4 Aug 2020

Provincial Growth Fund should be more transparent - Auditor General

8:03 pm on 4 August 2020

The auditor general says the $3 billion Provincial Growth Fund (PGF) needs to be more transparent about how it operates.

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auditor general John Ryan. Photo: Controller and Auditor General

That is one of three recommendations in a report released today.

But the minister in charge of the fund, Shane Jones, said he had seen no evidence officials had not been open about how the money was being spent.

Jones did not agree with other findings in the report - he utterly rejects the PGF has been tainted by unmanaged conflicts of interest - and in his mind, transparency problems do not exist.

Infrastructure Minister Shane Jones revealing the details on the $3 billion infrastructure spend on 1 July, 2020.

Regional development minister Shane Jones. Photo: RNZ /Dom Thomas

The recommendations are that:

- The Ministry of Business, Innovation and Employment (MBIE) further strengthen transparency about the operation of all parts of the Provincial Growth Fund's application, assessment, and decision-making processes.

- MBIE, the Ministry of Primary Industries, and the Ministry of Transport work together to continue to enhance consolidated reporting and more meaningfully report to Parliament and the public on the Provincial Growth Fund as a whole.

- MBIE complete and publish, as quickly as possible, a plan for evaluating the overall effectiveness of the Provincial Growth Fund to ensure transparency of how officials plan to give assurance to Parliament and the public about what it is achieving, both regionally and nationally.

Auditor general John Ryan told Checkpoint even though the Provincial Growth Fund was a work in progress, there were some areas that still concerned him.

"There is some reporting of funds that have been given out to different funds that have been given out. There is some reporting on jobs, although we mention in the report that is a very hard number to verify and to see whether it meets the requirement of the fund.

"So what we are expecting is that there is much clearer reporting consolidated across the fund about what was expected, where we're at against that and what's been achieved."

Ryan noted that - as acknowledged in the report - the fund was still a "work in progress".

"All the money has not been allocated and all the money has not yet been spent, either. What we're expecting at this stage is to be able to see all the projects that were funded, what was expected of those projects and what's been achieved...

"Ultimately, what we need to know is if there is value for money in $3bn of public spending, and a plan needs to be in place to evaluate that now."

While it was not yet known if it was good value for money, the auditor-general said we could not expect to - yet.

"What we can expect to know is how the progress towards the goals of the fund are going and that's not clear yet."

He said the number of jobs projects could create was a "difficult number to measure".

"Across all areas I think we would have wanted to see better reporting against what the fund was set up to do ... the other point we make is actually, the fund isn't due to be evaluated yet although that is shortly to start."

He expected that would answer the question of whether the $3bn was value for money.

As for the evaluation being put off, he said the report recognised the impact Covid-19 had on the PGF's timeline.

It was supposed to be completed before Cabinet this year.

'They've been incredibly successful' - Minister Shane Jones

Jones said the Auditor General had identified how the Ministry of Business Innovation and Employment (MBIE) could tighten up its processes and how to bring greater robustness to project evaluations.

"A lot of the projects are long term, such as the $500 million that was allocated towards the billion tree strategy, so it's only over a longer period of time as those forests develop, that we'd get a full indication as to how it's turned around the fortunes of climate change, employment and local industry," he said.

"When we created the jobs, to deliver the infrastructure outcomes, many of which are yet to take place, then other jobs will flow after the infrastructure has been developed."

The report says it was difficult to find evidence of how manifesto projects had fully met the normal criteria for the PGF fund, RNZ Checkpoint's Lisa Owen asked why that was.

"Well I haven't seen specifically the reference you're referring to, but obviously I don't accept that, I think the Provincial Growth Fund investment in the Māori Battalion Museum, the race tracks, the Kiwirail speaks for itself, they've been incredibly successful.

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