The Provincial Growth Slush Fund

The problem with giving a minister a specific amount of money to spend (let’s say $3 billion, shall we?) is that he will find himself honour bound to spend it. This will not necessarily result in good decisions, even though there are plenty of projects and business opportunities in the regions that are crying out for public money.

This seems to be the problem with the Provincial Growth Fund. From tree planting projects where seedlings end up being mulched because no one thought to prepare the land, to advancing funds to dairy companies to improve their sale prospects, there is a lot wrong with the management of this fund at present. And it just got worse. quote.

The Provincial Growth Fund was on the cusp of investing $30 million to purchase stakes in two private airlines – including one that had not even applied for funding – before advice from sceptical Treasury and Ministry of Transport officials encouraged ministers to put a stop to the plan.

The documents also show that one airline was not even aware that the fund was looking to invest in it. The Provincial Development Unit which administers the fund had singled out an airline on the basis of a proposal from one of its competitors. end quote.

See what I mean? If there are no applications for funding, just throw the money anywhere. It doesn’t matter where. quote.

Documents released to Newsroom under the Official Information Act show a private airline applied to the PGF for $20 million in exchange for a Crown shareholding. The precise number of shares was redacted in the documents. 

The purchase would enable the airline to purchase two additional aircraft and an aviation engineering business, and allow it to repay some debts. It would also allow the airline to fly new services. end quote.

Since when was the PGF about investing in airlines? I thought that was what the national superannuation fund was all about. Even ACC are successful investors, but I thought the Provincial Growth Fund was about… provincial growth? The clue is in the title, isn’t it? quote.

Ministers appeared interested enough in the proposal to ask for more information, although they were worried about the precedent the proposal would set. 

end quote.

That precedent might be… well, I don’t know. Investing in things that neither need it or have not asked for it? quote.

“RED Ministers indicated that they wanted to consider the proposal in the context of analysis into regional air connectivity, and noted some high-level concerns about precedent effects”.

The proposal was shot down at the Regional Economic Development Ministers meeting on 6 December 2018. Jones said that while he was keen for the proposal to go further, his colleagues were less enthusiastic. 

“Whist I personally was very keen to avoid a situation where aviation connectivity was going to be weakened, at the end of the day these are decisions that are made in the context of consensus. There was no consensus therefore it died,” Jones said. 

“Basically, I’m a venturesome spirit, I was keen for the process to go a tad further, but I live by the process of all four ministers,” he said. 

Stuff.end quote.

We should all be very glad that Jones does not make these decisions entirely alone and that someone – anyone – is holding him back, at least a little bit. quote.

Jones confirmed the second airline was not told that the PDU had earmarked it for potential investment for reasons of commercial sensitivity. 

“[The company] has not applied to the PGF for funding, and we have not seen any analysis of what benefit a $15 million investment in this company would provide,” the briefing said.

end quote.

But let’s throw some money at it, eh Jonesie? You’ve got plenty in the slush fund to get rid of.

This is not a good sign of fiscal responsibility. You and I go to work to earn the money to pay for this shambolic set up. It is good that there were other ministers to ask questions in this particular case… but let’s face it… often, there is nothing stopping Shane Jones and his cheque book from wasting the money you and I go out there to earn. Nothing at all.