The announcements come as Shane Jones faces criticism over a pitch for votes at a forestry industry award dinner. Photo / John Stone
The announcements come as Shane Jones faces criticism over a pitch for votes at a forestry industry award dinner. Photo / John Stone
The Government has serious questions to answer about a $15 million loan it has given to the largest private employer on the East Coast, the Opposition says.
Regional Development Minister Shane Jones on Wednesday announced Gisborne-based salad company LeaderBrand would be getting a loan from the Government's $1-billion-a-year Provincial Growth Fund to help it build 30 hectares of greenhouses and allow production throughout the year.
The privately-owned business was set up in 1975 and has 370 employees in both growing and processing.
It has 3500ha in Gisborne, Matamata, Pukekohe and Canterbury and supplies both of New Zealand's major supermarket companies - Foodstuffs (behind New World and Pak'nSave) and Progressive Enterprises (Countdown) - along with sandwich chain Subway.
Jones said the greenhouses project would see the company employ another 50 staff when complete, along with providing environmental benefits that went along with indoor horticulture.
National Party regional development spokesman Chris Bishop the decision reflected a lack of transparency about how the PGF was making its decisions.
"It's obviously salad days for LeaderBrand, but you do have to wonder on behalf of the poor old taxpayer why a company that employers 400 FTEs and is the largest private-sector employer in Gisborne needs a $15m loan from the Government," he said.
"There are plenty of other companies around New Zealand, there's tens of thousands of New Zealand companies who would like a sub-commercial loan from the Government. What Mr Jones never really explains is why companies he gives the loans to deserve the loans, compared to plenty of others."
The Government was desperate to get money out the door and was throwing money around "like confetti", Bishop said.
But Jones said other companies were free to put up bids for the funding if they had projects that would be "transformational".
"This is a loan and the loan obviously imposes considerable obligation on the company and with this infusion we are going to see a transformation in this type of horticulture," he said.
The conditions of the loan were commercially sensitive, he said.
"When a big entity ... has expansion plans and it has markets it wants to grow into, it's the kind of transformationalism that the ministers [in charge] are keen to take place."
National MP Chris Bishop says there's serious questions to answer about the loan. Photo / Mark Mitchell
LeaderBrand chief executive Richard Burke said the funding was a perfect fit for the PGF's goal to give the region long-term economic hope.
"We really saw it as a key to unlock the potential in this region, part of which we feel is unlocking the value of local businesses," he said.
"There's no point offering a whole lot of money to external companies to set up in Gisborne or in the region because generally they don't last. If you want real economic development, then supporting of local businesses is the best way to do it. We're here because we know how to do business here."
He declined to give further details about the deal, other than to say it was a "commercial loan".
"At the end of the day, we have to pay it back anyway … We're taking the financial very seriously," he said.
The plan would increase production, allow new crops to be used and reduce the amount of fertiliser being used.
The expansion had only been made feasible by the Provincial Growth Fund and it had not approached commercial lenders, he said.
It's the latest in a string of established private companies to receive loans from the Government fund.
The Government last year raised eyebrows after announcing it was loaning $9.9m to dairy co-operative Westland Milk Products, despite Treasury arguing against the offer.
The deal was cancelled after Westland was sold to Inner Mongolia Yili Industrial Group for $588m.
The Provincial Growth Fund also loaned $15m to a company intending to publicly list in Australia, including a $5m convertible loan that would becomes shares after the float. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12247627
The business, Geo40, at the time said without the funding it would have been looking at taking its work overseas.
