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

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”. 
That same year the government and local iwi established Tāwhaki joint venture to secure 1000 hectares of land at Kaitorete Spit. 
The purpose was two-fold: to establish space launch and research and development facilities at Kaitorete and to protect and rejuvenate the natural environment.  
The Crown stumped up $24m towards Tāwhaki.
In mid-2023 Tāwhaki brought forward plans to build a runway and hangar at the site, concerned aerospace companies in New Zealand would leave if the facilities were not expedited.  
It initially approached the research, science and innovation minister with a request for a further $5.4m, but there was no spare cash available.  
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.  
Ministers were told by officials 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.” 
Officials 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.” 
And there were concerns 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.” 
There were benefits outlined, including it was likely to support the wider Canterbury region as well through increased jobs, revenue and research and development opportunities.
Benefits also included the support of Māori aspirations 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.  
Tāwhaki chief executive Linda Falwasser said there had been a real risk of companies leaving the country to access better facilities, and the Partnership Fund had been the option suggested by ministers.
“We’re on the ground, we’re talking with companies every day, and we’re right in their business and talking about the pipeline of activities they need to do.
“Sites that had the right infrastructure, where there was very little air congestion were very limited and we were hearing the need for that infrastructure and if that wasn’t available then of course, they probably would have looked at their options.” 
She said due to the quick funding and delivery, New Zealand had retained important talent and business. 
I don’t want to speak on behalf of the companies but that is exactly what we were hearing and why we did the urgent business case … and we haven’t lost any companies within the last 12 months, so something’s working.” 
Labour finance spokesperson Barbara Edmonds said the decision to approve the proposal was in line with the intention of the fund.
“The Tāwhaki Joint Venture is situated at Kaitorete in near Banks Peninsula, Canterbury, not Christchurch. 
“The funding to scale up the site with a sealed runway and hangar infrastructure was approved as the venture meets the requirements of the decision-making framework, including enabling Māori and sustainability.
“The Tāwhaki project is expected to create more than 1000 jobs, and encourages investment and growth in New Zealand’s aerospace industry.”