Auditor to evaluate growth fund

The Government’s top spending watchdog says it will pay close attention to the Provincial Growth Fund (PGF) and has ordered an in-depth review into aspects such as managing, monitoring and evaluating the fund.

Controller and AuditorGeneral John Ryan said the PGF would be a focus for his office for 2018/19 and beyond.

His comments come as the judgment of Regional Economic Development Minister Shane Jones faces scrutiny over his discussions with the acting chief executive of the NZ Transport Agency about its case against a Northland trucking company. Jones is related to the company’s managing director, Stan Semenoff.

The speed with which the fund was established, the nature of many of the funding proposals, and the high level of public interest have meant that the processes and types of funding provided might be different from traditional public sector arrangements, Ryan said.

The fund allowed for $3 billion of public money to be invested over three years, with the aim of lifting productivity potential in New Zealand’s regions.

A group of regional economic development ministers approve proposals above $1 million and Cabinet has to approve proposals above $20m.

The fund required appropriations to be managed by multiple government departments and organisations, which increased the risk of unappropriated expenditure, Ryan said. ‘‘We are of the view that, as the agency with responsibilities for administering the fund, monitoring its operation, and working with other government agencies, the Ministry of Business, Innovation and Employment’s (MBIE) Provincial Development Unit (PDU) has the responsibility for overall monitoring and reporting on the fund.’’

The specific review would look at PDU’s role in, and systems and processes for, managing, monitoring, and evaluating the fund across the three main departments: MBIE, the Ministry for Primary Industries, and the Ministry of Transport.

It would be in addition to the 2018/19 audit work.

The review work will look at processes and policies in place for: Administration and management of the fund by the PDU, working with other government agencies, and including processes and systems to ensure effective reporting at all levels, and against the appropriations that Parliament has allocated to the fund; governance arrangements; contract management; and the evaluation framework for the fund.

The review was likely to take until October 2019.