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A 48,000 kg spool for the Sky Waka gondola rope haul is lifted into place

PGF progresses on target – By Iain MacIntyre

Investments totalling $1.77 billion have to date been approved and committed by the Provincial Growth Fund (PGF) with the initiative said to be on target to achieve its full $3 billion allocation before the next election.

As at the end of January this year, a total of 13,085 jobs were expected to be generated by currently-confirmed PGF-funded initiatives – 5121 in feasibility studies and 7964 in actual projects – according to Ministry of Business, Innovation and Employment documentation.

When launching the initiative in February 2018, Minister of Regional Economic Development Shane Jones listed its main objectives as including:

  • • 
Enhancing economic development opportunities
• Creating sustainable jobs
• Contributing to community wellbeing
• Lifting the productivity potential of regions
• Helping meet New Zealand’s climate change targets.

“The $3 billion will be fully committed over three years, making investment in the provinces more attractive for private sector investment, which has strongly favoured our main urban centres in recent years,” Minister Jones said at the time. “We will form genuine partnerships up and down the country and provide the capital needed to stop projects languishing in long-term plans and regional action strategies.

“Our provinces are full of ideas and proposals. I have been heartened by the aspirations of so many businesses and investors, local councils, iwi and community groups, and I’m pleased to say that we now have a mechanism to see these realised.”

A different vehicle

Provincial Development Unit (PDU) head Robert Pigou, whose agency supports delivery of the PGF, describes the initiative as “a vehicle significantly different to anything else that has been done in the past” – particularly in regard to both its scale and flexibility.

Provincial Development Unit head Robert Pigou: “The initiative is significantly different to anything else that has been done in the past”

“The qualifying criteria are also broader than anything we’ve seen before,” Mr Pigou tells NZCN. “Many of the proposals that are coming through to us are new – they are not projects that have been around for 20 years and just been dusted off.”

Elaborating on the flexibility of the funding options available, Mr Pigou says there is a “large amount of discretion as to how we structure these transactions” – ranging from outright grants through to different loan types. “If the project has a commercial backer or there is a commercial revenue stream that flows off it, we would look to fund that any other way than a grant on the basis that it would have the revenue to repay all or some of the loan.”

Mr Pigou emphasises that in addition to the localised and specific benefits delivered by PGF-funded projects, the investments often have notable downstream impacts. In this vein, he highlights the partially PGF-funded industrial hub at Kawerau, which has enabled a new dairy factory to be opened recently, with a wood processing plant planned. “The enabling infrastructure is not just roads off the state highway – it will be a rail spur and rail sidings, and will create an industrial park and multi-modal hub,” he notes.

“The benefits that will flow from that are not just increased activities and productive capacity and benefits for the local Kawerau community. You now have a first-rate industrial inland port where people can truck goods to and then rail to Tauranga or Auckland, and you can get more high-quality goods in volume by train coming back the other way.”

He describes the PGF as having facilitated an evolution in focus from a merely project-specific basis to a regional package basis and even system-wide basis. “So if it’s forestry processing, it’s looking at it from ‘where are you going to get your trees and workers from, what is the processing required?’ and all of that has flow-on impacts beyond the immediate project out into broader provincial and pan-provincial communities.”

Mr Pigou adds that a framework is currently being developed that will enable the full impacts of the PGF at a whole-of-fund level to be evaluated.

Sky Waka

One of the notable projects to have gained funding through the PGF is the high-speed gondola on Mt Ruapehu, which is being developed to provide a year-round tourist attraction capable of transporting up to 2400 passengers per hour up the Whakapapa skifield.

Tower 11 of the Sky Waka gondola completely dwarfs the human construction workers

In planning for a decade and due to become operational in late June this year, the $25 million ‘Sky Waka’ has received a $10 million 10-year loan from the PGF, which is structured with a number of triggers for repayment of interest and capital.

Ruapehu Alpine Lifts chief executive Ross Copland is emphatic that the project would not have been enabled without PGF funding. “Our region will benefit immensely from the increased visitation to the gondola,” he says. “The visitor economy will provide accommodation, retail and other experiences to the half-million annual visitors by year ten, creating employment and wealth in one of New Zealand’s regions most in need.

Ruapehu Alpine Lifts chief executive Ross Copland: “Our region will benefit immensely from the increased visitation to the gondola”

“We are very grateful for the vision and economic stimulus the PGF has provided to the Ruapehu region through this project. It is a fantastic outcome for taxpayers, considering it not only has to be repaid with interest, but along the way it creates hundreds of jobs, stimulates this region’s visitor economy, and it generates millions of dollars in incremental GST revenue as a result of the spending growth.

“To date, over 300 construction workers, suppliers, consultants and design professionals have been inducted onto the project site. Millions of dollars of construction materials and equipment have been purchased in the regions surrounding the mountain, creating benefits for a wide range of nearby communities.”

Creating confidence

Mr Pigou adds that by providing such funding, the PGF acts as a catalyst to attract other co-investors and generates confidence which ensures such projects advance. Another prime example of this stimulus is the PGF funding provided to support that already generated by local people and charities in order to complete the final component of the Waitangi Mountain Bike Park.

The Waitangi Mountain Bike Park – PGF funding will supplement that already generated by local people and charities and will enable the final component of the park to be completed

“What’s driven off the back of that is these businesses – all centred on hiring bikes and providing other facilities and the like – are stimulating a whole lot of activity in Paihia around accommodation and cafés. It’s created the confidence for people to invest alongside that investment, which is what we’re trying to achieve.”

Iain MacIntyre is an award-winning journalist who specialises in transport and infrastructure issues within New Zealand i.macintyre@xtra.co.nz

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