Provincial growth Fund another ‘Think Big’ dud?

A New Zealand think tank is claiming the Government’s Provincial Growth Fund (PGF) needs a course correction to ensure it isn’t wasting money.

The Maxim Institute released a report on Tuesday which suggests the Government’s “big” thinking with the $3 billion PGF comes with too much risk, and it needs to start making “smart” investments to generate the best outcomes for the regions.

“The temptation when you are under that kind of pressure is to pick the low hanging fruit, to grab the thing that is investment ready, even if it isn’t necessarily the best investment in the big scheme of things” said chief executive Alex Penk.

The report says that the PGF has “great potential” but introduces the risk of “misallocating resources, creating dependency culture and favouring rent-seekers over innovators”.

The institute’s five key concerns include a lack of evaluation and little co-ordination across the overall regional development strategy. It also said a “sector-based investment strategy that picks certain sectors over others introduces undue risk”.

 

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32 Comments

  1. Gerrit

     /  26th February 2019

    If we look at the projects carried out under the “think big” strategy we see ALL of them were successful

    methanol plant at Waitara
    ammonia/urea plant at Kapuni
    synthetic-petrol plant at Motunui
    expansion of the Marsden Point Oil Refinery
    expansion of the New Zealand Steel plant at Glenbrook
    electrification of the North Island Main Trunk Railway from Te Rapa – Palmerston North
    a third reduction line at the Tiwai Point aluminium smelter, near Bluff
    the Clyde Dam on the Clutha River.

    https://en.wikipedia.org/wiki/Think_Big

    Problem with the PGF is that is is not focussing on “think big” projects. A new roading roundabout in Kerikeri is hardly a “think big” project.

    A “think big” regional project for Northland should have been the upgrading of the NAL rail line, something that would make a big difference to the region. Serving the Kaipara region, Whangarei, North Port, Bay of Islands, etc. Similarly the upgrading of the Napier – Gisborne rail line to service Poverty Bay.

    I don’t think Shane Jones has a clue about what to deliver strategically to really get a region up and running.

    Reply
    • Blazer

       /  26th February 2019

      after they were built Muldoons ‘Think Big’ projects were decried as a waste of money…I understand most were sold off at a loss to taxpayers

      So give Jones 40-50 years before you assess his performance..

      Reply
    • The Consultant

       /  26th February 2019

      If we look at the projects carried out under the “think big” strategy we see ALL of them were successful
      How defined? Completed? Working? Making a profit? Churned money back into the economy in good Keynesian fashion?

      Yep.

      Return on Investment? Return on Capital? Debts paid off not written off?
      Nope.
      Basically huge sinkholes into which the government sank money it never got back: money that could have been spent on other things that actually did have a positive ROI, ROC and all that stuff, or for that matter even on Health and Education.

      Of all those projects I think only the Clutha dam made financial, let alone economic sense, and plans for it preceded Think Big: Muldoon just rolled it into the scheme. Also, all those projects meant that future governments were at the mercy of the corporates who’d talked them up as fanastic ideas – if the government would come to the party with that sweet, sweet, juicy borrowing and/or tax payer money for the loans the corporates could not get themselves once lenders looked at the projects.

      And they’re still at it, with the Aussie firm last year still squeezing government’s balls to insure they keep that cheap power flowing from Manapouri for another decade or two. As the Meredian CEO said to the Select Committee: We’re not dealing with Grandma here.

      And all that money that disappeared into the ROI/ROC gap? It was just imaginary money or “paper-shuffling” or some other damned excuse centred around, “Hey, we tried”?

      Well actually it turned up in the form of government debt later and that bit us on the arse bigtime. Thanks for nothing Rob.

      Reply
      • Duker

         /  26th February 2019

        And big corporates havent lost mega bucks from wrong decisions.? Even with all their expertise and so called profit motive it can all go to hell.

        Then there is the so called ‘mega events’ like for NZ The Americas Cup . How much moolah will disappear down the gurgler for both Government/Council and the Syndicates for something that will cumulatively rate less than one night of the Oscars

        These are the ‘think Big’ projects for a City that doesnt need it , nor a Country that needs it ‘for the tourists’

        Reply
        • adamsmith1922

           /  26th February 2019

          Some good points and worth making

          Reply
        • High Flying Duck

           /  26th February 2019

          Am Cup is more about the yachts and boats coming to NZ. The teams and crews, the work driven by the event itself and the work derived from visiting super yachts.
          Last time the Cup was here it drove waterfront revitalisation and development, economic growth and was beneficial to the region. I’m sure this time will be no different.
          Any ratings or viewership overseas is a cherry on the cake.

          Reply
  2. High Flying Duck

     /  26th February 2019

    The messenger in this case – Maxim Institute and Chris Penk’s brother Alex lends a partisan feel to the report.
    Then again I’m not sure we needed any outside group to identify the complete omnishambles anything Shane Jones touches with the PGF turns into.
    He can’t even pork barrel well.

    Reply
    • Duker

       /  26th February 2019

      You tell those areas that…. they say keep your jaffa hands off out new airport terminal etc

      Reply
  3. Finbaar Rustle

     /  26th February 2019

    In ’75 Rob Muldoon promised “Jobs for you, your children and their children”
    Unemployment went up 100k.
    But Rob’s mob like the sheeple they were just
    followed the economic genius to their graves.
    Now days there are more than 2 million
    Kiwis of working age with out real jobs.
    Super beneficiaries 900,000 and those in education 900,000 account for the
    greatest unemployed groups draining on the economy.
    Cutting super and education funding by 50% would solve all our problems.

    Reply
  4. Duker

     /  26th February 2019

    Maxim Institute ? Totally rubbish , a long time Christian lobby group which focused on education. Would have zero economic cred

    Reply
  5. PartisanZ

     /  26th February 2019

    The PGF isn’t a “Think Big” project …

    The PGF is a big whole bunch of “Think Little” or “Think Moderate” or “Think Local” projects.

    Big, big difference.

    Reply
  6. Alan Wilkinson

     /  26th February 2019

    The only Think Big projects necessary are in the infrastructure that the Government has appropriated to itself – road, rail, planning and compliance.

    When they can’t even get those right why on earth are they messing in other stuff?

    Reply
    • Duker

       /  26th February 2019

      You mean projects like Joyces partnership with Thiel on buying Xero shares ?
      compared to PGF:
      Omaka Aviation Heritage Centre Expansion Project
      West Coast Wilderness Cycle Trail – on of Keys ‘huge’ projects for 1000s jobs during the recession.

      Reply
      • Corky

         /  26th February 2019

        Looks like the PGF may become the granddaddy of them all, Duker

        Reply
      • Alan Wilkinson

         /  26th February 2019

        Must really rile you bitter and twisted Lefties that Key managed to keep unemployment so low during the GFC, Duker.

        Reply
      • Alan Wilkinson

         /  26th February 2019

        Actually that’s an interesting contrast, Duker. Key built cycle trails that create jobs. Labour and Greens build cycleways that destroy jobs..

        Reply

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