Govt could back Air NZ flights to Cooks by up to $1m

Mr Key said the Government would support the Cook Island's decision to underwrite losses on Air NZ's flights to Rarotonga, with a capped $1m contribution. File photo / Paul Estcourt

Prime Minister John Key announced today that, if required, the Government will financially back Air New Zealand flights to the Cook Islands to ensure they continue.

Mr Key's trip to the Pacific ends today with a visit to Rarotonga in the Cook Islands. He has visited several Pacific nations as part of a relationship building tour.

Cook Islands Prime Minister Jim Marurai and Mr Key signed an agreement to share tax information; agreed to a forum to strengthen the relationship between the countries and discussed tourism.

Mr Key said tourism was the key foreign exchange earner for the Cook Islands' economy and it was dependent on keeping important air routes open.

"New Zealand has agreed to support the Cook Islands government's decision to underwrite any loss on Air New Zealand's weekly Los Angeles-Rarotonga-Auckland route, with a capped $1 million contribution from the aid programme for the current financial year," Mr Key said.

New Zealand's bilateral aid programme with the Cook Islands would increase from $11 million to $14m in 2009-10 and 2010-11, then $17 million in 2011-12.

The two prime ministers signed a Tax Information Exchange Agreement and announced they would hold an annual Joint Ministerial Forum to strengthen the relationship between the countries.

"Regular high-level political engagement between our two countries will play an important role in assisting the Cook Islands in developing its economy and also reflects the strong realm relationship that underpins our partnership," Mr Key said.

Mr Key said New Zealand's funding would focus on small business development, entrepreneurship and investment.

"I've also discussed New Zealand's desire to increase funding for infrastructure support," he said.

"We are particularly interested in building on assistance for the management of lagoon eco-systems to preserve them for the enjoyment of local communities and overseas tourists alike."

- NZPA