National says it's not surprised Treasury advised deferring granting Westland Milk Products a loan.
The private company was given a $9.9 million loan from the Provincial Growth Fund last year.
Political editor Barry Soper says the money came from the Provincial Growth Fund late last year, but papers released under the official Information Act show Treasury advised against it.
Regional Development Minister Shane Jones lauded the company when making the loan, saying it was an investment in the West Coast.
However, Treasury said the Government was acting as a lender of last resort after the company couldn't get a bank loan on acceptable terms.
Officials said further consideration should be given to the loan, but Jones decided otherwise.
It warned the Crown would be acting as a lender of last resort.
National's Regional Economic Development spokesperson Paul Goldsmith says he is not at all surprised.
He told Larry Williams it sets a bad precedent if the Government becomes the lender of last resort.Â
"In this instance, I think it would have been wise to have listened. But it's part and parcel of a Government that's so determined to spend $3 billion so quickly."
Goldsmith says that this would have gone through Cabinet approval, so it was not just one Minister signing this off.Â
While he does not doubt the legality of it, Goldsmith says that the Government needs to justify it.
"There is some transparency in that we know a loan was given to this company. What we don't know the terms of the loan."
He says it is the latest example of the Provincial Growth Fund stretching its limits.Â
Take your Radio, Podcasts and Music with you