Cabinet has endorsed an ownership bid for the Whakapapa ski field and has agreed to loan Whakapapa Holdings up to $5 million to support its purchase.
The funding is conditional on Whakapapa Holdings obtaining a concession from the Department of Conservation to operate in the Tongariro National Park.
If the bidders have a commercially viable bid they should be able to get a loan from a bank. Banks should be those who finance commercial investments, not taxpayers.
If taken up in full, the Government’s $5m loan to Whakapapa Holdings would take direct Crown expenditure to save skiing on Ruapehu post insolvency to $35m.
It’s the sunk cost fallacy – we have already put to much money in, we need to keep doing more to stop it failing.
The Government bravely said no to the ferries sunk costs continuing. They need to do the same here.
David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders.
2 comments:
Not really sure what Government's motive is here. It can't be to protect the recreational rights of the RangeRover set from Remuera, and this Government is not in the habit of propping up failing industries just to save jobs. So what's going on? Skiing is a failing industry because there's not enough snow. Let it go naturally and let the workers find jobs in more productive sectors of the economy. It's not as if there weren't plenty of other commercial opportunities on the mountain (if DoC could be persuaded to unlock them them) and that's before you even consider what else is going on in the central North Island..
Here's a subtle investment test - would JT and his Wh***ing trust 'loan' Whakapapa Holdings up to $5 million - if not, why should Tama convince the Cabinet to spend our monies thus?
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