Keen eye on PGF: Auditor-General urges more transparency in funding decisions

Regional Development Minister Shane Jones announces $20 million for Whangārei projects at the council chambers last month. Photo / Michael Cunningham

A report critical of the way projects are selected for Provincial Growth Fund cash is calling for more transparency around the fund's decision-making processes.

However, the Auditor-General's report also reveals just how much Northland has benefited from the fund with $556 million committed so far — more than double the next best-funded region, East Coast/Tairāwhiti.

Northland leaders have welcomed PGF cash and described it as a catch-up after decades of neglect by central government, but right-wing lobby group the Taxpayers' Union has called it a slush fund used by Regional Economic Development Minister Shane Jones to win votes.

Jones, NZ First's Northland candidate in the upcoming election, denies the vote-buying claim, saying the North's share of PGF funding reflected the roughly $200m committed to reopening its railway line and the extent of its infrastructure deficit.

PGF

The PGF was launched in early 2018 as part of the coalition agreement between Labour and NZ First with $3 billion to spend in the regions over a three-year period.

Priority was to be given to the ''surge regions'' of Northland, Bay of Plenty, East Coast, Manawatu-Whanganui, West Coast and Hawke's Bay due to their infrastructure and social deficits.

In May $600m of the $3b was repurposed for the Covid-19 Response and Recovery Fund.

In his report Auditor-General John Ryan said the fund was set up at short notice leading to initial deficiencies in the way conflicts of interest were managed and investments were reported. Those systems had improved over time, he said.

The fund was supposed to spread investment around New Zealand, with an emphasis on the surge regions, but it was difficult to see how balance across regions and sectors had been considered or achieved.

One of the difficulties was that the PGF was, in reality, a number of different funds which came under four government departments plus the newly established Provincial Development Unit.

While each department reported to Parliament as required, reporting about the fund as a whole needed to be improved, Ryan said.

Many announcements had been made about individual projects but ''full and relevant reporting'' was needed about the nature and purpose of the fund's investments.

''The public is entitled to know how well the fund has met its objectives and what benefits have been achieved for the public money spent,'' he said.

Regional Development Minister Shane Jones at a PGF funding announcement in Maungaturoto with Kaipara Mayor Jason Smith and Labour MP Willow-Jean Prime. Photo / Tania Whyte

Ryan called for a plan to evaluate the PGF's overall effectiveness. Such a report had been due to be released this year but has been delayed until 2021 by Covid-19.

The Auditor-General highlighted potential problems with conflicts of interest because the same regional officials who helped groups with funding applications were involved in decision-making processes.

Ryan also found it hard to see how seven projects approved from the $70m Manifesto Commitments Fund, which he described as ''a fund within a fund'', had met the criteria projects were normally assessed against.

According to the report, $556.9m has so far been committed to Northland projects. Of that $251.3m is under contract and $91.9m has been spent.

In the next-best funded region, East Coast/Tairāwhiti, $236.5m has been committed with $105.4m under contract.

In figures released by Jones for the number of jobs created by PGF projects, Northland again comes out on top with 1316 current jobs and 3233 expected. Only Bay of Plenty has more expected jobs (3484).

Taxpayers' Union director Jordan Williams welcomed the report, saying New Zealanders ''deserve more information to shed light on whether Shane Jones' slush fund justifies a mortgage on our future''.

Williams said the spending breakdown by region revealed what he called the PGF's real motivation.

''The region to receive the most funding, half a billion dollars and counting, is Northland. That's a $3671 election bribe for each man, woman, and child in the region that NZ First is targeting for votes. It is banana republic stuff,'' he said.

Regional Development Minister Shane Jones announces $8m for Kerikeri infrastructure projects at the Turner Centre last month. Photo / Peter de Graaf

PGF announcements have been coming thick and fast in recent months. They include $19.5m for an industrial park at Ngāwhā, $26m for flood and road resilience, $20m for various Whangārei projects, $6.25m for a Kaikohe sports facility, $8m for a Paihia breakwater and $70m for water storage projects. On Friday a further $2.7m was announced for Hokianga wharves and water supplies.

Asked if he was buying votes, Jones said that was a ''tawdry description''.

''The sum of pūtea that has come into the North through the PGF is enlarged by the nigh-on $200m that is associated with KiwiRail for tunnels, bridges and tracks that had been closed down. While those improvements are in the North, KiwiRail is part of the national economy and if we want to create logistical options for Northland obviously we have to invest in rail. That's something three parties campaigned on and have committed to.''

Jones said the Taxpayers' Union claims were ''just more of the flow of negativity about our willingness to address historical infrastructure deficits in the North''.

''Whether it's the flagging fortunes of forestry we've sought to turn around, or roundabouts and jetties, the North has been screaming out for years. It's been an absolute privilege to have been the steward of a fund that's led to not just this region, but a host of regions, feeling central government support,'' he said.