Government grant for house firm that later failed

The company was one of three working in the Waimahia Inlet Special Housing Area. Photo / Nick Reed

House maker that received $287,500 from the Government now owes $17.5 million.

New Zealand's biggest off-site housing manufacturer, which owes creditors $17.5 million, received a $287,500 Government grant before Prime Minister John Key opened its Kumeu factory.

Jordan Williams, executive director of lobby group the Taxpayers Union, discovered the money was paid three years ago to eHome Global (NZ), now eHome NZ, in receivership.

He wants to know more about why that grant was given and how it was used.

The money came from the Ministry of Science and Innovation on December 5, 2012, because eHome had "a manufacturing process and construction techniques for conventional homes using panelised components", the ministry said.

The ministry's functions have now been taken over by Callaghan Innovation and the Ministry of Business, Innovation and Employment.

Key opened eHome's big factory in 2013.

Ross Baker, Callaghan's manager of grants and assurance, said eHome got the grant because it met eligibility criteria at the time.

"The company met the eligibility criteria for the grant and successfully completed the R&D project that it was funded for. Project grants are designed to support firms with smaller R&D programmes or early stage companies that are establishing R&D programmes. No further funding has been approved for eHome," Baker said.

However he also indicated the possibility of seeking the money back.

Receivers estimate eHome owes creditors at least $17.5 million and are trying to sell it as a going concern to recover as much money as possible.

Williams said his organisation checked whether grants had been given to high-profile organisations when there was trouble.

"Politicians don't have a particularly good track record of picking winners. This is a classic case of corporate welfare and a big photo op for politicians and then a big flop, leaving many people out of pocket."

Philippa Norman of the Ministry of Business, Innovation and Employment said questions should be directed to Callaghan Innovation.

"This grant used to fall under the former Ministry of Science and Innovation but when MBIE and Callaghan were established this function transferred to Callaghan," she said.

Williams said that answer was not good enough. "Officials can shuffle the deck as much as they want but taxpayers supported this organisation and officials should say why," he said.

He has put questions to MBIE directly.

"We [asked] the following: What did the $287,500 funding relate to? Were the services by eHome delivered? What other taxpayer funded support or contracts have been awarded to the company since 2008 by MBIE and Callaghan innovation? What was each amount for?"