Bungy bailout ‘corporate welfare’
A payout of millions of dollars to ensure the survival of AJ Hackett Bungy New Zealand has been criticised as ‘‘corporate welfare’’ for a company with wealthy shareholders.
It was announced on Wednesday that the bungy jump firm could get up to $10.2 million from the Government to help it remain in operation despite the disruption of Covid-19.
It will receive a $5.1m grant in the first year, with a possible loan of up to $5.1m available in the second year if borders remain closed to international tourists.
Co-founder and managing director Henry van Asch said it was needed.
‘‘Even after considerably resizing our business across New Zealand we are still facing significant losses through to whenever the tourism market rebounds.’’
AJ Hackett Bungy announced staff cuts in May, with a spokeswoman saying at the time 150 jobs out of 224 could go.
But economist Cameron Bagrie said the payout was inappropriate. ‘‘I’m not convinced that jumping off a bridge is a strategic asset. I would have thought that’s an asset you can hibernate and wait for the demand to come back. Bungy jumps are now a strategically important asset? You have to look at this through a common sense lens and think, really?’’
He said while the operation might have a couple of lean years without tourists, it had a long and successful history that it could draw from to finance it.
AJ Hackett Bungy is owned by Bungy New Zealand, which has three shareholders – Fun
Innovators NZ, owned by Van Asch and John Ward, Trojan Holdings, owned by Sir John Davies, and Gulley Holdings, owned by Andrew and Claire Brinsley and Farry & Co
Trustees. Davies was cited in the
Rich List as being worth
$140m.Van Asch owns a number of properties, including one in Dalefield with a valuation of almost $7m.
‘‘I don’t think this business would have been going anywhere,’’ Bagrie said. ‘‘If they had wanted to unload it another investor would have been prepared to step in and pick it up at an appropriate price … It just looks like corporate welfare, it’s the only way to describe it.’’
The money was part of the
$400m Tourism Sector Recovery Package.
‘‘I’m not convinced that jumping off a bridge is a strategic asset.’’
Cameron Bagrie Economist