Questions for Mallard on 'job machine'

The National Party wants to know why part of the Government's much-vaunted "jobs machine" has distributed only 3 per cent of its annual budget in the past 9 1/2 months.

National MP Katherine Rich says the Strategic Investment Fund (SIF), once championed by former economic development minister Jim Anderton, now appears to be on the backburner.

Mr Anderton once described the fund as a "vital ingredient" of the jobs machine run by Trade New Zealand and Industry New Zealand.

The two organisations have since merged into New Zealand Trade and Enterprise (NZTE), which still uses SIF to pay for feasibility studies and facilitate investment inquiries.

Mrs Rich said the scheme never matched the rhetoric and now appeared to have fallen into disfavour with new minister Trevor Mallard.

"In the 2004 Budget, funding for the scheme was doubled to $8 million [a year], but only 24 per cent was eventually spent that year on encouraging investment to New Zealand," Mrs Rich said.

"With only 3 per cent of the fund allocated so far this [June] financial year, it's clear the fund has been an impractical flop or is being slowly smothered to make it easier to cull at the end of his present grants review."

Economic development grants are being reviewed as part of a Government push to ensure it is getting value for money from spending.

In answers to written questions, Mr Mallard did not go into detail about why only 3 per cent of the fund had been allocated, Mrs Rich said.

"Trevor Mallard wins the award for most obtuse reply: 'Because that was the total that has been approved and distributed'."

Mrs Rich said it was possible that officials had now found the "ill-conceived" fund was unworkable after the Auditor-General criticised it and other funds in 2004.

"It's either that or the more depressing reason that there just aren't any overseas investors wanting to engage with NZTE and consider investing in New Zealand."

Mr Mallard said National had a confused and contradictory stance on economic development.

"We have them attacking the Government's support for business on the one hand, and then demanding to know why grants have not been paid out on the other," he said.

There was no conspiracy behind the lack of payments made so far and NZTE was working with a number of prospective applicants.

"Further work is needed on the relevant business cases before they can be considered," Mr Mallard said.

In 2004, Auditor-General Kevin Brady criticised NZTE's management of almost $50 million in business support grants as sloppy and inadequate.

He said the administration of the fund was particularly deficient. Guidelines failed to describe how applications should be considered, how Cabinet criteria should be applied or how risk should be assessed.

Under Cabinet criteria, grants - some as high as $2 million - were expected to lead to the direct investment in a local venture of $50 million over five years or the creation of 200 new jobs. But Mr Brady said there was often no supporting documentation or analysis of how that was assessed.

- NZPA