Among projects in known PGF applications is a suspension bridge over the Tauherenikau River. GRAPHIC/GERAD TAYLOR
Like the business-end of a one-day cricket match there is a time to get runs on the board and it is that time for the Provincial Growth Fund.
Businesses in Wairarapa seeking money need to be aware the fund considers itself to be near a half-way point and is looking to get into actual projects not just feasibility studies.
A briefing for community leaders and business people in Masterton was hosted last week by PriceWaterhouse Coopers and the Bank of New Zealand – both involved in providing help with applications for funding from the PGF.
Economic Development Minister Shane Jones was upfront when he visited Wairarapa last year saying the $3 billion fund may last just one electoral cycle – with the next election due next year.
Officials point out that the fund is not a grants scheme but an investor looking for projects that might not otherwise get up, that have 50 per cent of funding already sorted, be it debt or equity, and that lift productivity, including skills in the regions.
The fund has announced more than $700m worth of projects, but Wairarapa has so far just got part funding for a project manager. The fund has also allocated $485m to the government’s One Billion Trees Programme.
The message from Wellington is that even though there have been applications for a lot of funds already, the fund still has its door open to good projects.
There is an army of accountants and bankers looking to help people shape their applications, for a fee, and to introduce investment partners if required. They are busy smoothing the way for businesses looking for a piece of the action.
Hawke’s Bay is a “surge region” and as many as six applications a week are flowing in from there.
Wairarapa is not a surge region, but it has separated itself from Wellington by having its own economic development strategy, with priority areas identified of value-added food and beverage, tourism and visitors and knowledge intensive.
People looking for money need to show they are aligned with these goals.
The message from officials is to keep applications clear and to the point of what the project is about – leave the government-speak out.
Business owners and other groups that need funding are wary. There have been provincial growth funds before and this one may only last three years. Is it worth the effort? Is it too late and do you have to have a project with a link to iwi?
Officials counter that by saying even if the fund doesn’t last, the deals it does will as they are contracts.
Approval can also be quite speedy.
Cabinet has delegated power to approve projects of up to $1m to a group of senior officials, who meet regularly as a group.
Projects worth from $1m to $20m are signed off by a group of core ministers and for projects above $20m the decision is made by Cabinet.
Those who have talked to Jones say he likes rail and he likes trees, which is handy as Wairarapa has a bigger forestry industry than many realise.
Iwi are also seen as being big players as the Maori economy is worth $50 billion nationally and only about 5 per cent is settlement money. It’s a significant business sector, often based in the regions and iwi have a shared goal of raising skills and opportunities.
Critics point out regional development funds come and go and don’t have a great record. There was the Development Finance Corp, which was sold, then collapsed.
Wairarapa doesn’t have a great history with accessing pots of government money tagged for the regions. Many say it missed out on Steven Joyce’s version because it was a forgotten part of the Wellington region.
Still, Wairarapa may benefit from projects Wellington gets.
One project some wonder privately about is whether the fund could be used to rationalise Wellington’s port. A move of the ferries and cruise ships to land at Kaiwharawhara has been talked about for years but it never gets off the ground.
Could the PGF become the “but for” investor?
The fund sees itself as an underwriter of demand risk, that is a supporter of projects where the uncertainty about demand makes banks and investors pull back.
With respect to Wairarapa there’s speculation about applications for hemp projects, which can include food and medicinal cannabis, and milking sheep and goats, but among the ones known about are water storage, a suspension bridge, for walking and cycling, over the Tauherenikau River, and South Wairarapa’s Dark Skies project.
The National Aviation Centre project for Masterton is expected to be an applicant and seems to tick a lot of boxes.
The question is — has Wairarapa missed the boat again on regional development funding?
It’s too early to say, but it is time to hit one out of the park.