Julian Wood

By Julian Wood - 08/04/2019

Julian Wood

By Julian Wood -

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Provincial Growth Fund | Comparative Analysis

We will undertake a comparative analysis of how the Provincial Growth Fund (PGF) aligns with the Regional Action Plans (RAPs). Detailed regional activity reports and regionally collaborative action plans have been critical documents that articulate the region’s bottom-up strategies and now serve the additional purpose of outlining how the PGF might partner with regions to achieve its goals.

This analysis is based solely on publicly available information as at 5 November 2018, encompassing the first 12 months of PGF operation, and, as such, is only part of what will be at least a three-year programme.[1] While this is necessarily an interim report, because of the proactive and voluminous release of information by the Government, we believe there is sufficient information to reveal some key insights so far.

Method

Initial data collection on PGF funding and RAPs

We began our initial data collection by creating a synthesis of all available funding and planning information. Funding-wise, we copied a complete set of PGF spending information from the MBIE website on 17 September, 27 September, and 5 November.[2] This included both the information available from the overall summary page as well as information available via the individual regional pages. We then accessed the available planning documentation: the RAPs, regional activity reports, Cabinet papers, the latest Regional Development Weekly Reports, and Ministerial media releases for the funded initiatives.

Challenges and limitations of the data

Due to inconsistencies and omissions, the publicly- available PGF funding information required data cleaning:

  • There were significant differences between the summary funding page and the details outlined under the individual region pages. For example, a total of 11 initiatives were listed under the Bay of Plenty region page on 27 September, but there were only 5 PGF funding initiatives outlined on the summary page. A similar story was found under the Hawke’s Bay regional page;[3]
  • An additional initiative was located by cross referencing the PGF media announcements with the funding summary pages;
  • Some multi-region initiatives were assigned to regions and some were not;
  • Several initiatives appeared to have been double- entered in different rows of the summary funding announcement spreadsheet;[4] and
  • The dollar totals on the main PGF summary page did not match a summation of the individual initiatives included. Even with some trial cleaning to remove double entries and multi-region initiatives we were unable to find a total that matched those that were given.

These inconsistencies pose a challenge for analysis, and highlight how fast-moving the process is. More positively one could also argue that it highlights the speed and the somewhat proactive approach that MBIE has had toward to the release of information as part of the PGF delivery process. However, given the commercial nature of much of the information there is still a significant time lag associated with the release of information and, as we shall see, significant gaps in information provision.

Snapshot of RAPs and growth studies

We pulled together all the data from the RAPs, regional growth studies, and Māori economic development reports from the MBIE website, or individual regional, council and other institutional websites. We found that 10 of the 13 regions included in the design of the PGF have publicly available RAPs.[5] Two of these 10 regions had explicit Māori Economic Development reports, namely the Manawatū-Whanganui, Te Pae Tawhiti, and the Tairāwhiti, Kimihia He Oranga. The remaining four regions included in the PGF at the time of writing appear to be either developing RAPs (Otago) or remain silent on the topic (Nelson, Marlborough, and Tasman). While the three excluded cities (Auckland, Christchurch, and Wellington) all have economic planning documents in various forms (regional economic development strategies or long term planning documents), they were considered to be outside the scope of this paper.

A qualitative regional development matrix

We then funnelled this data into a single matrix to support a comparative analysis. Each region’s RAP was separated out into a separate column and then each initiative was placed in a row aggregated into broad sector and industrial categories. We found there were significant overlaps between categories depending on the nature of the initiative. Any listed explicit goals related to the initiatives like export volumes, population, Gross Domestic Product, or jobs goals were also recorded in separate rows. The PGF funding initiatives were then also placed in a regional column alongside their corresponding RAP, and then once again aggregated in rows by broad sector or industry. This enabled a PGF region and sectors, non-statistical “goodness of fit” and gaps analysis with the RAPs to be undertaken.

Findings from the regional development matrix: a comparative analysis

After putting the RAPs side by side, it becomes clear that they are largely regionally-siloed documents. Even though a number of similar initiatives are intended to take place in different regions, the plans don’t appear to “talk to each other.” They also largely ignore any links to New Zealand’s largest cities and growth nodes. Having said this the Māori economic development reports were generally more collaborative. While opportunities for knowledge spillovers abound both across and within the regions it seems that the potential gains from synchronisation are largely ignored, and as such, lost.

RAPs are regionally siloed and increasingly out-of-date

While the RAPs are intra-regional collaborative documents by nature, they appear to have been written in isolation from each other. One reason for this may be that the documents have been authored over several years (2015-2018) rather than concurrently. It could also be because the documents almost always map well to their intra-regional “regional growth study,” commissioned as part of the previous government’s Business Growth Agenda which were also regionally bound by nature. Surprisingly, the regional research institutes were mentioned in their own region, but did not rate a mention in any other regions’ action plans.

There are some promising collaborative initiatives

Having said this, there are a handful of notable collaborative initiatives or goals in some of the RAPs. Taranaki’s Clean Energy Development Centre and H2 Hydrogen initiative, for example, has a specific goal to connect with other countries and regions to seek opportunities to work together.[6] Similarly, Southland’s aim to create an “age-friendly community in Gore [is] based on the concept developed for Levin in Horowhenua.”[7] The Bay of Plenty offers another example of good collaborative practice, both in exploring who they could work together with in special interest tourism and in mānuka honey, and also through their connections to Waikato University in particular.[8] The regional neighbours of Tairāwhiti and the Hawke’s Bay also both make mention of the Napier-Gisborne cycleway in their action plans.

There are limited regional links to New Zealand’s growth nodes

Not only did the plans not seem to talk to each other, they largely ignored New Zealand’s centres of economic activity. Indeed, only one report, Te Pae Tawhiti, the Manawatū-Whanganui Māori Economic Development strategy, explicitly aimed to connect with the economic activity in our major cities. By not including the three major centres of economic activity, namely Auckland, Wellington, and Christchurch, as part of the overall PGF strategy, there are very limited opportunities or incentives for the RAPs to cross-pollinate with initiatives from these cities. Partially countering this, PGF bids may include activity in the main cities if this helps to maximise the benefits to the associated regions.[9]

Māori action plans tend towards a more collaborative approach

Interestingly the plans that stand out as having the most connections to other regions, are Te Pae Tawhiti, the Manawatū-Whanganui Māori Economic Development strategy, and Kimihia He Oranga, the Tairāwhiti Plan. Both plans explicitly acknowledge the “good intentions” of their respective RAPs,[10] but go on to say that they don’t reflect Māori aspirations and values.[11] Overall, plans drafted by Māori tended to look at regional development in a different way that encompasses a broader or more collaborative focus.

There are good opportunities for collaboration

Looking across the plans, we also noted that while there is little sign of inter-regional collaboration, there is a high degree of similarity in apparent opportunities or initiatives worth exploring. For example, half of the RAPs make explicit mention of mānuka honey. Of those five, all aim at planting mānuka trees and three aim for processing facilities. Only one mentions working with other regions, and only one explicitly mentions establishing regulatory standards or intellectual property around mānuka honey production. This is a good example of where inter- regional collaboration and the building of knowledge chains across the regions could be explored.

Some regions are already looking at ways to vertically integrate initiatives

This widespread use of mānuka honey not only illustrates the potential value of inter-regional collaborative connections, but also highlights that many regions are already looking to improving the forwards and backwards linkages between industry output and input needs. The one example where this occurs is the analysis of the skills and labour needed and hence initiatives needed to support the needs of the agricultural, forestry, or mānuka industries.

There is a desperate need for widespread infrastructure investments

Broad infrastructure pinch points are also highlighted. Almost all rural regions, for example, highlighted the need for the rural fibre (Ultra-Fast Broadband) rollout to be implemented. Almost all of the regions also highlighted a set of roading priorities, often linked to local industry needs. This underscores the complex nature of regional development and how having New Zealand-wide local input into these funding decisions is important, especially when the central government struggles to balance big city growth (with its headline-making commuter woes) against significant regional infrastructure needs.

Analysis of PGF funding and RAPs

Secondly when looking at the regional PGF funding beside the RAPs it becomes clear that the RAPs are in need of a refresh, that different regions are at different planning stages, and that while multi-region initiatives exist, the current RAP framework doesn’t inform this funding very well because of the lack of overall co-ordination and strategy.

The RAPs need a refresh

Timing is critical, and unfortunately, we found many of the plans are beginning to show their age, increasingly becoming out-of-date and less relevant to the current regional situation and needs. This is partly because the RAPs were mostly written within the previous Government’s BGA and RGP, which, as already mentioned, had only limited funding outside of baseline. Because they were not written within an environment that included substantial additional funding, their scope was bounded, reflected in the limited and often overlapping nature of the proposals. Similarly, just because funding is now available doesn’t mean that local and central government election cycles are synchronised. While the current PGF is running on a 3 year electoral cycle, not all local body election cycles are on the same timeframe and local planners may be reluctant or unable to enter into a planning phase if they are near to their own election timeframe. Indeed, sign-off on planning decisions may need to wait for incoming elected officials to take office.

The need to deliver funding, it would seem, is overruling the vital need to synchronise policies between Government and the regions and across the regions themselves. We acknowledge that there are a range of real world challenges to overcome in regard to collaboration and synchronisation not least of which is the incentive the PGF in itself creates for regions to compete for funding. In our view this highlights the essential need for the PGF to be explicitly clear around its objectives in regard to collaboration and synchronisation.

Different regions are at different planning stages and this appears to have impacted the ability of different regions to receive funding

It also appears that some regions are at different stages in their regional development planning cycle and as such have been able to receive different value from the PGF to date. This means that regions on the planning frontier have been able to access funding, while regions who are relatively new to the process are struggling to receive funding. One can compare the rollout of the PGF in Northland or Taranaki with Otago to see this stark difference. Unfortunately, in terms of co-ordination and synchronisation just because an application from a particular region is investment-ready doesn’t mean it is the optimal investment overall to make. Quick funding wins are not necessarily the best funding decisions until they are found to be better than alternatives. At this stage it may be better to invest in capacity building across regions and to enable PGF frontier regions to inform more laggard regions in the development of their action plans.

Multi-region initiatives oddly highlight the lack of overall policy co-ordination

A third item of note is the priority given to and the existence of multi-region initiatives. Theoretically, when done well multi-region initiatives are one of the major ways that the PGF can unlock the innovation spillovers that potentially exist. This is because (as covered in the section above on knowledge spillovers) better inter- regional connections enable better local solutions to be found. As knowledge diffuses and opportunities for learning are broadened, previously embedded institutional settings can change. Good multi-region initiatives should enable systems and linkages between leading and lagging regions to be built. Important here is that each region will be both a leader and a laggard in different areas of expertise and so all regions can in theory realise gains from working together.

Unfortunately, rather than proving the theory correct it would seem that some of the existing initiatives like the Upper North Island Port study highlight the lack of multi-level governance, overall policy co-ordination and synchronisation. In the case of the Northport initiative it would seem its rather top-down nature combines with Auckland’s exclusion from the PGF to mean that the regions involved are not working together. Indeed, it would seem that Auckland sees little to gain from being part of the wider regional development strategy.[12] At a theoretical level one can easily see that excluding our largest cities from the PGF means they are not considering how to link to the wider regions and take part in the wider economic development and PGF strategy. Similarly for lagging regions, most RAPs are not considering how to best interface with these regional economic hubs. The partial coverage of the PGF is going to continue to lead to geographic tensions and lost opportunities.

Sector strategies need refinement

There is also a significant focus on sector-based funding, with many initiatives fitting within the food and beverage, tourism, and forestry sector focus of the PGF. It would appear that a number of funded initiatives have progressed without being part of any RAP process, a particularly common situation for forestry sector initiatives. Some of this risk should be mitigated via the application and assessment procedures of the PDU alongside the co-investment requirements of sector- tied funding, however, while the business case for an initiative may well stack up in isolation, it says nothing about overall co-ordination and how these sector-based strategies stack up against their respective opportunity costs. While not perfect, the RAP planning process is an important way to understand how a sector-based initiative could be placed alongside other initiatives in a region and wider regions. A key question here is how the sector initiative fits alongside all the other opportunities vying for attention in a region. Had all the opportunities been through the rigour of an action plan process what would be the most important long term investment? All this means that the evaluation of initiatives is especially important when the initiative is sector-based rather than regionally-based.

Regions are still almost entirely growth-focused rather than looking at using funding for transition purposes

The vast majority of regions are pursuing a growth-only focus to their investments. This continued focus on growth will be an opportunity missed especially given the long term demographic and ageing concerns for the wider regions.[13] There are, however, a handful of transitional, non-growth funding initiatives outlined in the RAPs. Taranaki’s Clean Energy Development Centre, aged care in Gore and Levin, and the widespread use of tree planting as a way to offset carbon emissions or soil erosion highlight efforts in this area. Greymouth has also received $125,000 from the PGF to help the development of its revitalisation master plan.

Evaluation information is thin

While there is a plan to have an overall evaluation strategy as we outlined earlier, the publicly available information on the evaluation of individual projects remains extremely thin. We were, for example, unable to locate any proactive information release about the evaluation of any individual initiative thus far. Similarly, within the information collected there was no mention of evaluation budgets, or details of how a project may be evaluated over its life-cycle.

However, while evaluation strategy is thin, it is not non- existent. Discussions with officials suggest that the PGF is making use of conditionalities within its funding arrangements, and this aligns well with best practice. We also acknowledge that there is a need to keep compliance and transaction costs proportionate to the funding available so as to not place an undue reporting burden on smaller initiatives.

It is clear that information on individual projects is being collected and reported to the relevant Minister in an ongoing monitoring capacity. This aligns with Cabinet papers assessing early proposals in Northland released under the Official Information Act.

It is also apparent that there is some front-end debate over the readiness of some investments, with an aide memoire from Treasury showing that the One Billion Trees “[g]rant scheme does not appear to be investment ready… [highlighting that] …there is no detail around how many trees, or what kinds of trees will be delivered in the 2019 planting season.”[14] Another instance was “Treasury urging Finance Minister Grant Robertson to reject a $116m grant scheme because of the ‘lack of detail around grants’ and a $127m partnership package, again because ‘little detail’ came with the Budget bid.”[15]


This is an extract from Julian’s research paper “A Risk Worth Taking | Ensuring the Provincial Growth Fund is Fit For Purpose” Policy Paper. (Released 2019) 

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ENDNOTES

[1] Measured from when the coalition document was signed on 24 October 2017.
[2] Ministry of Business, Innovation and Employment, ‘Data, Statistics, and Public Information: General Information and Documents Related to the Provincial Growth Fund.’, accessed 3 December 2018, https://www.growregions.govt.nz/about-us/data-stats-information/; Ministry of Business, Innovation and Employment, ‘Weekly Reports to Ministers’, accessed 3 December 2018, https://www.mbie.govt.nz/info-services/open-government-official-information/weekly-reports-to- ministers; Ministry of Business, Innovation and Employment, ‘Bay of Plenty’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/bay-of-plenty/; Ministry of Business, Innovation and Employment, ‘Canterbury’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/canterbury/; Ministry of Business, Innovation and Employment, ‘Gisborne/Tairāwhiti’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/gisbornetairawhiti/; Ministry of Business, Innovation and Employment, ‘Hawke’s Bay’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/hawkes-bay/; Ministry of Business, Innovation and Employment, ‘Manawatū/Whanganui’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/manawatu-whanganui/; Ministry of Business, Innovation and Employment, ‘Northland’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/northland/; Ministry of Business, Innovation and Employment, ‘Otago’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/otago/; Ministry of Business, Innovation and Employment, ‘Southland/Murihiku’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/southland-murihiku/; Ministry of Business, Innovation and Employment, ‘Taranaki’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/taranaki/; Ministry of Business, Innovation and Employment, ‘Top of the South/Te Tau Ihu: Nelson, Marlborough, and Tasman’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/top-south-te-tau-ihu/; Ministry of Business, Innovation and Employment, ‘Waikato’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/waikato/; Ministry of Business, Innovation and Employment, ‘Westcoast’, accessed 3 December 2018, https://www.growregions.govt.nz/regions/west-coast/.
[3] Even over this short time frame, we noted that PGF funding information had undergone significant change and data migration over to new websites, reflecting the fast changing nature of the PGF rollout and officials’ responses.
[4] Ministry of Business, Innovation and Employment, ‘Data, Statistics, and Public Information: General Information and Documents Related to the Provincial Growth Fund.’
[5] Ministry of Business, Innovation and Employment, ‘Data, Statistics, and Public Information: General Information and Documents Related to the Provincial Growth Fund.’
[6] Tapuae Roa: Make Way for Taranaki, Action Plan to Prosper Taranaki, 8.
[7] Southland Regional Development Strategy: Te Iwi Me Oranga Rauemi Action Plan 2015-2025, 27.
[8] Bay of Connections, Toi Moana Bay of Plenty RGS Action Plan Summary, 3.
[9] As more information comes to light in regard to successful funding information the ability of regions to link to the main cities will clarify. As mentioned above in regard to multi-level governance, the South Island Destination Management Plan highlights that regions and cities can collaborate and synchronise for overall benefit.
[10] Smith et al., Tairāwhiti Māori Economic Development Report, 29.
[11] Dr Jason Paul Mika et al., Te Pae Tawhiti: Manawatū-Whanganui Māori Economic Development Strategy 2016 – 2040, 9.
[12] Anne Gibson, ‘NZ First MP Shane Jones Wants to Block Ports of Auckland Carpark Plans’, New Zealand Herald, 2 November 2018, sec. Business, https://www. nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12153168.
[13] Paul Spoonley, ed., Rebooting the Regions: Why Low or Zero Growth Needn’t Mean the End of Prosperity (Auckland, New Zealand: Massey University Press, 2016);Spoonley; Natalie Jackson and Jonathan Boston, eds., ‘The Ebbing of the Human Tide: What Will It Mean?’, Policy Quarterly 13 (June 2017): 1–72.
[14] The Treasury, ‘Aide Memoire: Advice on the Forthcoming One Billion Trees Funding Request’, 21 June 2018, 2, https://www.documentcloud.org/ documents/5031440-Treasury-OIA.html#document/p6/a465299.
[15] David Fisher, ‘Shane Jones’ One Billion Trees Bungle: Scrub, Weeds Mar Planting of 1 Million Seedlings’.

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