Auditor-General lacks confidence that Provincial Growth Fund money is being well spent

The Office of the Auditor-General has written a letter to Parliament saying not enough attention is being paid to whether Provincial Growth Fund investments are worthwhile. 

The Provincial Growth Fund (PGF) is a legacy of the 2017 coalition government in which New Zealand First negotiated the $3 billion fund for regional development projects.

It was managed by NZ First MP Shane Jones until the party was booted from Parliament in the 2020 election, after which Labour made $640 million of the fund available for Covid recovery. 

The Auditor-General, which has been critical of the fund in the past, said it would examine these changes — which it called ‘the PGF reset’ — at an appropriate time. 

Last week, it wrote to Labour MP Naisi Chen, who chairs Parliament’s Economic Development Committee, with its review of the reset which outlined a number of problems. 

It said the PGF reset had not met all its expectations, despite those expectations being low as the reset had been “designed and implemented at speed” during pandemic uncertainty. 

“Given these factors, we did not expect to find a perfect process, but we did expect to see one that was fit for purpose,” the Auditor-General said.  

Parts of Kānoa-RDU’s (a government agency within MBIE) management had gone well, but other key elements were missing.

“We are not yet certain that Parliament or the public can have confidence that the investments made through the PGF reset will ultimately represent good value for money”. 

The Auditor-General said this was another example of Covid-related spending not being scrutinized enough to allow the public to see whether significant investments were delivering value for money. 

“There is a general expectation that public organisations spending public money will demonstrate what is being achieved with it,” it said. 

“Significant investments should be appropriately monitored and have their overall outcomes periodically measured and publicly reported. This is not an unreasonable expectation, even in a pandemic”.

The review of the PGF reset said more attention needs to be paid to risk management and monitoring the investments, while noting poor record-keeping and complex criteria made it difficult to know whether applications were properly assessed. 

The politics of it all 

Michael Woodhouse, the National Party’s spokesperson for economic development, said it was a “damning indictment” of a government that only cared about “announcements and ribbon cutting”.

“This is an unacceptable situation for taxpayers who have a right to expect that their dollars will only be spent with care, such as having clearly defined success measures that are monitored and reported,” he said in a statement. 

Act Party leader David Seymour said the provincial growth fund was never about regional economic development. 

“It was about NZ First trying—and failing—to buy votes in the provinces,” he said. 

“Shane Jones used the PGF to give money to organisations that he was previously involved with or that had donated to him. It always had a bad stench about it”.

Regional Development minister Kiri Allan told Stuff.co.nz she would work closely with Kānoa-RDU’s to work on the improvements that were needed. 

“We always take reports of this nature seriously and I acknowledge its findings,” she said.