2018: The Provincial Growth Fund

June 17, 2024

By AHNZ

The Provincial Growth Fund (2018) was initially a slush fund awarded to the New Zealand First political party to induce them to join the Labour 6.0 coalition. Having lost the 2017 election, Labour was determined to out-bid Bill English’s National 4.0 Ministry so for the ‘King Maker’ NZ First it was a seller’s market. Their MP, Shane Jones, was handed $3,000,000,000 in taxpayer money to distribute according to his judgement. The cover story was that it was to “help the provinces grow” and that Jones, like some economic fairy godmother, knew how to do that.

Jones was not supposed to be around any more. He had been in Helen Clark’s Labour 5.0 Ministry but retired from politics, bought off by an invented role called ‘Pacific Economic Ambassador’. He was paid $1,000,000 and we supposed he would go away to Samoa or Tonga or something and not come back but…he did, as 2IC to Winston Peters.

Labour 6.0 liked the Provincial Growth Fund idea so much that they rebooted it for a further 3 years using the cover of ‘COVID’. The Auditor General in 2023 put out a damning report of the PGF and was unable to figure out if it had created value for money. The answer to this is “no,” even on the metric of buying NZ First back into parliament in 2020 which it did not.

The PGF was finally stopped in budget 2023 but will probably come back under a different cover story in 2024….

..Yip, sure enough the National 6.0 Ministry (in coalition with ACT and NZF) have rebooted the old deal with a new cover story called the Regional Infrastructure Fund. This time around the sack of money will be $1.2 billion.

“Chris Bishop, the new minister for infrastructure, is promising the new Provincial Growth Fund – now dubbed the Regional Infrastructure Fund – will not be a “slush fund” for New Zealand First pet projects.” – NZ First’s new provincial fund won’t be a ‘slush fund’ this time – Chris Bishop, RNZ (Nov 2023)

“Foreign Minister Murray McCully has today announced Shane Jones as New Zealand’s new Ambassador for Pacific Economic Development. He will also serve as High Commissioner to several small island developing states in the Pacific and Indian Oceans, which will be announced once diplomatic formalities have been completed.” – Beehive (2014)

“The Office of the Auditor-General has written a letter to Parliament saying not enough attention is being paid to whether Provincial Growth Fund investments are worthwhile. ” – Auditor-General lacks confidence that Provincial Growth Fund money is being well spent, Interest (2023)

There are many issues to be raised about this but I’ll confine myself to just 2.

Firstly, why do New Zealanders put up with this obvious slush fund where billions of their stolen tax dollars are dolled  out to hand-picked corporate welfare recipients?

Answer: Because they want to be those corporate welfare recipients themselves.

Short answer: Greed for the unearned.

Secondly, what is the harm in letting politicians distribute loot according to their own preferences and favors? Assuming the recipients are not providing political quid pro quo or bankrolling the New Zealand First re-election campaign fund….what’s the harm?

Answer, from Milton Friedman: When you take money from productive people you are not just taking it from their productive venture but from the charitable use a productive person would have selected and putting it instead to what an unproductive person (eg. politicians) desires. This is the worst possible combination of whose money is spent and whom it is spent upon. There is no incentive to economise or to seek the highest value. Ref. The Four Different Ways To Spend Money By Milton Friedman, Financial Samurai 

So, a local hall or pool etc. gets a bit of this money. That community has been deprived of the chance to feel their own muscles and meet each other in pursuit of a goal. They don’t have to find innovative and novel ways to afford things. They don’t need to work extra hard in the cold or make up extra cakes or sausage sizzles or working bees or muster up discipline and resolve together. They just put their hands out and get someone else’s money and a photo opportunity with someone like Shane Jones. The healthy tissue of community us cut out and replaced with the artificial body parts of network. A community that might have been proud of their new amenities and “growth” is instead relating to something they were given. The only thing to be proud of is one’s ability to lobby and beg.

Further, what’s to become of the things the PGF or RIF buy when the money is gone? Lavish infrastructure still needs to be maintained but without the money hose it will deteriorate. It’s in the hands of people who didn’t earn it, don’t respect it, don’t have a team of people invested. Government or outsiders will probably buy up what remains or else the derelict pumped-and-dumped properties will rot away. Winston and Shane will be long gone.

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Image ref. NZ First MPs Winston Peters and Shane Jones; Newshub

Image ref. Garrick Tremain (2023)

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