A stoush is brewing in the creative arts sector with Arts on Tour NZ Trust (AOTNZ) claiming Creative NZ has ‘‘defunded’’ the popular touring company.

Arts on Tour brings artists to small town and rural New Zealand, with support from Creative NZ, a Crown entity governed by the Arts Council.

In a statement released last week, AOTNZ said it had been relegated from secure three-year Te Uru Kahikatea (TUK) funding to an annual grants cycle. It received $235,000 annually through the fund.

The move to an annual grants cycle could result in a diminished delivery of the arts to regional and rural areas and seemed a ‘‘puzzling action’’ on behalf of Creative NZ, directly after a pandemic, the statement said.

AOTNZ chairman Steve Lowndes said the news was a shock.

‘‘In a year when we have 259 forward bookings into 74 community agencies for 10 tours in 2023, the announcement by the Arts Council … was a complete shock and surprise,’’ he said.

Founder and artistic director Steve Thomas agreed, saying the action was taken without warning or consultation.

However, Creative NZ senior communications adviser Therese Lloyd said Arts On Tour had not been ‘‘defunded’’.

‘‘The TUK Fund AOTNZ was a recipient of a contestable investment programme with a fixed term of three years. Existing three-year contracts in the programme were due to finish at the end of 2022.

‘‘When CNZ published the Request for Proposals for investment through the Toi Uru Kahikatea programme, we reminded organisations that past investment did not guarantee a renewed funding offer from 2023,’’ Lloyd said.

Arts Council chairwoman Caren Rangi said the Arts Council aimed to strike the ‘‘greatest balance across the board’’ when making decisions.

‘‘This year we were particularly challenged by our reduced financial capacity, and the reality is we’ll continue to face these challenges.’’

Arts on Tour visited Central Otago and the Upper Clutha areas.

Lake Hawea Community Centre Committee member Colleen Carr said it provided some cultural entertainment for the rural community at a reasonable price.

‘‘Pulling the funding would mean that costs would go up and attending the shows would be beyond the means of most and the Community Centre does not have the ability to provide any subsidy.’’

‘‘Losing the funding will mean the end of live theatre in our centre and it will be sorely missed as was well illustrated when shows had to be cancelled because of Covid, ’’ she said.