We wrote to the Economic Development, Science and Innovation Committee after reviewing how Kānoa – Regional Economic Development and Investment Unit (Kānoa-RDU) managed the repurposing of more than $600 million from the Provincial Growth Fund.

The Provincial Growth Fund was launched in 2018 with $3 billion to be spent over three years to increase growth and development in regional New Zealand.

The repurposing of the Provincial Growth Fund (the PGF reset) occurred in 2020 and was designed to help regional New Zealand recover from the economic impact of the Covid-19 pandemic. The PGF reset introduced additional objectives that prioritised funding to projects that created jobs immediately, could be under way within six months, and would be visible to communities.

The PGF reset was designed and implemented at speed in an uncertain environment, at a time when Kānoa-RDU was experiencing significant staff resourcing challenges. Given these factors, we did not expect to find a perfect process, but we did expect to see one that was fit for purpose.

We found that parts of Kānoa-RDU’s management of the PGF reset went well and largely met our expectations. However, other key elements needed to be in place to help ensure its success. For these reasons, 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.

Our recent work examining Covid-related spending has often shown that not enough attention is being paid to ensuring that criteria are clear for funding applications, decision-making is transparent and appropriately documented, and the public can see how significant investments are achieving the intended outcomes and represent value for money.

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

Our key findings are set out in more detail in Appendix 1 of our letter.

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