Concerns regarding MBIE process for the Ruapehu skifields liquidation
Tēnā koutou Minister McAnulty,
I write to you on behalf of the Ruapehu Skifields Stakeholders Association (RSSA), formed just over a year ago to represent and advocate for the interests of skiers, boarders, workers, the local community, Life Pass Holders, and other stakeholders in the Voluntary Administration and now Liquation of RAL.
We now represent thousands of members of the mountain community. Many of our members and their families have supported the operations on Ruapehu for decades and will continue to do so for many more generations. RAL itself survived for nearly 70 years as not-for-profit entity investing all its returns into on mountain operations.
A few bad decisions by recent directors combined with the catastrophic impact of COVID closures, topped off with a La Niña (snow drought) in 2022, pushed RAL to the wall. Recent issues aside, 70 years is many lifetimes in the corporate world, and a testament to the durability of the community- ownership model.
It has become clear that to recapitalise and re-establish a solid business on Ruapehu will require some level of government support and external investment. Such investment and support is not (as some would claim) incompatible with maintaining the community ownership model. The RSSA is strongly of the view that the operations should remain a public entity that has an inter-generational horizon and will re-invest all profits into development and diversification of this Central North Island economic engine, not land it in the hands of private enterprise with short-term returns top of mind.
At the June Watershed meeting, more than 71% of creditors by number voted for such an entity – new RAL, only blocked by Government through an MBIE led voting block, that used the leverage of public money to stalemate a community outcome, in favour of private bidders.
It has now been acknowledged by government itself that MBIE’s approach to this whole process has been poor. We too have previously voiced grave concerns as to MBIE’s handling of the RAL insolvency; however, we are focused now on the path forward and request your critical influence on achieving an inter-generational outcome for the skifields that we can all be proud of.
In our view, Iwi have been substantially overlooked in the process so far and that is reflected in the various Ministerial apologies and the fact that Concessions have not and will unlikely be granted in the foreseeable future, these things take time. Previous Concessions have taken multiple years to conclude and should not be rushed. The current timeline looks to conclude Concessions in 3-6 months, which is still unrealistically optimistic given the current Treaty of Waitangi claims in progress.
It is very likely given the currently proposed timeframe from MBIE that we will be back in the same situation in March next year with no new entity able to actually take over and operate the skifields, no season passes being issued, more key RAL staff losses, and visitors planning alternative holidays (as happened this year).
The local Ohakune, National Park (Waimarino), Tūrangi, Taūpo & Whakapapa businesses are already experiencing significant stress and reduced visitor numbers due to the poor process followed this year. If this was to occur again, it would likely be the final nail in the coffin so to speak and have significant long-term negative effects on the entire central North Island economy.
Through the process of Voluntary Administration and now Liquidation all the Stakeholders Association has sought is a level playing field of government treatment for a community-led proposal. We request that you direct your officials to seriously consider this as an alternative to private ownership.
It is the RSSA and our strategic partners’ view that the best long-term path forward is to bring RAL out of liquidation by the government offering the same debt forgiveness as was offered to the NewCos (private) bidders. This is no more forgiveness than has already been approved by Cabinet, just a levelling of the playing field. If the Public and ANZ debts are removed from the RAL’s balance sheet, then new RAL is no longer insolvent and importantly the vital Concessions remain intact and/or can be improved over time with a respectful allowance for local consultation rather than under urgency or even duress. The law allows for this outcome.
The process for a level playing field would involve:
MBIE engaging with RSSA in good faith on a proposal for a community entity (new RAL) and to end the liquidation of RAL through forgiving MBIE debt and with that we understand ANZ bank will most likely follow suit.
The directors of RAL and trustees have agreed that on request from PWC, the liquidators, they would resign their roles allowing appointment of new directors and trustees.
Existing Concessions would remain in place, however acknowledging that Iwi have a real desire for changes and there is a need for DOC remedial liabilities to be removed. New RAL can operate while this process takes the time required for consultation to resolution.
RSSA would immediately launch a Life Pass re activation campaign requiring Life Pass Holders to pay $1100 (+ GST) to activate their pass in the new RAL. Feedback to date suggests that this process will likely generate around $7M.
MBIE extend a medium-term capital loan to new RAL of $10M.
Government can retain a shareholding in new RAL if so desired for future Iwi settlements.
The community-ownership model represents a back-to-basics return to the skifields living within its means and re-investing profits in a prudent long-term manner. In the 70-year history of RAL, the community-ownership model has allowed for significant investment, growth, and periodic renewal of the assets.
Minister, Mt Ruapehu is an economic powerhouse for the region and as an entity RAL is critical for jobs, livelihoods, and tourism activity. With a long-term horizon, diversification to some new snow activity and renewed focus on integration with a wider regional tourism approach, we believe RAL is a critical entity for Central North Island prosperity and should be retained in community hands with strong management and governance.
I request an opportunity to discuss our proposal at your earliest convenience as MBIE has set a deadline of the end of August for submission of proposals and we do not want the ski community to be disadvantaged in this process by a repeat of previous conduct by MBIE.
Ruapehu Skifield Stakeholders Association