment for the Crown long term.”

The briefing paper to minsters also outlined officials’ concerns that other funding avenues had not been explored.

“Tāwhaki has not fully explored other funding mechanisms (e.g. co-fund, sell assets, raise capital, partner with other commercial entities, other government funds, Budget bid). Tāwhaki claims that a grant is the only workable option, however our view is that there are further funding options to explore.”

There were concerns, too, that the project itself was not fit-for-purpose.

“The runway length proposed may only be useful to the current generation … as such the proposal only provides an interim runway solution and therefore re-work may be needed.

“The proposed runway surface would be a chipseal surface, as a cheaper alternative to asphalt. This would allow for aircraft with a maximum take-off weight of 5700 kilograms to use the runway. This would preclude any future use of the runway by heavier aircraft.”

Hatton says benefits outlined included the likelihood the project would support the wider Canterbury region through increased jobs, revenue and research and development opportunities.

Benefits also included “the support of Māori aspirations” – yep, that’s what they said- and it helped spread the fund into the South Island, where projects in the North Island had dominated.

Cabinet considered the bid and decided to approve it.

The then-Prime Minister Chris Hipkins announced the funding at the Aerospace Summit in mid-September.

Since then, swift progress on the runway and hangar has been made.

The runway opened in February and the hangar is due to open next month.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton

1 comment:

Anonymous said...

And why would such a facility be needed at all. NZ has huge capacity for aeronautical research at existing, under utilsed airports - both civil, military and private. And what about tapping into ngai tahus millions. Quite simply a means of funnelling taxpayer cash to maori elite ... again.

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