Cook Islands tourism industry concerned by NZ funding pause and lack of government clarity

The tourism industry is calling for transparency from the Cook Islands government after New Zealand quietly extended its funding freeze to $29.8 million in the latest twist to the diplomatic fallout between the two governments.

The Cook Islands Tourism Industry Council is demanding answers as the diplomatic dispute between the Cook Islands and New Zealand deepens with a further pause in direct budget support to the country.

The industry is concerned with the latest development and wants clarity, stating that government engagement with the private sector is "crucial" during this time.

Tourism Industry Council president Liana Scott questioned why the further pause in funding was announced through the New Zealand news first rather than from "our own government".

Scott said the industry is "very concerned" and that there needs to be greater transparency from the Cook Islands government.

"Who will miss out or where will the shortfall come from?" questioned Scott, the general manager of the Muri Besch Club Hotel.

"NZ$30million over two years is significant contribution towards a government budget - specifically when it talks about assistance in crucial sectors such as health, education and development."

Prime Minister Mark Brown's office has said that it is continuing to engage directly with the New Zealand government through formal diplomatic channels.

In a letter to Brown on 13 October, NZ Foreign Minister Winston Peters advised of New Zealand's decision to freeze an additional $11.6 million in core sector budget support for the 2026/27 financial year, after it had already paused $18.2 million for the current 2025/26 financial year in June.

New Zealand's decision to pause core sector support funding came after the Cook Islands signed several agreements with China in February, including the Action Plan for the Comprehensive Strategic Partnership (CSP) 2025-2030. New Zealand has accused the Cook Islands, a self-governing state in free association with NZ, of a lack of proper consultation.

In a statement to Cook Islands News, a spokesperson for Peters said: "We took this step reluctantly and after careful consideration. Direct budget payments to another government rely on a high degree of trust. The Cook Islands Government has breached New Zealand's trust through a series of actions that are well known."

The spokesperson clarified that while direct budget payments to the Cook Islands government have been paused, development assistance "worth around $35 million across the 2024/25 and 2025/26 financial years" will continue.

The development funding is targeted at areas such as health, education, governance, border security and humanitarian support. The core sector support funding, which has been paused, provides direct budget support to the Ministry of Education, Cook Islands Tourism Corporation and the Ministry of Health to improve indicators directly related to the Cook Islands National Sustainable Development Agenda 2020+.

The tourism industry, which contributes over $520 million to the Cook Islands economy - about 73 per cent of the total GDP - relies heavily on New Zealand tourists, who make up about two-thirds of the visitors in the country.

"While we recognise that this decision has many dimensions beyond tourism, it is still a concern as it potentially poses challenges towards core sectors that affect us all," Scott said.

"Engagement with the private sector is crucial to explore the implications of the shortfall, so we can remain resilient."

Ministry for Health secretary Bob Williams said they had to reprioritise programme affected by the core sector support funding pause.

The Ministry still receives support from New Zealand through the Polynesian Health Corridors programme which aims to strengthen health systems and improve health outcomes for people and communities across the region.

"As for the programmes that was previously supported under the Core Sector Support, we just have to reprioritise those programmes against our TMO operations budget and other programmes funded by development partners," Williams told Cook Islands News.

"Our relationship with Health New Zealand continues as normal including with the Polynesian Health Corridor team where there are work streams that continues to be supported."

A spokesperson for the Office of the Cook Islands PM said Brown will not be giving interviews or additional public comment at this time "though we are reviewing most recent reporting and where clarifications on our position or discussions are required, we will advise".

"The Cook Islands Government's position has been clearly conveyed through official correspondence. We remain firmly committed to our constitutional relationship of free association with New Zealand, a relationship grounded in shared citizenship, mutual respect, and trust," the spokesperson said.

"Our focus is on constructive engagement and ensuring that cooperation between our two governments continues to benefit our people."