Plans for spaceport at Kaitorete Spit in strife as government rejects further funding

Work on setting up an international spaceport at New Zealand's best site for launching rockets is in strife.

The government is pulling back at Kaitorete Spit, south of Christchurch, without signing up a single international customer and despite its high aerospace ambitions.

Facing east in largely empty skies, Kaitorete is the jewel in the crown of launch sites, even by world standards.

But the fledgling national aerospace centre Tāwhaki has failed in early efforts to attract international investors, has underspent its $4 million a year budget and is not making enough return on investment.

Space Minister Judith Collins has now rejected its request for more funding, newly released documents show.

That was despite Tāwhaki warning her that "lower funding options would undermine industry and investor confidence and weaken the message that New Zealand is open for aerospace business".

At the same time, Collins has been signalling to the United States that New Zealand wants in on its burgeoning commercial and military space launches.

Though Collins told RNZ this week that the government still supported Tāwhaki, the briefings showed the tide had been going out on the centre since February.

Tāwhaki was a core bet by the previous government to build a multi-billion-dollar aerospace business, in addition to the Mahia launchpad used exclusively by Rocket Lab.

The Crown instigated it in a joint venture with two rūnanga in 2021 after business cases suggested the operation could build several launchpads, create 1300 high-tech jobs and generate hundreds of millions of dollars - as well as protect rare fauna on Kaitorete Spit.

"The Crown entered into [it] on the basis that the attraction of space launch firms to New Zealand represented a 'high-risk high-reward' strategy," a report to Collins in May said.

The possible rewards had bloomed amid a global boom in satellite launches fuelled by Elon Musk's Starlink, the US military and the Ukraine war.

But the documents showed the Tāwhaki joint venture had not cashed in, and had quickly run out of rope.

"Tāwhaki has worked extensively to attract firms to New Zealand but none of these opportunities has yet come to fruition," officials at the National Space Agency within the Ministry of Business, Innovation and Employment told Collins in May.

"Tāwhaki should focus on maximising the value from existing infrastructure given the low likelihood of international launchers entering New Zealand in the near-term."

The officials advised Collins to tell Tāwhaki about "your preference for a scaled-back operation".

"Their income is less than it should be given the opportunities available and the Crown investment already made" of $30m, half of that for the 1000ha of land.

Around this same time, Tāwhaki's chief executive Linda Falwasser joined the prime minister's trade-boosting trip around Asia, and in July, the agency told RNZ it was talking to international companies and seeking partners for rocket launches.

However, Falwasser finishes up her job on Friday, with no replacement for her in sight.

The government overhauled the board in June, and has told Tāwhaki to do another "commercially focused" business case, though the agency lacks the resources to do it.

Its most concrete achievement is a runway opened in February, built using $5.4m the previous government gave Tāwhaki - though it was not eligible for it, papers show.

It is now surviving on what it underspent from last year.

"Lower funding options would stall progress," Tāwhaki told Collins in April.

"This is because we would not have the resources to provide additional technical programme support, convert the pipeline of opportunities, build partnerships, and construct proposals."

Collins told RNZ on Wednesday that funding talks were ongoing, though RNZ understands Tāwhaki is not in on those talks.

Asked if the government was at risk of wasting the country's best launch site, Collins said it remained "an important site to support commercial drone, uncrewed aerial vehicle and advanced aviation activity".

"A significant investment has already been made ... and we look forward to realising the outcomes from that," she said.

Her statement did not mention rocket launches.

Asked by RNZ what she was doing about National's policy to set up two new aerospace testing sites aside from Kaitorete, she did not respond.

National's 2023 policy said "New Zealand faces the real risk of losing its hard-won competitive advantage in aerospace" due to red tape and global competition.

It promised to "streamline rules", including replacing ministerial approval of individual launches with launch criteria. That would likely be controversial for military payloads.

The Pentagon has expressed how keen it is to access Southern Hemisphere launch sites, and Mahia has already done some.

Meanwhile, an American analyst said New Zealand had a huge edge due to a technology agreement that allowed the US to send its advanced satellite tech here; lower labour costs; and launch fees a fraction of what they were in the US.

Collins met commanders of America's Space Force in the US in April and spoke at the defence-oriented Space Symposium in Colorado, where a US-New Zealand commercial space roundtable introduced officials to 16 space companies.

What Tāwhaki's role is in this remains unclear.

By now, it was meant to be in a third development stage, working on "advanced space testing of rockets, space planes, piloted craft".

It has had some domestic uptake, such as from Dawn Aerospace, which said it had talks with the US military and NASA about using its rocket-powered space plane.

But officials have both talked up the potential at Kaitorete and cast doubts on it:

"Uncertainties about the Tāwhaki proposal remain, especially in terms of the proposed regional and national economic benefit and the market demand for the infrastructure," they said about the runway proposal.

"MBIE is unclear at this stage if funding the Tāwhaki proposal will be a good investment for the Crown long term."

If Kaitorete won customers, "we can increase Crown assistance if necessary" but for now, drones were in but rockets were out, the documents indicated.

As for other options for vertical space launches, the Space Agency said no advice on that had gone to Collins this year.

Similarly, it provided no record of briefing Collins about the options for the future Crown role in Tāwhaki, instead saying that had all yet to be worked out.

Tāwhaki declined to comment.