Saturday, April 20, 2024

AG inquiry raises concerns with pandemic tourism programme

The Auditor-General’s Inquiry into the Strategic Tourism Assets Protection Programme has raised concerns about the programme’s criteria, assessment process, and decision-making transparency.

The Government’s $290 million Strategic Tourism Assets Protection Programme (STAPP) aimed to provide rapid financial support for strategically significant tourism assets affected by the COVID-19 pandemic.

COVID’s arrival in March 2020 led to the closing of New Zealand’s borders, with the tourism industry “suddenly and severely affected”, with losses of $18-$21 billion forecast, the OAG said in a statement.

A group of Ministers, known as the Tourism Recovery Ministers, was responsible for making decisions about STAPP.

Concerns were raised in the media, and with the Auditor-General, about how STAPP was managed. Because of this, and the amount of public money involved, Auditor-General John Ryan decided to inquire.

The inquiry focused on the STAPP eligibility criteria for funding and the process for assessing funding applications.

The Auditor-General acknowledged that public officials, ministers, and tourism businesses were working in “a challenging and constantly-changing environment”.

Auditor-General John Ryan.

“Ministers aimed to deliver support quickly, meaning that STAPP was developed at pace with tight time frames for applying and assessing applications,” he said.

The inquiry found that STAPP involved a high-trust approach, and aspects of STAPP’s criteria were not as clear as they could have been. For example, it was unclear what the need to have “exhausted all other avenues of support” meant in practice.

“There was no guidance about what steps businesses needed to take to confirm all other avenues had been exhausted,” Mr Ryan said.

Some tourism businesses told the Auditor-General that they decided not to apply as they had not used options such as re-mortgaging private property. Some businesses with profitable parent companies received funding.

“Clear criteria and assurance processes create trust because people feel that they have been dealt with fairly and transparently. Criteria also need to be clear so decision-makers can verify that the criteria have in fact been met,” the Auditor-General said.

The Auditor-General found that once STAPP applications formally opened, the process for assessing applicants was structured and consistent. Three businesses received funding before STAPP opened for applications. These went through a different assessment process.

Mr Ryan said he was concerned that there was limited documentation about why ministers decided on the number of businesses to fund, and why they did not accept officials’ advice to stop STAPP or to only fund a small number of businesses.

“Ministers have broad discretion to make decisions and can seek further advice from other parties and rely on their own knowledge,” says Mr Ryan.

“However, all decisions to spend public money come with an obligation to ensure that the decision-making is consistent and transparent. We saw limited evidence explaining the reasons for the decisions.

“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.”

Uncertainty about whether key criteria were met, combined with the divergence from officials’ advice and limited documentation explaining why, makes it hard to determine the extent to which STAPP represents value for money, the Auditor-General said.

“Trust and confidence in government depends on transparency and accountability when spending public money. 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.”

“To ensure that future schemes build on the lessons learned from STAPP, I suggest that the Ministry of Business, Innovation and Employment should commit to formally reviewing the effectiveness of STAPP against its goals,” Mr Ryan concluded.

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