Prime Minister Bill English drops scepticism about funding Niue hotel with aid money

Prime Minister Bill English, Pacific Peoples Minister Alfred Ngaro, Foreign Affairs Minister Gerry Brownlee and Labour Pacific Island Affairs spokeswoman Carmel Sepuloni in Niue. Picture by Claire Trevett

Prime Minister Bill English has opened the new extension at Niue's Matavai Resort, saying he was initially sceptical about putting money into such schemes but had come around.

English is on a day visit to Niue as part of the PM's Pacific Mission - his first to the small island.

He and the rest of the delegation went to the Matavai Resort for the opening of the extension, built with $7.5 million of New Zealand aid - bringing the total spent on redeveloping the hotel on the tiny island to $18m.

English said he recalled discussing it with former Foreign Minister Murray McCully a few years ago "and I remember being a bit of a sceptic about whether it was another one of these schemes we'd heard about for years that might or might not work".

"So I must say it is very satisfying to come to this spectacular place."

The Matavai Hotel unwittingly became the centre of some controversy recently when Labour leader Andrew Little was unsuccessfully sued for defamation for comments about a donation from the Scenic Hotels founder Earl Hagaman to the National Party and the later award of a management contract to Scenic Hotels for the Matavai hotel.

The $7.5m for the upgrade was given to the Trust running the hotel soon after that.

The jury in the trial was unable to reach a verdict on most of the claims of defamation. Hagaman passed away late last month.

Despite the controversy, English did not let it stop him singing the praises of Scenic Hotels which manages the Matavai, saying it had also gone to his old electorate in Gore and turned a struggling hotel into a successful one.

"It's a different context there - it's 23 degrees today and 0 in Gore, and you can't do whale watching from the hotel room but the same philosophy is operated by the company and that's why I feel confident this is going to be a success."

Sir Toke Tufukia Talagi, who has been Niue's Premier since 2008, said he was often accused of running the island like a business, but he made no apology for that.

He said tourist numbers were nearly at the goal of 10,000 a year, GDP was up and Niueans had started moving home - albeit slowly.

Talagi has been critical of the New Zealand Government in the past for the conditions it put around its release of aid funding, but said he was happy with the way the relationship had developed under former Prime Minister John Key and McCully.

"It is not always money that is important in a relationship."

Other MPs on the trip appeared to enjoy the entertainment on offer at the Matavai - NZ First leader Winston Peters had a close encounter with a crab, while Maori Party co-leader Marama Fox had a dip in the pool.

The delegation will travel to Tonga tonight for the final day of the trip.