The government’s $54.2 million fund to invest alongside firms to help nudge New Zealand’s tourism sector into a more sustainable model will be open to all and sundry, if they can give ministers the most bangs for the bucks.

The initiative reallocated unspent money from the government’s covid cushion for the sector in this year’s budget to support tourism’s recovery from the pandemic while also pushing it in the lower-volume, higher-value direction mooted by tourism minister Stuart Nash and many within the sector.

Nash and finance minister Grant Robertson took a paper to cabinet in May seeking approval to set up the broad parameters of the fund, telling their colleagues that the limited access to cash created an opportunity to support the recovery by encouraging more innovative and regenerative activities.

“By co-funding higher-risk, innovative activities in partnership with industry and other key stakeholders, the government can take advantage of this opportunity to support transformational activities that drive the sector towards a more regenerative model,” Nash and Robertson said in the paper.

Nash is pushing for the sector to get more out of fewer visitors, which will reduce the strain on infrastructure in some hot spots while at the same time preserving NZ’s reputation for a pristine environment.

That sentiment is shared by new leaders in the tourism sector, and Nash and Robertson’s paper said there’s demand in the industry to decarbonise, invest in waste reduction systems, collect more tourism data, and lift workplace standards.

“However, current balance sheets likely do not prioritise investment in these opportunities,” the paper said.

Tight purse strings

Nash and Robertson want the innovation fund to pick up the slack, co-investing in higher-risk activities that cash-strapped firms might be reluctant to pursue while rebuilding their businesses. 

That should help push the sector into a more regenerative model, the paper said.

They proposed, and cabinet accepted, that the fund has broad and open eligibility to drive the greatest change, saying non-tourism sector organisations such as tech firms and academic institutions will bring the highest level of innovation.

“We consider that broad, open eligibility is the most effective option for delivering the level of transformational change we are seeking through the innovation programme for tourism recovery,” Nash and Robertson said.

“However, we recognise that broad eligibility also carries risks of scope creep beyond the tourism sector and will require clear and considered project investment criteria to ensure that the funding will drive direct outcomes for the tourism sector.”

The ministers hadn’t ironed out the details, instead meeting stakeholder groups in June to make final decisions on the design of the policy in the September quarter.

That will include whether the fund will be contestable or not. Ministers also noted the auditor general’s concerns about the $290m strategic tourism fund and said it’s important the lessons from that review are incorporated into the innovation fund.

Robertson and Nash proposed they – in their finance and tourism roles – be responsible for the policy design final decisions, although cabinet added Māori development minister Willie Jackson to the group.