Westland loan advice ignored

The Treasury argued against the Government giving Westland Milk Products a $9.9 million loan but its advice was ignored.

One of the department’s reasons for advising against the loan was that Westland was having problems obtaining a loan from its bank on acceptable terms, and the Government would then be acting as a lender of last resort.

The Government announced the loan in November but a spokesman for Regional Economic Development Minister Shane Jones said on Thursday that the money had not yet been handed over as contract negotiations were ongoing.

Following an official information request, the Treasury has released papers relating to the Provincial Growth Fund (PGF) including advice it gave on Westland Milk.

Treasury policy analyst Erwin Ricketts and policy manager Natalie Labuschagne also said: ‘‘The justification for the proposed loan is that value-add dairy is one of the few industries on the West Coast with growth potential.

‘‘This criterion ... alone would not exclude similar loan requests from other companies seeking to establish themselves on the West Coast,’’ they said.

Prime Minister Jacinda Ardern and Jones visited Hokitika in November to announce the loan, to help build a plant to separately process multiple types of special quality milks into high-value products.

Since then it has been revealed Westland could be totally or partially sold to Canadian company Saputo.

However, a condition of the interest-bearing loan was that it would have to be immediately repaid if there was a change of ownership structure.

‘‘The PGF, when granting a loan, is able to consider wider benefits than a commercial bank would, such as wider regional development and employment outcomes,’’ Jones’ spokesman said.

Gerard Hutching