POWERING UP AOTEAROA - NEW ZEALAND'S REGIONS - THE GUIDE TO THE PROVINCIAL GROWTH FUND - Grow Regions
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Photo credit: David Ward POWERING UP AOTEAROA – NEW ZEALAND’S REGIONS THE GUIDE TO THE PROVINCIAL GROWTH FUND
Photo credit: Alister Newton
CONTENTS INTRODUCTION
Introduction3 The New Zealand Government has allocated three billion dollars
This guide 4 over a three-year term to invest in regional economic development
through the Provincial Growth Fund (PGF).
The Provincial Growth Fund 5
The PGF is a significant opportunity to realise the remarkable
PGF Investment Tier 1 9
potential of the regions of Aotearoa New Zealand. It can provide
PGF Investment Tier 2 12
funding to accelerate growth, and to kick start new initiatives.
PGF Investment Tier 3 15
Provincial New Zealand is the heartland of Aotearoa, and home
Key considerations to some of our most creative and innovative people. Much of
for investment decisions 18
New Zealand’s economy rests on the successes of the regions,
with tourism, forestry and the primary industries all strong
contributors to New Zealand’s export economy. However, some
regions are challenged with higher unemployment, lower productivity,
finding skilled workers and people who are struggling economically,
which puts their wellbeing at risk.
Through the PGF, the Government seeks to ensure our regions
and our people across New Zealand can reach their full potential
as part of an economy that is sustainable, inclusive and productive.
3
THIS GUIDE
This guide outlines information about the types
of projects and the considerations for preparing
and submitting a strong application to the PGF.
We welcome variety and ambition, and encourage
all aspiring applicants to submit their proposals
if they meet the PGF’s criteria.
More information on the PGF including how to apply
can be found here: www.growregions.govt.nz
He waka eke noa.
A canoe which we are all in with no exception.
4 The Guide to Provincial Growth Fund
THE PGF STRUCTURE OF THE PGF
OBJECTIVES The PGF has three investment tiers:
Regional Sectors Infrastructure
Support of Initiatives targeted Regional
economic at priority and/or Infrastructure
development high value sector projects that enable
projects, feasibility opportunities. regions to be well
The purpose of the PGF studies and This includes the connected from
is to accelerate regional capability building One Billion Trees an economic and
development, increase identified within Programme. social perspective,
regional productivity, regions. including rail, road
and contribute to more, and communications.
better-paying jobs.
This purpose is supported
by the following objectives:
• Creating jobs, leading Applications can be made to any of these tiers, or to two or more tiers
to sustainable economic where they are inter-connected. For example, development of a new
growth tourism attraction may be accompanied by investment in the local road
• Increasing social inclusion network to improve visitor access, and investment in building local skills
and participation in tourism and hospitality.
• Enabling Māori to realise Where applications touch on areas that receive government funding
aspirations in all aspects from elsewhere, for example, land transport infrastructure – assessment
of the economy will consider the purpose and priorities of that funding. We will work
to ensure that funding comes from the most appropriate source.
• Encouraging environmental
sustainability and helping
New Zealand meet climate
change commitments
Fund exclusions
alongside productive use
of land, water and other The following are not eligible for PGF as they are funded
resources by other means:
• Improving resilience, • Housing (unless it is a core part of a broader project
particularly of critical and would not otherwise be required)
infrastructure, and by • Water and large-scale irrigation
diversifying our economy • Social infrastructure (such as hospitals and schools)
5
5
He aha te mea nui o te ao? He tangata, he tangata, he tangata What is the most important thing in the world? It is people, it is people, it is people. KEY CRITERIA Proposed PGF projects will be assessed against the following key criteria: Does the project Does the project Is there a link to the Will the project be lift the productivity create additional regional priorities, well managed, well potential of a value and avoid and are key local governed and have region or regions? duplicating existing stakeholders an appropriate risk/ Does it contribute efforts? supportive? reward trade-off? to the PGF objectives? 6 The Guide to Provincial Growth Fund
GEOGRAPHIC FOCUS TAI TOKERAU/NORTHLAND
All regions of New Zealand are AUCKLAND
eligible for funding under the
PGF, excluding the metropolitan
areas of Auckland, Wellington and
WAIKATO BAY OF PLENTY
Christchurch. Six “surge” regions
have been prioritised for the PGF: TAIRĀWHITI/EAST COAST
• Tai Tokerau/Northland
• Bay of Plenty TARANAKI HAWKE'S BAY
• Tairāwhiti/East Coast
• Hawke’s Bay MANAWATŪ-WHANGANUI
WAIRARAPA
• Manawatū-Whanganui
WELLINGTON
• West Coast NELSON-TASMAN
Projects which are multi-regional MARLBOROUGH
in scope will also be given priority.
WEST COAST
CANTERBURY
OTAGO
SOUTHLAND
Ki te kahore he whakakitenga
ka ngaro te iwi.
Without foresight or vision
the people will be lost.
SUPPORTING MĀORI DEVELOPMENT The PGF aims to support Māori development and prosperity. The Māori economy is a key contributor to economic development and the PGF provides an opportunity for investment in Māori-led initiatives across regional Aotearoa New Zealand to help them reach full potential. Māori have large asset holdings tourism sectors. The scale and employment, education and are governors and managers objectives of the PGF provide and training, and the PGF of natural resources, many of a significant opportunity for can support such initiatives, which are located in the regions. Māori to unlock and realise the including through schemes Māori have a regional presence potential of their resources. like He Poutama Rangatahi and significant economic interests There is also an opportunity (Youth Employment Pathways). in food and beverage, forestry and to support more Māori into 8 Provincial Growth Fund guide to the Investment Statement The The Guide to Provincial Growth Fund
PGF
INVESTMENT
TIER 1
REGIONAL
PROJECTS, CAPABILITY
BUILDING AND
FEASIBILITY STUDIES
9
DEVELOPING REGIONAL SKILLS AND CAPABILITY
As well as investing in jobs growth, not in employment, education or investment timeframe and
the PGF represents an opportunity training. This includes investing beyond, and that include a clear
to grow the skills and capability of beyond just getting people outline of what support will be
locals in the regions to equip them work-ready; it’s also about provided to both employers and
for sustained work and pathways investing in building the skills to the potential local labour force
to higher incomes, by matching and capability of people in the to get them ready to seize this
them with the jobs in their regions. regions to be able to manage opportunity. Active employer
The PGF opens up significant and govern PGF and future participation and ongoing support
opportunities to invest in a more projects effectively, so that a to upskill people is encouraged.
tailored and location-specific way
transformative legacy can result. Proposals should demonstrate
to support local labour force and
employers to come together. The The PGF welcomes proposals how they complement, rather than
outcomes that the PGF seeks to that can demonstrate how replicate or substitute, existing
contribute to include: increased they will lead to an increase programmes and government
local employment and earnings, in sustained local employment support, and how they are linked
and lower rates of young people outcomes, both within the PGF’s to regional priorities.
REGIONAL PRIORITIES AND ACTION PLANS
Most regions have economic sectors, or natural and cultural context of the wider regional
action plans. These typically features. Regional action plans and national transport networks.
outline the region’s ambitions, are good mechanisms for In addition, applications should
and are used to identify priorities ensuring that projects are have been shared with key
for investment, including aligned with regional priorities. regional stakeholders, so they
government funding. Transport infrastructure projects are informed and have the
The PGF should be seen by or proposed investments with opportunity to give input and
regions as an opportunity transport components should show support. These regional
to upscale their planning, be included in Regional Land stakeholders include local
and further highlight their Transport Plans, so that they are government, mana whenua, and
comparative advantages, integrated into regional transport major business and community
such as specialisation in specific planning and viewed in the stakeholders where appropriate.
10 The Guide to Provincial Growth FundPGF INVESTMENT TIER 1
REGIONAL
Projects funded from the PGF will be
considered as part of an overall portfolio
of the Government’s support for the region,
rather than as stand-alone initiatives.
Each individual project should fit well into
an overall plan for enhanced economic
development for its region.
11PGF
INVESTMENT
TIER 2
SECTORS
12 The Guide to Provincial Growth FundPGF INVESTMENT TIER 2
SECTORS
SECTOR PRIORITIES
All sectors are eligible to apply The PGF can help strengthen aims to support projects that
our economy and accelerate the increase local skills, and reduce
to the PGF. Regional action plans
environmental impacts while
generally highlight areas of focus transition from a volume-based
at the same time enhancing
for regions, including comparative export economy (commodities), the productivity of the sector,
advantages in certain sectors. to a value-based economy. Sector such as through the uptake of
Consideration will be given to projects should take into account digital technology.
the markets that each sector environmental impact and the We expect to see projects from
supplies, and in particular to region’s resilience, as per the the food and beverage, tourism
PGF’s objectives. and forestry sectors being funded
their export potential, so that
as these align with international
we are maximising the return In line with our goals for resilience demand, and are strong sectors
for New Zealand. and sustainability, the PGF in the surge regions.
of high-value tourism. Priorities Tree planting helps meet
for the tourism sector, such as climate change targets, reduces
encouraging visitation across the soil erosion, supports more
year and across more regions,
Food and Beverage sustainable use of land, water
will also be supported through
and other natural resources, and
The PGF welcomes proposals the PGF. We also expect to see
for projects that increase the provides opportunities for Māori
initiatives that further develop
capability and employment Māori culture as an asset for to develop their land.
of local workers (thereby New Zealand tourism. The One Billion Trees Programme
reducing reliance on migrant
aims to ensure that the right
workers), and use land in ways
trees are planted in the right
which are economically and
landscape. This means planting
environmentally sustainable.
a mix of exotic and native tree
There may also be projects Forestry
that deploy technology to species in private, public and
The PGF supports the
enhance productivity, reduce Government’s One Billion Trees Māori owned land and a mix of
environmental impacts, or Programme to plant one billion permanent trees and commercial
add value to the end product trees across the country over forests that can be harvested in
(for example, use of robotics, ten years. the future.
or sensors on the farm).
Forestry has a range of benefits Commercial forestry initiatives
which include encouraging need to align with regional
regional economic growth,
transport plans and support
creating sustainable employment
regional wood processing
opportunities and lifting social
Tourism aspirations, research and
wellbeing. Projects that are
In the tourism sector, the PGF will environmentally – as well as development, skills training
prioritise investment into regional economically – beneficial will and new technologies, and
infrastructure to support growth be favoured. eco-recreational initiatives.
13
13CASE STUDY
TŌTARA INDUSTRY PILOT
The PGF provided $450,000 its establishment as a market. processed into higher value wood
towards a two-year pilot to products could increase the value
The pilot will investigate whether
test the validity of establishing derived by up to $60 million
these barriers are surmountable
a sustainable indigenous with a further 200 direct jobs
and, if they are, will facilitate the
tōtara wood products industry and 1,750 indirect jobs created.
development of a new sustainable
in Northland.
industry with multi-million dollar The project will be led by
Tōtara could provide an potential. It could also help the Tōtara Industry Steering
opportunity for New Zealand diversify Northland’s economy Group, which is made up of
to develop a new niche industry and sustainably grow jobs in Scion, the Ministry for Primary
producing high value native the region. Industries, Northland Tōtara
wood products. Working Group, Tai Tokerau
Research indicates that the
Māori Forests Inc., Northland Inc.,
Tōtara is an underused resource industry has the potential to
an industry representative and
within the wood products industry produce $7.5 million from tōtara
an independent chair.
but, despite its economic potential timber per year within three
and the abundant supply of it in years – that equates to 20 direct The $1 million pilot has also
Northland, the industry has faced jobs and almost 80 indirect jobs. secured funding from Scion
a number of barriers preventing The potential for tōtara to be and Northland Inc.
Through the One Billion Trees Programme the Government
has signalled its intention to use forestry as a platform for
building a sustainable and economically vibrant future for our
provinces. It will support this by providing opportunities to create
employment, optimise land use, mitigate climate change, protect
the environment and ensure sustainable fibre has a key role in the
future low carbon economy.
14 The Guide to Provincial Growth FundPGF
INVESTMENT
TIER 3
INFRASTRUCTURE
15The PGF prioritises two categories of infrastructure investment that are central to regional economic
development: transport and digital enablement (including connectivity).
Transport but which otherwise meet emergency services. Regional
Transport networks that are the government’s criteria and ports and airports need to be
fit-for-purpose for the safe objectives for the PGF. seen in a wider national context.
and timely movement of people To receive funding for any For example, investments in ports
and freight are essential for of these purposes, proposed may require complementary
businesses and communities, projects would need to align investments in roading and in
both regionally and nationally. strongly with the specific rail, and the potential impacts
objectives of the PGF, above on other regions need to be taken
Transport investment in
and beyond the priorities of into account. The Government will
New Zealand is well-orchestrated
current programmes of land work with regions to build a shared
through the National Land
transport investment. understanding of wider issues
Transport Programme (NLTP)
and interdependencies, which will
and Regional Land Transport Projects should also be included
inform advice on port and airport-
Plans (RLTPs). These remain the in RLTPs and other regional
related investments and bring
key mechanisms for transport strategic planning documents.
a national perspective.
planning, and the National Land This will ensure that integrated
Transport Fund (NLTF) continues regional transport planning Clarity about ownership and
to be the primary funding source continues, proposed projects fit management of whole-of-life costs
for land transport initiatives. with regional transport priorities, will be important considerations
the process for regions to access for all long-lived asset classes.
The PGF provides scope for
PGF funding is streamlined, and Digital Enablement
transport investment that
funding for projects comes from
generates additional benefits Digital technologies offer great
the most appropriate source.
for regions and accelerates potential for lifting productivity,
their development. Investment proposals relating and provide opportunities to
to rail, ports, wharves and airports develop new skills in our regions.
To support this intention for
and other non-land transport The PGF will invest in digital
additionality, the PGF will be
infrastructure should demonstrate enablement projects to capture
used to:
a clear link to PGF objectives employment and business
• provide a source of funding and criteria, and how they will fit opportunities in the regions.
for local authorities that face with a region’s transport network. This can involve investing in
significant difficulty in meeting As the rail system is a national network infrastructure to improve
local share requirements network, decision-making will
the reach, reliability and quality
• bring projects forward where take account of key policy work
of digital connectivity. It can
they may not be prioritised programmes underway – in
also include investments to ensure
under the NLTP but are particular the Future of Rail.
people are able to make use of
strategically important to a A number of smaller provincial the digital connectivity available
region’s productivity potential airports support tourism while to them, and ensuring people
• provide a source of funding others have a role as providing living in remote communities
for projects that do not secure service essentials in remote can take advantage of
funding through the NLTF communities, such as access to digital technologies.
16 The Guide to Provincial Growth FundCASE STUDY PGF INVESTMENT TIER 3
INFRASTRUCTURE
RUAPEHU ALPINE LIFTS
The PGF was set up to provide as well as a $10 million loan can take place. It is projected to
financial assistance in a variety from the PGF. generate 150 jobs for building
of ways – from traditional grants, Ruapehu Alpine Lifts is a public and operating the gondola, and
to a variety of debt or equity benefit entity – it’s a not-for-profit potentially a further 400 through
investments. Funding provided that is restricted from providing associated activities.
depends on particular projects, a return to shareholders – and 2,400 passengers can be
the applicants’ circumstances operates in an abnormal risk transported per hour in 10 person
and the PGF’s criteria. environment. Therefore it is
cabins – a journey that will take
difficult to raise capital through
The construction of a high speed five minutes. It is forecast to
conventional means. The PGF is
gondola on the Whakapapa ski generate 500,000 additional
lending the money to Ruapehu
field by Ruapehu Alpine Lifts was visitor days by 2025.
Alpine Lifts as while it’s a not-for-
identified as being transformative profit, it’s a commercial entity and For a district experiencing
for central North Island as it the money will be repaid if the population decline through
provides a year-round destination project is successful. the waning of other sectors,
for tourists. The total cost of the The gondola has the potential to this project meets the PFG’s
project is $25 million, with funding be a key investment in the region, investment criteria – it supports
coming from local government, creating the ‘must do’ attraction job growth and has an impact
investors, Ruapehu Alpine Lifts, around which other investments on the region as a whole.
The Provincial Growth Fund guide to the Investment Statement 17KEY
CONSIDERATIONS
FOR
DECISIONS
INVESTMENT TYPES
RISK AND REWARD
CAPACITY TO DELIVER
CO-CONTRIBUTION
INVESTMENT ATTRACTION
FUNDING TYPES
18 The Guide to Provincial Growth FundKEY CONSIDERATIONS FOR INVESTMENT DECISIONS
Investment types
It is likely there will be a number of differing types of investments made under the PGF:
Non-commercial Quasi-commercial Commercial
An investment delivers An investment generates An investment may be
a public benefit but has a revenue stream, but this viable for the private sector,
no revenue stream is insufficient to be funded but PGF invests to realise
e.g. investment in capability by the private sector. a public benefit that would
development or in a road not otherwise occur.
improvement.
Risk and reward at both the direct and indirect clearly outlined in its proposal,
All PGF projects must provide benefits from their project including the risk of not achieving
clear benefits which can be proposals, and demonstrate the expected benefits. Suitable
linked to its goal of lifting the overall value created in both mitigations or contingencies to
productivity of the regions of economic and non-economic manage these risks should be
Aotearoa New Zealand. We terms. This can include social, highlighted. Funding decisions
expect projects to provide a net cultural, environmental and will weigh up the reward and
benefit, that is, value created by community benefits. Each project value created against the risks
the PGF’s investment exceeds proposal should include its of projects. The PGF may also
its cost, although this may be whole-of-life costs, bearing in consider whether projects might
considered across a portfolio mind that ongoing operational be better funded through other
of projects, where each adds to costs will not typically be government programmes and
a beneficial sum of parts. We funded through the PGF. The sources, and work with applicants
encourage applicants to look risks for each project must be to identify those where relevant.
PGF investments will not crowd out private or other public investments.
CAPACITY TO DELIVER
Projects and initiatives need PGF will look for demonstrated make clear how projects
to have the right skills and capability within the team, will be delivered on time and
resources to deliver intended a track record of success, budget, with benefits realised
benefits and ensure success. and / or partnering with others and risks managed.
When evaluating projects the to deliver. Applications should
19CO-CONTRIBUTION
The PGF will look for contributions to come from applicants, or related parties. Exceptions may be considered
where the benefits to the region or to New Zealand overall are high (e.g. for projects supporting those not in
employment, education or training into employment).
The PGF is looking to applicant or related third party benefits are shared beyond the
leverage investment from (in line with other government specific firm sponsoring the
private enterprise, iwi and programmes). project, and where government
philanthropy. Projects that contribution creates additional
Co-contribution can be in-kind
are deemed commercial or value – for example, increased
rather than financial where
quasi-commercial will require employment opportunities,
appropriate for the project.
a 50% contribution from the increased research capability,
applicant, or a related third party. Co-investment with individual or a contribution to regional
Grants provided to commercial firms may occur if they generate infrastructure for multiple
projects will generally require opportunity and value that would beneficiaries.
a 60% contribution from the not otherwise occur, where
Examples of co-investment a range of apprenticeships to the local transport and
with private industry for local people, with logistics network than would
might be for a business supporting pastoral care. otherwise occur, where they
that is proposing to invest • The PGF might co-fund would deliver more benefits
in a new factory / processing a research facility attached to a community or region.
facility: to the plant, if the research
is of value to the regional Please check
• If the location has
economy (e.g. research www.growregions.govt.nz
above-average rates
of people not in education, into monetising a local or contact us for more
employment or training, natural resource) commercial investor and
the PGF might partner • The PGF could co-fund more investment attraction
with the business to fund extensive enhancements information.
20 The Guide to Provincial Growth FundCASE STUDY
H2 TARANAKI
Taking a co-investment approach A further $950,000 PGF funding Economic Development
has allowed for the establishment has been allocated for Hiringa Strategy which was launched
of H2 Taranaki. It is envisaged Energy to develop hydrogen in April 2018. It extends the
that H2 Taranaki will stimulate infrastructure in Taranaki. capability and capacity honed in
the growth of innovative hydrogen This co-investment model across the region’s energy sector over
projects and advance the take-up local government and private decades of successful operation,
of hydrogen technologies in enterprise aims to establish a during which time Taranaki has
Taranaki, helping position the place for Taranaki in an emerging established world class industrial
region on the world stage as hydrogen industry with a particular and technical abilities. This rich
technically advanced, sustainable, focus on zero emissions and heavy history means the region has all
clean and green innovators. and long distance transport. the hydrogen market application
Co-investment brings for demonstration projects in one
A feasibility study and roadmap
together the hydrogen supply geographic area.
development is required to
discover and plan activities for infrastructure expertise from H2 Taranaki has the potential to
H2 Taranaki. These activities cost Hiringa Energy with the purpose generate new hydrogen projects,
$190,000 with $140,000 funded of Venture Taranaki – to drive create jobs and attract technology
from New Plymouth District and facilitate sustainable, diverse investments, working with public,
Council, Hiringa Energy and economic growth in the region. private and not for profit sector
Venture Taranaki. The balance This work neatly aligns with partners to make a sustainable
has been secured from the PGF. Tapuae Roa, Taranaki’s Regional difference to the region.
Naku te rourou,
nau te rourou,
ka ora ai te iwi.
With your basket
and my basket
the people will live.
21FUNDING TYPES
The PGF will work with applicants commercial projects a certain level of revenue for
to decide suitability of funding (noting there may be some a project, the PGF may decide
type for each project, from the extra caveats for transport to underwrite that revenue
following available options: projects). Loans will be made risk to guarantee a certain
available to projects on suitable revenue stream.
Grants and agreed terms. The PGF will
• Equity
Non-commercial projects will look for debt collateral that is
In some circumstances,
in general be funded through as strong as possible.
the PGF may take an equity
grants (taking into account
• Underwrite position (part-ownership)
the required co-contributions
The PGF may offer to in a project. Typically, this
outlined earlier). In addition,
‘underwrite’ the risk of a will be where the project
feasibility studies – projects that
project; this is likely to take the cannot support further debt,
will help define and scope future,
form of guaranteeing a certain or where there is sufficient
larger projects – are likely to be
funded via grants. outcome for a project, lowering extra return from the project
the risk for other potential which the Government should
For quasi-commercial investors. The PGF is more benefit from.
and commercial projects, likely to underwrite projects
PGF will select primarily from in order to accelerate them by Attracting third party investors
debt, underwrite or equity: making their parameters more The PGF may facilitate matching
• Debt certain, rather than in solely proposed projects with
Debt is the preferred financial terms. For example, potential investors where this
mechanism for PGF funding if a project estimates a certain may help remove barriers to
of quasi-commercial and volume of visitors to generate their commitment.The PGF represents a major
opportunity to unlock barriers
to growth, accelerate existing
programmes, and kick start
new opportunities – including
support for sustainability and
Māori economic development.
Applicants are encouraged to
set aspirations and ambitions
high, so we can create a
step-change in regional
prosperity for our future.
MORE ABOUT THE PROVINCIAL GROWTH FUND
The PGF is managed by the Expression of Interest (EOI) The information you provide
Provincial Development Unit If you are unsure whether your will help us to assess and
which works in partnership project is eligible for the PGF, evaluate eligible projects
with regions and across you could submit an Expression and investment opportunities.
government to support of Interest to help us understand One of our regional advisors
its delivery. your proposal and eligibility. will contact you to discuss
More information, including your application, and any
Submitting an application
Expression of Interest and additional information needed.
If you are confident your project
Application forms are available They can provide you with
is eligible, please submit an
at www.growregions.govt.nz advice and support where
application form.
necessary, including advice
to help coordinate central
government support.
23WWW.GROWREGIONS.GOVT.NZ MBIE 3911
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