Thursday, July 7, 2022

PGF gets a pass mark

Neal Wallace

The Government is hailing the $3 billion Provincial Growth Fund (PGF) as a success, saying it has created 16,000 jobs and boosted regional economic growth.

Economic and Regional Development Minister Stuart Nash released an independent evaluation of the fund that revealed $1.89b has been paid out to March 31, 2021, funding 1359 projects.

“Of the 1359 projects approved for funding, over 500 have already been completed, resulting in over 16,000 jobs and improved economic outcomes for our regions,” Nash said.

“The report shows that grants and loans from the PGF have directly led to real change with tangible flow-on benefits, such as the $15 million loan and equity stake in Taupō-based GEO-40’s world-leading silica extraction plant, or the $500,000 grant for Southland start-up ecosystem COIN South to launch their pilot business support programme.”

The PGF was a NZ First initiative launched in late 2017 that allocated $3b over three years to raise the productive potential of regional NZ.

It was reset in 2020 to soften the economic impact in the regions of the covid-19 pandemic.

It can only invest in regions outside Auckland, Wellington and Christchurch.

The evaluation by consultants Allen and Clarke reveals Northland, with nearly $600m, received the most funds to March 31, 2021, while Kapiti ($4m), Chatham Islands ($5m) and Wairarapa ($15m) received the least.

It assessed the fund’s design and approach performance as fair to reasonably good and the outputs and outcomes of the fund as effective.

The consultants noted more time is needed to fully assess the PGF’s contribution to regional gross domestic product.

“Many applicants and other stakeholders indicated that the way in which success is currently measured is too narrow,” it concluded.

“More consideration needs to be given to how broader benefits can be captured and what information needs to be collected.”

The report recommends some changes, especially around the application and reporting systems and in measuring what is most important.

The largest allocations were for KiwiRail ($300m), Tairawhiti Roads ($135m), Te Uru Rakau ($484m including operational funding), HPR/TAM ($162m), whenua Māori and digital connectivity ($100m), and tourism infrastructure ($75m). 

Smaller allocations were assigned to energy and waste ($40m), historical sites ($20m) and economic development agencies ($5.6m).

The ACT Party reiterated its opposition to the fund, though.

Leader David Seymour said it has been a failure. 

“It hasn’t created the jobs that the Government promised and the money has to come from somewhere,” he said.

“New Zealanders are smart enough to work out it’s from their taxes.

“The PGF might have created some jobs, but that’s offset by fewer jobs being created in the private sector because of the higher taxes to pay for it. “Factoring in the disincentives created by those taxes, the PGF has actually made New Zealanders poorer.

“ACT would cut spending and taxes because New Zealanders know better than politicians and bureaucrats how to spend their money.”

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